We will all be hearing lots on the news in the next days and weeks about some conflicting rulings regarding one important aspect of the Affordable Care Act…the premium tax credits and tax subsidies that help low income families afford their new health insurance policies. It is expected that the Supreme Court will be the ultimate arbiter of this, especially since there are conflicting lower court rulings. The NY Times piece covers the issue well.
In a nutshell….
1. some states have federally facilitated Exchanges/Marketplaces (including Kansas), and others went ahead and fully designed their own Exchanges.
2. The plaintiffs have argued (now successfully in at least one ruling) that the original law was written to allow tax credits to consumers purchasing insurance policies through state Exchanges, not through federally facilitated state Exchanges.
3. The nuance being argued is whether or not Exchanges that were set up by the feds BUT IN STATES and with insurance policies sold in those states are the same as state Exchanges. One court says yes, another says no. Most pundits say the law was ambigious on this regard so it is up to the administrative body, in this case, the IRS, to interpret and put into operation the law. Others had said in the past that the writers were really trying to push the states to setting up their own Exchanges and hence, denying consumers the tax credit in those states that relied on the feds to set up the Exchange, ergo a presumed incentive to go with the state Exchange. When fewer than half of the states felt ready to design their own Exchanges (and some chose not to for seemingly political reasons), then the administration asked that this aspect be interpreted more fully to include all Exchanges. This will certainly be an interesting court battle to watch…but one with severe consequences for many Kansans and other Americans.
IF the Supreme Court holds that consumers are eligible for tax credits and subsidy cost sharing only Exchanges set up by the states this will negate tax credits for those in 36 states, including Kansas.
57,000 Kansans signed up for policies in the Kansas Marketplace. National figures show over 80% of those consumers have been eligible for tax credits. Some are only paying $20/month for policies that would otherwise cost approximately between $200-$600 month. One can quickly see how the current rulings negating the ability of the IRS to implement tax credits would result in having those lower income families once again unable to afford insurance.
Note: people may qualify for subsidies if they have incomes of up to $45,960 for individuals and up to $94,200 for a family of four. The Congressional Budget Office estimates that subsidies this year will average $4,400 for each person who receives a subsidy.
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