Thirty-four states did not set up their own exchanges and rely instead on healthcare.gov, run by the federal government. Lawyers for the plaintiffs argued that, as a result, millions of consumers in those states should not receive tax credits to pay premiums.
Pulling the subsidies would have undermined the insurance market in those states to the point of likely failure, experts said. Unable to afford the coverage, many consumers would have dropped out. Those remaining would probably have been older and sicker, driving up premiums to unsustainable levels.
Eighty-five percent of those who bought insurance through healthcare.gov qualified for subsidies averaging $272 per month. The Department of Health and Human Services predicted 6.4 million people would have lost subsidies if the court ruled for the plaintiffs.
Those subsidies are effectively revenue for hospitals and health insurers, financing premiums and the cost of care. Both industries are relieved they were upheld.
"Providers will feel better," said Peter Strack, a consultant with the Altarum Institute, which works closely with hospitals. "They don't have to worry about this back and forth of, 'Will I have the appropriate population covered?'"
A loss for the administration would have affected employer-based coverage as well, although not nearly as much, benefits lawyers said.
For large employers not offering health insurance, penalties are triggered when workers obtain subsidies in the marketplaces. No subsidies, no penalties, so employers could have dropped coverage without fearing fines.
Although employers are focused on complicated, health-law reporting requirements that take effect this year, their situation changes little in the wake of the decision, said Edward Fensholt, a benefits lawyer with brokers Lockton Companies.
"The working assumption has been, 'We need to offer this coverage to our full-time employees or we’re going to risk these penalties,'" he said. "And that's not going to change."
ACA supporters said the lack of a reference to tax credits for the federal exchange was a drafting error and that Congress intended for subsidies to be available regardless of the platform. Lawyers for the plaintiffs said the government must follow the letter of the law.
The health law faces other legal cases, including objections from religious institutions to their role in providing birth control coverage and a suit by the House of Representatives contending that Obama's delay in requiring employers to offer coverage was illegal.
But even if legal challenges to the law disappear, health insurers, doctors and hospitals face broad uncertainty.
Signups for 2015 exchange coverage were lackluster. At the end of March, a little more than 10 million people had enrolled and paid for insurance, less than the 13 million the nonpartisan Congressional Budget Office was projecting last year.
Health costs seem to be creeping up again in a system that is already the most expensive in the world.
In recent years large, self-insured employers have seen health-spending increases of 4 or 5 percent a year, said Dale Yamamoto, an independent actuary who works closely with such companies. So far this year those companies are seeing 6 or 8 percent, he said.
"Everyone I’m talking to — it sounds like they've started to go up this year," he said. "If it's going up for them, it's probably going up on the individual side as well."
jhancock@kff.org | @JayHancock1
Kaiser Health News (KHN) is a nonprofit national health policy news service.
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