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Billions in health care subsidies hang on Supreme Court decision

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A new Kaiser Family Foundation analysis reveals how much is at stake in a health insurance law premium subsidy case now awaiting a U.S. Supreme Court decision.

In King v. Burwell, the high court is expected to rule by the end of this month on the legality of a 2012 IRS rule that said eligible uninsured individuals could get premium subsidies authorized by the Patient Protection and Affordable Care Act for coverage in state exchanges, as well as exchanges set up by the U.S. Department of Health and Human Services for those in states that declined to do so.

Plaintiffs challenging the IRS rule say the health care law makes clear that the subsidies are limited to those living in states that set up their own exchanges.

The Kaiser analysis released Tuesday says 6.4 million people nationally would lose federal subsidies collectively worth $1.7 billion per month if the Supreme Court strikes down the IRS rules and limits the subsidies for coverage in the state exchanges.

Without those subsidies, enrollees in the roughly three dozen states where coverage is available through the federal exchange would be hit with premium increases averaging 287% if they had to pay the full cost of coverage, the foundation said.

The biggest losers would be individuals in Mississippi, where the average enrollee would see an average premium increase of 650%, according to the Kaiser analysis.

By state, Florida would have the most enrollees — 1.3 million — who would lose $389 million of monthly health insurance premium subsidies if the Supreme Court overturns the IRS rules, followed by Texas where 832,000 residents would lose $206 million in monthly federal premium subsidies.

If the high court strikes down the subsidies, lawmakers could act to restore them, at least on a temporary basis.

For example, legislation introduced in April by Sen. Ron Johnson, R-Wis., and backed by 30 Senate Republicans, would continue until August 2017 the subsidies for those now receiving coverage in the federal exchange.

In exchange for a temporary continuation of those subsidies, the legislation would end both the law's individual and employer mandates, in which individuals who do not enroll in a plan and employers — except smaller firms — that do not offer coverage are hit with financial penalties.