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Individual plaintiffs in Jacqueline Halbig et al. v. Sylvia Mathews Burwell et al. and David King et al. v. Sylvia Mathews Burwell et al. — all of whom live in states that do not run their own public health insurance exchanges — allege that the IRS unfairly subjected them to the reform law's minimum essential coverage requirement by making the premium subsidies available through the federal exchange.
Absent those subsidies being available, the U.S. Court of Appeals for the District of Columbia concluded that Halbig plaintiffs likely would be exempt from having to buy coverage of any kind.
“It's a big if, but if the Halbig ruling does stand, it doesn't bode well for the exchanges,” said Steve Wojcik, vice president of public policy at the National Business Group on Health in Washington.
To date, only 14 states, plus the District of Columbia, have established their own insurance exchanges. If the U.S. Court of Appeals for the District of Columbia's ruling in Halbig is upheld— or the 4th U.S. Circuit Court of Appeals' ruling in King is overturned — far fewer residents of the 36 remaining states that rely on the federal government's exchange would be required to maintain coverage under the reform law's individual mandate.
“If people have to pay more because the subsidized premiums are no longer available in a majority of the states, fewer people are going to be likely to sign up for coverage, especially those who are younger and healthier,” Mr. Wojcik said. “Eventually, that would lead to adverse risk pools in the federal exchanges, which would in turn drive premiums upward nationwide.”
Over time, experts say that would jeopardize the health care reform law's underlying goal of broadening access to affordable health insurance.
“If the Halbig ruling becomes the law of the land, then the Affordable Care Act itself would be in grave danger of unraveling,” said Steve Friedman, shareholder and co-chair of Littler Mendelson P.C.'s employee benefits practice group in New York. “The government subsidies are one of the centerpieces of the ACA; and without them, it's questionable whether the current structure of the public marketplaces would remain viable.”
The ultimate outcome of lawsuits seeking to limit the availability of federal premium subsidies under the health care reform law could substantially weaken its key provisions, including the employer and individual coverage mandates.