Any day now, the Supreme Court will make a decision that could change how much you pay for healthcare—and how much you pay in taxes.
Under the Affordable Care Act, aka Obamacare, Americans without health insurance can buy coverage from government-run marketplaces, or “exchanges.” The ACA also offers subsidies to help middle-class and low-income Americans afford their monthly health care premiums. Some states set up their own health insurance marketplaces, and some piggybacked off the federal government’s exchange.
The case before the Supreme Court hinges on a part of the law that says the subsidies are only available to Americans who buy health insurance “through an Exchange established by the State.” But what about Americans who bought health insurance through the exchange established by the federal government, Healthcare.gov? That’s up to the Supreme Court to decide. Legislators say this clause was just a “drafting error”, and Americans who bought insurance on the federal exchange are eligible for subsidies, too. But the plaintiffs say the law clearly states that only state exchanges can offer subsidies.
If the high court sides with the plaintiffs, millions of Americans who bought health insurance on the federal exchange will need to pay more for health insurance every month. Here are the key stats to know:
The number of states that could be directly affected. Only 13 states (and D.C.) are running their own exchanges. (Click here to see if your state could be affected.) That means that citizens in more than half of all states could lose access to Obamacare subsidies if the Supreme Court decides that subsidies are only available to Americans who buy insurance “through an Exchange operated by the State.”
The 34 states with “federally-facilitated marketplaces” are at the most risk, according to the Kaiser Family Foundation. But another three states — Nevada, New Mexico and Oregon — have “supported state-based marketplaces,” meaning they tried to set up their own exchanges but now use Healthcare.gov because of technical problems with their own systems. It’s unclear whether the Supreme Court decision will affect those states, according to the Rio Grande Foundation. Also, while another three states with federally-facilitated marketplaces plan to set up their own state exchanges in 2016 —Arkansas, Pennsylvania and Delaware — the marketplaces will not be operational by the time the Supreme Court decides.
The number of Americans who could lose their Obamacare subsidies. As of March 2015, that’s how many Americans bought subsidized Obamacare plans in states with federally-facilitated marketplaces, according to the Center for Medicare and Medicaid services. Altogether, 7.3 million Americans bought insurance from federal exchanges, but not all qualified for subsidies.
The average amount of the subsidy. Here’s how Obamacare subsidies work: If you make between 100% and 400% of the federal poverty line, you pay between 2.01% to 9.56% of your income for premiums. The government makes up the difference between what you contribute and the market price of the second lowest cost silver plan in your area. In 2015, the average subsidy nationwide was $263 per person per month, according to the Department of Health and Human Services, or $3,156 a year.
Technically, the subsidy is a tax credit. You can choose either to pay less for your premiums every month or to receive a lump sum refund at the end of the year. But if you overestimate your income when you sign up for Obamacare and you opt to receive a discount on your premiums every month, you may have to pay back part of your subsidy at tax time. If you underestimate, you can get a bigger tax refund.
Average amount that people who receive subsidies pay for health insurance every month. With a $263 subsidy, the average American pays just $101 for premiums every month, according to the Department of Health and Human Services. The subsidy keeps Obamacare premiums roughly in line with employer-provided health insurance: Employees pay $90 a month on average for single coverage, according to the Kaiser Family Foundation.
But Obamacare costs vary significantly by state. Subsidy recipients in Alabama pay just $52 a month for their premiums, while those in Ohio pay $145 a month.
The most a family of four can make and still be eligible for an Obamacare subsidy. Subsidies aren’t just for the poorest of the poor. Americans with incomes up to four times the poverty line can qualify for an Obamacare subsidy to help them pay for premiums. This year, 400% of the poverty line for a family of four was $95,400, according to Healthcare.gov. Individuals making up to $46,680 a year also qualify.
The percent of people who shopped on the federal marketplace who qualified for a subsidy. The vast majority of Americans who bought Obamacare plans qualified for financial assistance, according to the Department of Health and Human Services. Again, some states are getting more help than others. Some 93% of Floridians with Obamacare plans got a subsidy.
How much Obamacare premiums are projected to rise in the effected states if the Supreme Court rules for the plaintiffs. Even if you bought a plan under Obamacare but don’t receive a subsidy, you could end up paying more for health insurance. The Urban Institute says that if the Supreme Court dismantles the financial assistance available for Americans who enroll through the federal marketplace, many people will be forced to give up their insurance. And a disproportionate number of those who remain, the Urban Institute predicts, will be those who most desperately need health insurance—in other words, the very sick. As a result, insurers will need to raise all premiums in order to pay the medical bills of the sick people who remain in the insurance pool. Ultimately, the Urban Institute estimates, 70% of enrollees will leave the pool. (Remember that 87% of enrollees receive subsidies.) In an earlier analysis, the Rand Corporation predicted that premiums could rise 47%.
The number of employees projected to lose their employer-subsidized health insurance if the Supreme Court rules for the plaintiffs. Another section of the Affordable Care Act is built on the tax credit: The employer mandate. As of this year, large employers have to provide health insurance benefits or pay a fine. The thing is, large employers owe the penalty only if a) they do not provide quality health insurance to 95% of their full-time employees, and b) at least one of their full-time employees buys a plan on the marketplace and receives a subsidy. Which means that if a state has no subsidies, it has no employer mandate.
As a result, a Urban Institute and Robert Wood Johnson Foundation report predicted that if there were no employer mandate, some employers would stop offering health insurance. As of June 2015, the Urban Institute projects that 300,000 employees will lose their health coverage if the Supreme Court strikes down subsidies in 34 states. (In a separate analysis, the Rand Corporation expects that 300,000 people would lose their employer-subsidized insurance without an employer mandate, but predicts that nearly all of those people would find coverage elsewhere.)
The number of Americans projected to become uninsured if the Supreme Court rules for the plaintiffs. While only 6.4 million Americans are projected to lose their subsidies, the Urban Institute projects that 8.2 million will become uninsured. Here’s why: More people will drop their insurance if premiums spike, others will lose their employer-provided insurance, and some will lose their Medicaid coverage as states give up more federal funding. (In an older report, the Rand Corporation predicted that 8 million would become uninsured.) So the Supreme Court’s decision could have a big impact on a lot of people, not just the 6.4 million who receive the subsidies in question.