More than 430,000 Georgians who bought Obamacare plans on the federal health insurance marketplace could soon lose their new coverage and the billions of dollars in tax credits they received to make it affordable.
The U.S. Supreme Court is set to rule in June on a case, King v. Burwell, that argues tax credits shouldn’t be given to people in states where the federal government — not the state — runs the online marketplaces established by the Affordable Care Act.
Experts say if the court rules against the government, some states may avert the disastrous scenario of millions of people losing their health insurance by creating their own state-run marketplaces, also called exchanges. In Georgia, however, a law passed last year bars the state from setting up its own marketplace.
“We can’t just close the door on hundreds of thousands of Georgians who finally had it opened for them,” said Cindy Zeldin, executive director of Georgians for a Healthy Future, nonprofit consumer advocacy group.
The Affordable Care Act enabled people who don’t have insurance through their jobs to buy individual policies on the special online marketplaces. The tax credits, which are based on income, were central to most people’s ability to buy their policies. In Georgia, 90 percent of people who bought policies on the marketplace last year received tax credits. Without the credits, hundreds of thousands of people probably will be priced out of the individual market.
A ruling against the feds would strip Georgians of $1.5 billion in tax credits next year alone, and more than $17 billion over a decade, a recent analysis by the Robert Wood Johnson Foundation and the Urban Institute found.
Georgia is one of 20 states that refused both to create state-run marketplaces or to expand Medicaid under the health care law. Combined, those states stand to lose $238 billion in federal funding over 10 years without the tax credits, according to the study.
‘Would cause massive damage’
The King v. Burwell case is the largest challenge to the Affordable Care Act since the Supreme Court ruled to uphold the law in 2012.
At the heart of the case are four words: “established by the states.” The plaintiffs’ argue that tax credits awarded to Americans who bought through the federal marketplaces are illegal.
Health and Human Services Secretary Sylvia Burwell warned in a letter to Congress earlier this year that a ruling in favor of the plaintiff “would cause massive damage.”
Overall, more than 8 in 10 of Americans who bought plans through the federal marketplaces, about 8 million people, could lose access to the credits. Most would likely drop their insurance as a result, essentially gutting the marketplaces that are critical to the Affordable Care Act’s goal of extending health coverage to millions of uninsured individuals and families.
Without financial help, healthy people would be far less likely to buy insurance — leaving a disproportionate share of sick individuals in the marketplace and raising the cost of coverage for everyone else, Burwell said in a letter to Congress earlier this year.
The Obama administration has said there is no backup plan if the court strikes down the tax credits.
‘A practical solution’
The loss of tax credits would hit Southern states particularly hard.
Georgia has long been home to one of the largest populations of uninsured in the country — a problem that taking away people’s tax credits would only exacerbate, said Tim Sweeney, a health policy analyst with the nonprofit Georgia Budget and Policy Institute.
Georgia has the second highest uninsured rate in the country, behind only Texas, according to a recent Gallup survey.
Both Sweeney and Zeldin say they believe the state should step in and create its own exchange if the court rules against the government to prevent hundreds of thousands of Georgians from losing the access to health care they so desperately need.
But such a move would likely be an uphill political battle.
At least one Georgia lawmaker has already promised to fight a state-based marketplace.
“We can’t afford it,” said state Rep. Jason Spencer, R-Woodbine. “If those subsidies are gutted, then we’ll have an opportunity to try free-market solutions.”
Spencer sponsored the bill that bars the state from creating its own exchange, which Gov. Nathan Deal signed into law last year.
The governor won’t comment on hypotheticals, Deal spokesman Brian Robinson said in an email to The Atlanta Journal-Constitution this week.
“The court has proven its ability to surprise with an outcome no one could predict,” Robinson said. “In Georgia, any change in state practice in regards to Obamacare requires approval by the General Assembly.”
Deal has said in recent weeks that if the court strikes down the tax credits, he hopes Congress will revisit the entire Affordable Care Act structure rather than telling states they’re the only one that can solve the problem.
“Far be it from me to think that anyone in Washington would listen to what I think is a practical solution,” he said.
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