Nearly 10 Million Would Lose Health Insurance if ACA Subsidies Axed

Supreme Court to decide legality of offering subsidies to low- and moderate-income people who purchase coverage through federally run health insurance marketplaces.

The elimination of government subsidies for low- and moderate-income people purchasing health insurance through federally run marketplaces would cause a sharp cost increase while reducing enrollment by more than 9.6 million people, according to a study by the RAND Corporation.

The report finds that the anticipated effect of cutting the subsidies in 34 states where the federal government runs insurance marketplaces would lead to individual market enrollment declining by 70%, from 13.7 million people to 4.1 million people purchasing policies that comply with the Affordable Care Act (ACA). Furthermore, unsubsidized individual market premiums would jump by 47% in those 34 states, which would correspond to a $1610 yearly increase for a 40-year-old nonsmoker on a silver-level plan, jumping from $3450 per year to $5060 per year.

"The disruption would cause significant instability and threaten the viability of the individual health insurance market in the states involved," study senior author Christine Eibner said in a press release. "Our analysis confirms just how much the subsidies are an essential component to the functioning of the ACA-compliant individual market."

Later this year, the US Supreme Court will hear the court case of King v. Burwell that will challenge the use of government subsidies to aid low- and moderate-income people who purchase insurance through marketplaces run by the government. The ACA is intended to keep costs reasonable in order to make health insurance more appealing to young and healthy individuals.

The study estimates the effect from ending federal subsidies would be greater in states with federally run marketplaces than it would be in states running their own marketplaces. That difference is attributed to a number of factors, including the fact that states with federally run marketplaces typically have a higher proportion of low-income individuals, who are generally more sensitive to cost increases and are more likely to drop insurance without help from subsidies.

There were also higher rates of uninsured people in these states before the ACA was adopted.

The report notes that most of these states did not expand Medicaid to cover more people as allowed by the ACA, which indicates more low-income people purchasing policies in state-run insurance marketplaces.