What the SCOTUS battle over Obamacare subsidies means for producers

If the Supreme Court decides against the legality of federal subsidies, there could be big consequences for the future of the law.

Insurance News

By

Agents and brokers working in the health insurance space will be well-situated regardless of the Supreme Court's decision on the legality of consumer tax credits offered through the federal health insurance exchage. It is more a question of the environment in which they will sell personal and group health plans, says Scott Sinder, partner at Steptoe & Johnson and general counsel for the Council of Insurance Agents and Brokers.

“At some level, brokers will always win because they’re advisors,” Sinder told Insurance Business America. “The [Supreme Court case] will cause confusion, and employers and individuals will need guidance through the confusion.

“From my vantage point, that makes the broker a key player in all these discussions regardless of the case’s outcome.”

The Supreme Court announced Friday it would hear King v. Burwell, which considers whether language in the Affordable Care Act allows for the extension of health insurance subsidies to consumers on HealthCare.gov, as well as those shopping on state-run exchanges.

In the event subsidies are axed, health insurance could become unaffordable for the millions of Americans that rely on HealthCare.gov. The employer mandate could also be made void, as provisions in the law require employers to pay mandate-related penalties if, first, the employer fails to provide health benefits above a “minimum threshold,” and second, the employer has workers who receive a subsidy through the individual exchange.

Without subsidies available through HealthCare.gov, companies in the 36 states that use the federal exchange would effectively be exempt from the employer mandate. This would be true even if a company offered no plan at all to its workers.

And thanks to widespread Republican control of legislatures and governorships in affected states, many political pundits consider it unlikely new state exchanges will open to pick up the slack.

That could mean a return to the traditional, pre-ACA group benefits market.

“There was a pretty robust market for group benefits before the law,” Sinder observed. “I would imagine it would return to a similar state of employers looking at health insurance as kind of an adjunct benefit to the others they provide workers.”

A negative Supreme Court ruling on subsidies could also open the door to a greater reworking of the Affordable Care Act, Sinder said, particularly with regard to provisions on the individual mandate and the 30-hour work week.

He does not expect the Court case to influence this year’s open enrollment period, beginning Nov. 15, in any material way.

You may also be interested in: "Supreme Court to decide on legality of Obamacare subsidies"
"Obamacare subsidies in peril as court rulings differ"
"The bright side of a Republican Congress for the insurance industry"

Keep up with the latest news and events

Join our mailing list, it’s free!