Milwaukee-based law firm Quarles & Brady LLP on Tuesday hosted a webinar to provide an update to employers and health care providers on the impending U.S. Supreme Court decision that may ultimately decide the fate of the Affordable Care Act.
A decision is expected in late June on the King v. Burwell case that challenges the ability of federally-run exchanges to provide subsidies that help people purchase insurance coverage. If the court rules against President Barack Obama’s administration, 7.5 million Americans could lose their health insurance subsidies, including186,614 in Wisconsin.
Wisconsin is one of 27 states that have adopted a federally-run exchange as opposed to a state-run exchange and, thereby, would be affected if the Supreme Court rules against the administration. Another 10 states, including Illinois and Iowa, could be affected as their exchanges are part of a federal partnership or are federally supported. Only the 14 states that adopted a state-run exchange would not be affected.
From an employer perspective, the biggest impact would be on employer shared responsibility rules, which generally require employers with more than 50 full-time or full-time equivalent employees to offer “good enough” health plan coverage or risk a penalty.
The penalty, however, is driven by whether the exchange subsidy is provided, and generally no subsidies means no risk, the attorneys said.
Employers could also be negatively affected as it pertains to wellness discounts. For instance, the ACA allowed the Internal Revenue Service, the U.S. Department of Labor and the U.S. Department of Health and Human Services to increase wellness discounts to 50 percent of family coverage, but a repeal of the ACA could lead agencies to lower it back to 20 percent.
A “collapse” of the exchange in a federally-run exchange state like Wisconsin could also cause problems with the Small Business Health Options Program (SHOP) Marketplace, the attorneys said.
Finally, if the Supreme Court rules against the administration, the attorneys said it raises the question of whether or not the subsidies some small employers receive to provide employee health plan coverages would go away.
From the health care provider perspective, they should be ready to expect confusion among patients, “slightly more intelligent confusion” in their business offices and patient assistance functions, and confusion among employed and independent medical staff.
Things for providers to consider, according to the attorneys, are grace periods, premium assistances, and proactive cost reduction strategies.
As for health plan consequences, up to 7.5 million American enrollees could see mass policy terminations if they are unable to pay the full premium. The attorneys predict widespread consumer confusion, with millions of enrollees calling to ask, “Will my subsidies really end and when? What happens to my insurance if I can’t pay the full premium? Am I still subject to the individual coverage mandate? Will I have to repay subsidies I already received?”