Court Ruling on Health Care Subsidies Risks Loss of Coverage

ALEXANDRIA, Va. - Even with a federal subsidy to help cover the cost, Gloria Spottswood has had to squeeze her household budget to afford the health insurance she bought this year through the Affordable Care Act.

Ms. Spottswood, who is 56 and works in food service, signed up for a CareFirst Blue Cross Blue Shield plan to cover herself and her 17-year-old son. She gets a subsidy of $181 a month toward the $663 premium, and pays the remaining $482. She manages, she said, but just barely.

So when a federal appeals court panel found Tuesday that subsidies cannot be used in states like Virginia that rely on the federal insurance exchange - even as a different appeals court in Virginia found the opposite in a separate case - Ms. Spottswood flinched.

'I'm scared,' she said Wednesday, sitting in the lobby of her condominium building here because her air-conditioning had broken and she did not have the money to fix it. 'I don't see how, in all honesty, I would be able to afford to pay the whole thing.'

The conflicting court rulings left much unresolved - both cases will be appealed further, and additional cases challenging the subsidies in federal exchange states are still making their way through trial courts in Indiana and Oklahoma.

But the ruling in Halbig v. Burwell, in which a panel of the United States Court of Appeals for the District of Columbia found that subsidies could be awarded only in states that set up their own insurance exchanges, raised the possibility that many of the 4.5 million people who were found eligible for subsidized insurance through the federal exchange would drop their new coverage.

Mary Katzke is one. An independent filmmaker in Anchorage, Ms. Katzke, 60, said she was paying $267 toward her $1,167 monthly premium and relied on a $900 subsidy to cover the rest. Ms. Katzke, a single mother whose silver-level plan covers her and her teenage son, said there was 'no way' she could continue to pay for the policy without her subsidy.

Nor is she optimistic that the Alaska Legislature, which is led by Republicans who oppose the health care law, would establish a state exchange to allow residents to keep receiving health insurance subsidies if they could no longer get them through the federal marketplace. About 13,000 of a total 730,000 Alaskan resident signed up for coverage through the exchange, according to the Obama administration, but Ms. Katzke said she doubted they could persuade state lawmakers to keep the subsidies flowing. 'There will probably be some outcry,' she said, 'but I don't know how powerful we are.'

In the 36 states that used the federal insurance exchange this year, about 87 percent of people who signed up for private plans had incomes low enough to qualify for premium subsidies, according to the Department of Health and Human Services. The average monthly subsidy amount was $264, an analysis by the department found, and the average cost to consumers after the subsidy was $82.

To be sure, there are people who never wanted to buy insurance but did so only because the Affordable Care Act required it, under threat of fine. But the law exempts people from the mandate if the cost of coverage is greater than 8 percent of household income. So some of those opponents of the mandate may well celebrate losing their subsidies - if it exempted them from having to buy insurance.

The Virginia case was brought by four people who said either option - buying insurance or paying a fine - would hurt their 'financial strength and fiscal planning.'

Many businesses, too, may be hoping the plaintiffs prevail because they would no longer face penalties if they failed to offer health insurance to employees. Under the health care law, penalties are imposed on certain employers once any of their workers receive federal subsidies to buy insurance through an exchange.

But Robert Benson of Nashville, who said he paid only $100 of the $700 monthly premium for the plan he and his wife bought through the federal exchange, said that losing their $600 monthly subsidy would be devastating.

'The subsidy makes it possible for me to actually have insurance and health care,' Mr. Benson, 62, said, 'and I'm perfectly happy to pay my co-pays.'

Mr. Benson does not think the legislature in Tennessee, which is led by Republicans and was strongly opposed to establishing a state exchange, would change its mind if subsidies were no longer available through the federal marketplace.

'I have no faith in the Republican-led legislature in the state of Tennessee to be concerned about anyone's health care except their own,' he said. 'If the courts let this happen, Tennessee will not set up a state exchange, and I personally and most of my neighbors may have to stop going to the doctor.'

In Provo, Utah, Chris Bigelow said he would probably keep paying for his new insurance, for which his family of seven gets a $90 subsidy toward the $900 cost. The policy costs more than his mortgage and is far from perfect, he said; its $5,000 annual deductible 'will make us much less quick to just go to the doctor.'

Nonetheless, Mr. Bigelow, 47, said, 'I would have to be really desperate to give up insurance.'

Here in Virginia, Ms. Spottswood said she had already cut out or reduced certain expenses - by downgrading to more modest cellphone and cable plans, for example - to afford her portion of her premiums. She was uninsured for the past six years, she said, during which she suffered two strokes and went to the emergency room.

Lawmakers here opted against creating an exchange and have rebuffed efforts by Gov. Terry McAuliffe, a Democrat, to expand Medicaid. Ms. Spottswood said she would canvass or work phone banks to persuade lawmakers to create an exchange if necessary.

'I believe it's going to be difficult to have an exchange set up in Virginia,' she said. 'But people like me, who have health issues and have the opportunity now to actually have some health care, we will fight tooth and nail to make sure we can keep it.'