Thousands Of Kansans, Missourians Could Lose Health Coverage If Court Erases Subsidies

More than 300,000 consumers in Kansas and Missouri have a stake in the case argued Wednesday in the U.S. Supreme Court over a provision in the Affordable Care Act.

The vast majority of people who purchased Affordable Care Act coverage in both states qualified for federal tax credits. But they could lose those credits if the court rules that only consumers using state-based marketplaces are entitled to them.

Neither Kansas nor Missouri established its own online insurance marketplaces, forcing consumers in both states to use the healthcare.gov site created by the federal government.

The latest legal challenge to the ACA hinges on whether Congress intentionally limited subsidies to state-based marketplaces to encourage states to set them up. Defenders of the law insist that Congress intended no such restriction.

The court is expected to hand down its decision in late June.

That could make for an anxious three months for the hundreds of thousands of consumers in Kansas and Missouri whose health coverage could be at risk if the court invalidates the tax credits they used to purchase it.

In Kansas, 80 percent of the 96,226 people who purchased health insurance in the ACA’s federal marketplace received tax credits to offset a portion of their premiums, according to the U.S. Department of Health and Human Services. Those tax credits averaged $214 a month.

In Missouri, 88 percent of the 253,969 people who purchased ACA coverage qualified for tax credits, which averaged $284 a month, according to HHS.

If the court invalidates the credits, consumer advocates in both states say many of the people who purchased insurance on the exchanges no longer would be able to afford it.

“They would immediately lose that subsidy and would have to decide if they could come up with the money to pay the full price of their insurance policy,” says Sheldon Weisgrau, director of the Health Reform Resource Project in Kansas.

If that happens, Weisgrau says, older, sicker people would be the most likely to do whatever they can to hang onto their policies. Younger, healthier people would be more likely to risk going without coverage, he says.

Over time, those changes would drive up premiums for everyone.

“It will really create a lot of damage to the whole insurance market,” Weisgrau says.

An analysis by the Missouri Hospital Association indicates the loss of federal subsidies would trigger a 4.3 percent increase premiums across the state. Premiums in Kansas would increase by almost 3.3 percent, according to the analysis.

The Associated Press reported that Missouri Sen. Bob Onder, a Republican of Lake St. Louis, presented a bill to a committee Wednesday barring insurers in Missouri from accepting subsidies from the federal government. Onder said congressional action would be needed to fully dismantle the Affordable Care Act but the bill would be a first step.

Linda Sheppard, a senior analyst at the Kansas Health Institute and director of health care policy and analysis at the Kansas Insurance Department when Congress passed the ACA, helped direct early discussions about how to implement the law in Kansas and whether to create a state marketplace. At the time, Sheppard says, there was no discussion about the possibility that Kansas consumers wouldn’t be eligible for federal subsidies if the state failed to create its own marketplace.

“It never came up,” she says. “There was never a hint of that.”

Editor’s note: KHI News Service is affiliated with but editorially independent of the Kansas Health Institute. 

Jim McLean is executive editor of KHI News Service in Topeka, a partner in the Heartland Health Monitor team.