King v. Burwell: What it Means for South Carolina

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In the coming weeks, the United States Supreme Court  will rule in the case of King v. Burwell, having far-reaching effects on health care in America. The issue to be decided is whether the Affordable Care Act (ACA) allows consumers to receive tax credits to help pay for insurance in the 34 states (including South Carolina) that use Healthcare.gov, the federally facilitated marketplace, rather than one set up by the state. When Congress enacted the ACA, everybody – Republicans, Democrats, and the Congressional Budget Office alike – agreed that the tax credits would be available in all states, regardless of whether coverage was provided by a state or the federal exchange.  In yet another effort to derail the ACA detractors are now challenging the notion that tax credits can be provided to those receiving insurance through the federal Marketplace.

SouthCarolinaSnapshot_v2More than nine million Americans will lose tax credits on their health insurance if the Supreme Court accepts the Plaintiff’s argument that they are not eligible and of those nine million, two-thirds will become uninsured. That includes nearly 150,000 people in South Carolina who stand to lose close to $3,180 in tax credits and cost-sharing reductions each year.

A ruling against the government will cause health insurance premiums to spike for the millions of people who have health insurance through other sources, like their employer. If the subsidies are taken away, many who are healthy, and don’t necessarily need to be in the insurance pool, will be forced to drop coverage as their premiums drastically increase. This will  leave only those that have serious health conditions remaining, which will cause additional price hikes for those who remain in the marketplace.  With health insurance made less affordable due to the loss of tax credits  it will be unlikely many will apply for insurance.

The resulting chaos would create a “death spiral” through the health care system, affecting consumers and health care providers across the country – not just people who currently receive these tax credits. Costs for health care will rise dramatically for all consumers, regardless of whether or not they are insured or how they get their insurance. It is clear to see that this ruling should matter to everyone.

Everyone involved in the health care system, including hospitals, providers, and insurance companies strongly disagree with the challengers’ position. This is just a political tactic from opponents of the ACA to dismantle the law. In fact, Congressional Leadership has openly admitted to counting on the Supreme Court to “take down” the ACA by dealing it a “body blow” that will cause it to “unravel” “pretty darn quickly.”

With so much at stake, we’ll be following the case closely and provide updates on the decision  and its implications for South Carolina as soon as the Court issues its opinion.

Data *Robert Wood Johnson Foundation Urban Institute