With Subsidies In Jeopardy, Supreme Court Case Looms Large For Newly Insured

June 14--With conditions like high blood pressure, Barry Cagan said the monthly cost of the health insurance he buys for himself climbed to nearly $900.

But beginning last year, the Affordable Care Act transformed how insurers charge individuals like Cagan for health plans. The federal law provides income-based tax credits that lowered monthly premiums by an average of 68 percent for about 190,000 Tennesseans who signed up this year.

"My health care today is under $200 a month," said Cagan, 64, who hosts a Saturday sports talk show on ESPN 790. "When you put it all together with my deductibles and co-pays and everything, I'm saving over $10,000 a year."

The U.S. Supreme Court is expected to decide within the next few weeks whether those subsidies should continue in 34 states including Tennessee, Mississippi and Arkansas. An end to the credits could make health insurance unaffordable once again for thousands of Shelby County residents, and trigger insurance market and political tidal waves.

In Tennessee, several insurance carriers "have suggested the need for massive rate increases for 2016, if the Supreme Court rules against the administration and Congress does not take action," Kevin Walters, communications director for the state Department of Commerce and Insurance, said by email.

The loss of young and healthier people now attracted by subsidies would help drive price hikes, analysts say.

Even Mississippi, a state where Republicans routinely bash so-called "Obamacare, is urging the Supreme Court not to rule against the subsidies. For more than 97,000 people who signed up for health plans with tax credits in Mississippi this year, an average monthly subsidy of $353 dropped the average monthly premium to $52, according to federal data.

And yet, for the health care systems and physicians providing care in Memphis, the trickle of insured patients provided by the Affordable Care Act hasn't been large enough to rock the boat.

Methodist Le Bonheur Healthcare, for example, has seen its volume of uninsured patients dip to 8 percent from 10 percent of its total patients. That has helped to the tune of about $2 million, said Chris McLean, chief financial officer for Methodist.

"But it wouldn't be a crisis-type scenario for us at the health system" if the court strikes down the subsidies, he said. "Obviously, it's a crisis for those individual families who for the first time probably have coverage and now go back to not having no coverage."

At Regional One Health, which operates the Regional Medical Center, the number of new, subsidized health plan patients has been much lower than anticipated and the number of uninsured patients hasn't declined, said Regional One spokeswoman Angie Golding.

"The additional revenue that we would have seen under traditional insurance plans is not materializing as Affordable Care Act members are having to accept extraordinarily high deductibles that they are unable to pay," Golding said by email.

The Supreme Court lawsuit -- brought by David King and others who joined the Virginia limo driver in suing U.S. Health and Human Services Secretary Sylvia Burwell -- hinges on whether Congress meant for the subsidies to go only to states running their own state health insurance exchanges, rather than relying on the federally run marketplace.

Mississippi joined Virginia, 21 other states and the nation's capital in a friend-of-the-court brief for the Supreme Court case "because we do not want the rug jerked from beneath our working citizens who have already found critical financial assistance through federally facilitated insurance exchanges," Mississippi Attorney General Jim Hood said in a statement.

"States such as Mississippi that elected to forgo building their own state insurance exchanges had no notice that low- and moderate-income residents would be deprived of needed assistance and would be financially impacted in ways they can least afford," Hood said.

In Tennessee, BlueCross BlueShield of Tennessee captured about two-thirds of the state's individual insurance market and 82 percent of their individual federal marketplace customers received subsides. More than 16,000 people in Memphis and Shelby County bought the BlueCross plans on the federal marketplace this year, according to the Chattanooga-based insurer.

At Methodist, the health system in Memphis providing the network for those BlueCross marketplace customers, some have shown up in emergency rooms, although it's still too early to draw conclusions, McLean said.

"But many of them showed up in our physician practices and were doing what you hoped would be occurring and actually getting basic primary care and not waiting until they were in a crisis-type situation," he said.

Baptist Memorial Health Care Corp.'s 14 hospitals, which stretch from Memphis to North Mississippi and Jonesboro, Arkansas, won't see a significant impact from the court decision, said Don Pounds, Baptist's chief financial officer.

However, Baptist's vice president of government affairs, Rev. Keith Norman, said losing subsidies that make insurance more affordable, particularly for young people that Memphis and the Mid-South are trying to attract as residents, could have a major impact.

"It could have a devastating impact, I think," Norman said.

Meanwhile, Mississippi Insurance Commissioner Mike Chaney reports that the state has a contingency plan if the court strikes down tax credits, although it would require approval of the governor, lieutenant governor, House speaker and a funding source other than the state.

Cato Johnson, senior vice president of public policy and regulatory affairs for Methodist, said he thinks many states would look to Congress to extend the subsidies. Sen. Ron Johnson (R-Wisc.) had introduced legislation to extend the credits to September 2017, beyond the 2016 presidential election. But the bill also would repeal the act's insurance mandates for individuals and employers, a key component of the Affordable Care Act that has been targeted by Republicans.

"So this makes this a tremendous political issue as well as a public policy issue," Johnson said.

As a consumer, Cagan is solidly behind the Affordable Care Act's subsidies as well as its offer of Medicaid expansion that Tennessee and Mississippi haven't accepted to cover more people with incomes near or below the poverty level.

"I don't get it at all -- the last thing we want to do is help our neighbors who desperately need to go to a doctor, right? Unbelievable," he said.

An upcoming U.S. Supreme Court will decide whether thousands of Memphis and Shelby County residents continue to receive federal tax subsidies to buy health insurance. Here are the 15 ZIP codes where 1,000 or more residents signed up for health plans on the federal Healthcare.gov marketplace during the open enrollment period that ended in February.

ZIP code Number of individuals who enrolled

38109 1,862

38016 1,583

38115 1,579

38111 1,537

38125 1,534

38116 1,521

38128 1,507

38118 1,497

38017 1,441

38127 1,415

38018 1,382

38134 1,298

38104 1,089

38114 1,052

38106 1,000

Source: U.S. Dept. of Health & Human Services

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