Obamacare Scare: Court's Rule May Lead to Higher Price in States with Federal Insurance Exchange

NEW YORK (MainStreet) — The conflicting rulings from the two federal appeals courts yesterday left open the question of whether health insurance premiums will continue to be subsidized and if consumers will face higher prices.

While the Fourth Circuit Court bolstered the White House's position that subsidies may be offered in states that have federal exchanges, the D.C. court took an opposing position, stating that subsidies may not be offered to individuals in states with federal exchanges, said Shawn Pynes, principal and head of the employee benefits division of Barney & Barney, a San Diego-based business insurance and employee benefits program which works primarily with small to mid-tier companies.

"With 36 states that have federally-run exchanges, these different and opposing decisions will surely create more conflict and confusion over subsidies, in turn affecting the future of the Affordable Care Act," he said.

The final decision on subsidies in the federal exchange will impact employers in those states because penalties are assessed to an employer based upon whether an employee receives a subsidy in an exchange, Pynes said.

The D.C. decision may still be reviewed by the full D.C. Circuit Appellate Court of seven judges, but the Supreme Court will most likely decide whether subsidies may be offered in federally-run exchanges, he said.

The two rulings will not have an immediate impact on the 4.5 million people receiving subsidies and will continue to receive them through the first half of 2015 until the rulings are appealed, said Dean Rosen, CEO of Breakaway Policy Strategies, a D.C. health consulting firm and a WebMD healthcare reform analyst.

Consumers should still plan on signing up for health insurance in November even if they need a subsidy, he said.

"In the median term, there will be enormous uncertainty," Rosen said. "Nine out of 10 people who live in the states where the federal government is operating the subsidies will have a difficult time buying health insurance without the tax subsidy. If the subsidies go away, the people who rely on them will have a hard time affording the insurance."