How will the Supreme Court rule on the Obamacare “Federal Tax Subsidies”?
As you may be aware, according to the strict language of the law pertaining to subsidies, only Health Insurance purchased through an “Exchange established by the State under section 1311” of the ACA, Section 36B IRC, are eligible for subsidies.
Currently there are 34 States that have declined to establish their own exchanges and, by default, the Federal government established a Federal Exchange, which according to the language in the law, is not eligible to provide Subsidies.
This IRS Rule, allowing for Federal expansion, triggers other ACA Mandates and Penalties.
➢ For individuals, eligibility for subsidies triggers the “Individual Mandate Tax Penalty”*-, for which they would have otherwise been exempt, thereby increasing the number of people in those states subject to the tax penalty, in addition to now paying for coverage they may not otherwise be able to afford, not withstanding the High Deductibles imposed in most plans, that are likewise unaffordable.
➢ For employers, subsidies trigger the “assessable payments” of the Employer Mandate, specifically against Large Employers (currently), i.e. 100+ employees. In this case, if even one (1) employee applies for and receives a subsidy by virtue of going to the Exchange for coverage, the employer penalty is assessed. Like the case for Individuals, lacking a subsidy, there would be no employer assessment.
What results might evolve from prohibiting the Federal Exchanges from providing subsidies?
Clearly, those of modest to low/no income would incur a significant financial hardship and, perhaps even a loss of coverage, resulting in a substantial reduction of plans/insured’s and revenue to the carriers, who would then need to re-evaluate the premiums charged to their respective “book of business”.
Given the already significant reduction in revenue to both the hospitals and private practitioner(s), who are seeking sanctuary at the hospital’s, could we expect even further reimbursement reductions by the carriers, resulting in even further cutbacks in our already overburdened and under served healthcare system?
Alternatively, being an entrepreneurial country, would that well known American spirit called “competition” force carriers to be more efficient by allowing for cross state purchasing of insurance, i.e. open borders for consumer/employer purchasing of coverage. We are acutely aware of the already excessive monies expended on building and, even more frightening, maintaining our insecure Exchange.
If we were able to provide for a more realistic reimbursement to our “entrepreneurial” physicians, ACO style, would we then be able to not only reduce the number of our physicians leaving private practice, but more importantly, significantly incentivize and encourage our new physicians to entire and expand their own private practice services and negate the immediate and prospective shortages we will continue to experience. After all, what is the saturation point of absorbing physicians into the hospital mode?