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Upcoming Federal Court Decision Could Mean Premium Increases for Nearly 5 Million Americans

by Avalere Health
The Lund Report, July 17, 2014

The Halbig v. Burwell case before the U.S. District Court of Appeals could negatively impact millions of Americans who are benefiting from the Affordable Care Act (ACA).  A new analysis from Avalere Health finds that without action from the federal government nearly 5 million Americans would receive an average premium increase of 76 percent if the courts ultimately rule that consumers in the federal exchange cannot receive premium subsidies.

Halbig v. Burwell asserts that the Internal Revenue Service exceeded its authority in issuing a May 2012 rule that provides premium subsidies to individuals purchasing coverage through the federally facilitated exchange. While the ACA specifies that subsidies should be administered “through an exchange established by the state,” the law also gives the federal government the authority to establish an exchange on the state’s behalf. Only 14 states and the District of Columbia opted to create their own exchanges in time for the 2014 plan year.

“The court case has major implications for future insurance coverage and access to care for millions of Americans,” said Caroline Pearson, vice president at Avalere Health. “Depending on the ultimate decision by the courts and absent some other remedy, individuals in at least 25 states who remain in their current plans could see an average premium increase of over 70 percent.”

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