A panel of the D.C. federal appellate court ruled today that the federal government does not have the authority to administer insurance subsidies in states that refused to set up their own exchanges. If the ruling stands—a big if—it could deprive millions of enrollees of the support they need to purchase health insurance.
How much will this decision cost the working poor? The amount varies with income and other variables, but for a 40 year old individual making $30,000 a year, the tax credit was estimated at $1345 (KFF estimate here). Retroactive tax bills under Halbig will be significant and everyone impacted will have trouble paying for health insurance going forward (about 57% of exchange participants were previously uninsured, according to a KFF survey).
How many people will be hurt?At first glance: anyone receiving tax credits in the 27 states with federally facilitated exchanges (FFEs): (AL, AK, AZ, FL, GA, IN, KS, LA, ME, MS, MO, MT, NE, NJ, NC, ND, OH, OK, PN, SC, SD, TN, TX, UT, VA, WI and WY; KFF list here). But the government reports 36 states as having FFEs, including 9 additional states not included on the list above (ID, NM, AR, DE, IL, IA, MI, NH, and WV; more on this below). Using this broader definition, 4.683 million Americans may now have a surprising tax bill and be at risk of losing health insurance, being told retroactively that they didn’t qualify for tax credits after all.