King v. Burwell: Where Consumers Losing Tax Credits Could See the Biggest Increases in Premium Payments
The Supreme Court will rule any day now on King v. Burwell, the case that will determine whether premium tax credits remain available in the 34 states in which the federal government runs the health insurance marketplace.
If the Supreme Court rules against the government in King v. Burwell, more than 6 million people in 34 states would lose access to the premium tax credits they rely on to afford their health insurance. All consumers who rely on tax credits in these states would pay substantially more out of pocket on their monthly premium payments. However, residents of some states and congressional districts would experience much higher spikes in their premium payments if they lose their tax credits.
How the tax credits reduce the cost of health insurance
The premium tax credits made available under the Affordable Care Act help consumers afford health insurance. Their monthly premiums are offset by these tax credits, the size of which vary by income and the cost of insurance (a low-cost benchmark plan) in their state.
If the court ruling eliminates this assistance, consumers would suddenly have to pay the full amount of their premiums. Because these tax credits primarily help middle- and lower-income households, many consumers would find it difficult to afford health insurance and would be forced to drop their coverage.
An eight-fold increase for Mississippi residents who currently receive tax credits
While consumers losing tax credits in all 34 states would see large increases in their premium payments, some increases would be bigger than others. According to U.S. Department of Health and Human Services data, the increase would be most significant in Mississippi. There, consumers who receive tax credits now pay an average of $52 a month. But if the Supreme Court rules against the government, they would pay $405 a month.
The top five states where residents will see the biggest increases if their tax credits are eliminated and they have to pay the full premium amount:
- Mississippi: The full cost of premiums would be 8 times what residents with tax credits currently pay.
- Alaska: The full cost of premiums would be 6 times what residents with tax credits currently pay.
- Georgia: The full cost of premiums would be 4.7 times what residents with tax credits currently pay.
- Florida: The full cost of premiums would be 4.6 times what residents with tax credits currently pay.
- Maine: The full cost of premiums would be 4.6 times what residents with tax credits currently pay.
Congressional districts hit hardest in the country
The following are the districts in each of the five states with the highest number of residents who are at risk of losing their tax credits, based on our analysis. These congressional districts would suffer the most because they have the biggest population in the state that is currently receiving tax credits and the highest increase in premium payments if tax credits are eliminated.
- Mississippi’s 8th District: Represented by Bennie Thompson (D), it contains 25,000 people who are at risk of their premium payments increasing by nearly 8 times.
- Alaska: With just one congressional district, represented by Don Young (R), 15,000 people are at risk of their premium payments increasing by 6 times.
- Georgia’s 13th District: Represented by Rob Woodall (R), it contains 37,000 people at risk of their premium payments increasing by 4.7 times.
- Florida’s 25th District: Represented by Maria Diaz-Balart (R), with 91,000 people at risk of their premium payments increasing by 4.6 times.
- Maine’s 1st District: Represented by Chellie Pingree (D), 31,000 people are at risk of their premium payments increasing by 4.6 times.
Ruling in King v. Burwell would increase health insurance costs for all–not just consumers who lose tax credits
These numbers show the devastating impact a decision against the government could have on people who currently receive premium tax credits. As these consumers drop unaffordable coverage, only the oldest and sickest people would be left in the market clinging to their coverage, and premiums for everyone in the individual market—subsidized or not—are expected to shoot up. This is what is known as a health insurance “death spiral.” One estimate pegs the premium increase in the individual market at 35 percent nationwide, even for people who do not receive tax credits.
We remain confident that the court will uphold the law. These numbers frame just why it’s so important they do.
Learn more about what’s at stake in King v. Burwell and find resources for publicizing the potential damage.