Potential Implications of the King v. Burwell Supreme Court Decisions in the Real World

This spring, the Supreme Court will hear the case, King vs. Burwell, which challenges the Internal Revenue Service regulation that allows federal tax credits for Americans purchasing health plans through both federal and state operated marketplaces. The consequences of a Court ruling that eliminated tax credits for plans sold through federally facilitated marketplaces (FFMs) would be widespread and deep, with long-lasting market disruptions. Stakeholder groups that would be most affected by such a decision include consumers, insurers, providers, and state governments and regulatory agencies. Millions of consumers currently receiving tax credits would no longer be able to afford their premiums, insurers would lose revenue causing some to exit markets and abandon recent investments made as a result of the marketplaces, providers would quickly lose large amounts of revenue and face agonizing decisions concerning their patients’ care, and state regulators would have to manage a deteriorating insurance market and the disputes that might arise among affected stakeholders over revenue losses. Drawing on federal and state law, prior experience, and interviews with relevant stakeholders, the project team proposes to analyze the key implications for each of these four groups. The goal of the project is to inform federal and state policy makers and industry stakeholders about the consequences on the ground in the 34 states with federally operated marketplaces if tax credits were eliminated and the affected parties were left to pick up the pieces.