Ruling could raise insurance costs for 57,000 Nebraskans

By GRANT SCHULTE

Associated Press

LINCOLN, Neb. (AP) - Nearly 57,000 Nebraskans who bought subsidized health insurance could see their premiums soar and many would likely have to drop their coverage if the newest legal challenge to the federal health care law succeeds.

The U.S. Supreme Court is expected to rule this month on a lawsuit that could wipe out federal tax credits in 34 states, including Nebraska, which chose not to create their own health insurance markets.

Nebraskans who lose the credits would see an average premium increase of 265 percent, according to a report from the nonpartisan Kaiser Family Foundation. The credits are intended to reduce the cost of insurance for low- and middle-income people.

The state receives a combined $14.6 million in tax credits each month, for an average of $257 per enrollee, the group said.

“If the Supreme Court does strike the insurance subsidies, it’s a significant loss for Nebraska families,’’ said state Sen. Jeremy Nordquist of Omaha, who has followed the law’s implementation in Nebraska. “For a vast majority, it would mean the loss of coverage. They simply would not be able to afford it.

A ruling that eliminates the subsidies would have a larger-than-average impact on Nebraska, which had the nation’s 13th highest rate of enrollees that receive them as of March. Nearly 90 percent of Nebraska’s marketplace enrollees qualified for a tax credit, compared to 85 percent nationally, according to the Centers for Medicare and Medicaid Services.

At issue in the case is whether President Barack Obama’s signature health care law allows tax credits for residents of all states.

The Affordable Care Act offers subsidized private insurance to people without access to it on the job. Opponents of the law argue that its literal wording only lets the federal government subsidize coverage in states that built their own marketplaces where individuals and businesses can shop for insurance. The Obama administration argues the law’s intent was to provide the subsidy to all qualified enrollees.

Former Republican Gov. Dave Heineman announced in 2012 that Nebraska would default to a market set up by the federal government. Heineman said at the time that the federal option was cheaper for the state, and argued that state-run models were still heavily controlled by the federal government.

Nordquist said that, if the court strikes down the subsidies, the sudden spike in prices could prompt Congress to intervene.

If Congress doesn’t act, the problem would fall to Nebraska and other states that chose not to create a marketplace. Congress could also approve a temporary fix and then leave it to the states to set up their own.

Nordquist said setting up a state-run marketplace could require a special legislative session, because lawmakers would have to approve funding and give the governor the authority to move forward.

A spokeswoman for Gov. Pete Ricketts said his office is monitoring the case and working with the state Departments of Insurance and Health and Human Services. Communications Director Brittany Hardin said it’s too early to discuss specific responses because no one knows what the court will decide. She dismissed talk of a special session as “purely speculative.’’

“As we saw from the previous Supreme Court decision on the Affordable Care Act, the court can rule in a number of ways,’’ Hardin said.

Eliminating the credits would likely increase costs for Nebraska’s entire individual insurance market, and not just customers who are subsidized. Without credits, enrollees who do keep their coverage are more likely to need it because of expensive medical problems. Younger and healthier people who help subsidize the pool are more likely to drop their plans.

“Ultimately what ends up happening is the market can no longer be sustained,’’ said Clare Krusing, a spokeswoman for America’s Health Insurance Plans, a Washington-based industry group.

A spokeswoman for Blue Cross & Blue Shield of Nebraska, the state’s largest private insurer, declined to comment on the case. Rohan Hutchings, a spokesman for Aetna and Coventry Health Care of Nebraska, said it’s too early to talk about the ruling’s potential impact on Nebraska’s market.

Nebraska groups that helped with the enrollment effort said they’ve notified clients about the lawsuit, and many are worried their premiums will rise.

“It would be devastating for the whole state,’’ said Karen Harbach, executive director of the Chadron-based Northwest Community Action Partnership. “If the Supreme Court were to strike this down, I’m sure we’d be flooded with people asking for advice and assistance.’’

Harbach said many of the new enrollees were never insured before and are now receiving medical care they had previously postponed. The sudden loss of insurance would add undue stress to patients and providers, she said.

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