King v Burwell: Differing Views of Health-care Spending Post HealthCare.gov

‘NEW YORK (Reuters) - As the U.S. Supreme Court prepares to rule on whether people in 34 states can continue to receive Obamacare health insurance subsidies, economists are projecting billions of dollars in lost healthcare spending for hospitals, drugstores and drugmakers if the justices say the payments are illegal.

The immediate consequences of such a ruling would fall on the 6.4 million people who receive the subsidies and live in states that did not establish their own insurance exchanges under President Barack Obama’s healthcare law, instead relying on the federal HealthCare.gov website.

The case, known as King v Burwell, would not affect subsidies in the District of Columbia or in the 13 states that run their own exchanges. The decision is expected sometime this month.

Health economists calculate the economic impact of a ruling against the subsidies in different ways, but one thing many agree on is that about two-thirds of people who receive subsidies through HealthCare.gov would drop their insurance altogether rather than foot the entire bill.’

‘"There will absolutely be these second-order effects," said Larry Levitt, a senior vice-president and healthcare researcher at the Kaiser Family Foundation. "A reasonable assumption is that (spending on) healthcare by people who lose their existing subsidies will drop by at least half."’

‘Conservative economist Douglas Holtz-Eakin and Brittany La Couture of the American Action Forum wrote recently that such a ruling could give a boost to small businesses by removing requirements on employers to provide health coverage.

Joseph Antos of the right-leaning think tank American Enterprise Institute says the estimates of healthcare spending effects are imprecise at best. He expects that a ruling invalidating the subsidies would be followed by a "fix" in which Congress or states somehow restore subsidies, at least temporarily.

In that case, he said, any drop in healthcare spending would be temporary and only "a very minor downward bump."

"They are going to extend the subsidies in some manner," Antos said. "I don't know how they are going to do it, but they are going to find some way."‘ - Economists predict shockwaves if Obamacare subsidies are nixed, Yahoo News, 06/17/2015

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http://news.yahoo.com/economists-predict-shockwaves-obamacare-subsidies-nixed-142827841.html;_ylt=AwrBT9HvLYJVszAA2jVXNyoA;_ylu=X3oDMTEyZGZtdm1zBGNvbG8DYmYxBHBvcwMxBHZ0aWQDQjAwMjlfMQRzZWMDc2M-