If Supremes slap ObamaCare, it’s health insurers who lose

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This week health insurers announced they will hike premiums on ObamaCare plans by double digits in 2016. Yet it’s not ObamaCare buyers who are getting gouged.
For the most part, what consumers have to pay is calculated based on their income.
They don’t pay the sticker price. It’s you — the taxpayers — who get taken to the cleaners, because you foot the bill for the subsidies paid directly to the insurers.
That makes the Supreme Court ruling in King v. Burwell, expected this month, even more consequential. It will determine the fate of these subsidies in 37 states.
Without subsidies, ObamaCare buyers in those states will have to pay the actual — and unaffordable — sticker price of ObamaCare. And you — taxpayers — will not have to fork over hundreds of billions of dollars to subsidize insurers over the next decade.
But the dirty secret is that insurers stand to lose the most from King v. Burwell.
The Affordable Care Act compels the public to buy their product, and forces taxpayers to subsidize it. What a sweetheart deal.
The giant players — United Healthcare, Cigna, Aetna, Anthem and Humana — have seen stock prices double, triple, even quadruple since the law was passed in 2010. The coming ruling threatens to put an end to their gravy train.
Democrats are predicting disaster if the court rules against President Obama.
Republicans will “rue the day” they let millions of people lose their subsidies, says Nancy Pelosi. That’s crazy talk.
No one will lose their coverage immediately, the poor will be unaffected and the biggest losers will be insurance companies.
Employers, job-seekers and taxpayers actually stand to win here.
In addition, most Republicans in Congress are inclined to compromise with the president to provide some type of financial help for insurance buyers. If the Supremes gut ObamaCare, there will be many more winners than losers. Here’s how it shakes out:
The Affordable Care Act says subsidies will be provided only in states that set up their own exchanges. But only a handful of states (including New York) did.
In 37 states that didn’t, people use the federal healthcare.gov Web site instead. The Obama administration handed out subsidies to these people anyway, playing fast and loose with the law — and your money.
If the justices rule that the Obama administration can’t do that, some 7.7 million people will eventually lose their subsidies.
Eventually, but not soon.
During oral arguments, Justice Samuel Alito suggested that if the court makes such a “disruptive” ruling, it could delay its taking effect. And Justice Antonin Scalia told the Obama lawyers that “if the consequences are as disastrous as you say,” Congress will come up with a remedy.
Insurance companies are lobbying furiously for a congressional fix.
Meanwhile, outside Washington, DC, a ruling nixing the subsidies will benefit employers and job-seekers.
Any of the 37 states that want to can set up an exchange and immediately qualify for the subsidies. But most are controlled by the GOP and won’t do it.
Without subsidies, the employer mandate is toothless, because employers are only fined if their uninsured workers go to an exchange and get a subsidy.
Employers who have been struggling to keep their workforce under 50 (where ObamaCare kicks in) and use part-timers (who aren’t subject to ObamaCare) won’t have to worry any more. Nullifying the employer mandate is likely to ignite a hiring boom.
According to the US Chamber of Commerce, that looming mandate has caused 21 percent of small businesses to reduce workers’ hours, 41 percent to delay hiring and 27 percent of franchises (such as fast-food restaurants) to replace full-timers with part-timers.
People facing a penalty for being uninsured will also come out ahead. Without subsidies, most will be exempted from the penalty, saving them $2,000 on average next year.
Despite Democrats’ dire warnings, the poor won’t be hurt. An amazing 89 percent of people who are newly insured because of ObamaCare are on Medicaid, which won’t be affected.
Ignore the alarmist rhetoric. A loss for the Obama administration in King v. Burwell will be a win for most Americans.
Betsy McCaughey is a senior fellow at the London Center for Policy Research.


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