Court rulings on Obamacare could have big economic impact on states

According to new research by the Urban Institute, yesterday’s court rulings on Obamacare subsidies could mean a big drop in federal funds flowing into some states. The Urban Institute says that 11.8 million individuals are expected to enroll in the 34 Federally Facilitated Marketplaces (FFMs) in 2016 and of those, 7.3 million are estimated to receive federal subsidies to purchase insurance. Some of the lowest income recipients will also receive additional subsidies to lower the cost of their co-payments, deductibles and co-insurance.

Yesterday’s D.C. Circuit Court of Appeals decision, however, put those subsidies in jeopardy. If it is ultimately decided that IRS tax credit subsidies for insurance can only be awarded through state-run exchanges (versus federally-run exchanges), millions would lose subsidies. The Urban Institute estimates that would translate into a loss of $36.1 billion in 2016 of funds that would “otherwise go to individuals and families with incomes below 400 percent of the federal poverty level, with spillover effects to state economies also expected from the sizable reduction in federal dollars flowing into these states”. Those losses range from a high of $4.8 billion in Florida and $5.6 billion in Texas to $94 million in Delaware and $140 million in Wyoming.