REMINDER: If King plaintiffs win, it's not just 7M people who'd be screwed, but 14M

When you're deep in the weeds on this stuff, you tend to take things for granted. Case in point: I kind of figured that it was obvious that everyone who purchases private insurance coverage in the 34 Federal Exchange states will be utterly screwed in the event of the plaintiffs in King v. Burwell winning (assuming, of course, that the GOP Congress doesn't show a lick of decency for once and none of those states slap together an exchange-in-a-box, that is).

Apparently I was mistaken about this, so to review:

Under King premiums for subsidized enrollees would ↑ 256%. As the risk pool deteriorates, premiums for all in the individual market also ↑.

— Larry Levitt (@larry_levitt) March 5, 2015

The consensus among actuaries seems to be that premiums would end up going up about 35% or so on average. That means that:

  • a $500/mo policy via w/a $400/mo tax credit would go from $100/mo to $675/mo...a 6.75x increase.
  • a $500/mo policy via w/a $250/mo tax credit would go from $250/mo to $675/mo...a 2.7x increase.
  • a $500/mo policy via w/a $100/mo tax credit would go from $400/mo to $675/mo...a  69% increase.

...and so on. The above groups add up to perhaps 6.7 million people as of now, and will likely be over 7 million by the time the Supreme Court issues their ruling in June.

HOWEVER, there's more:

  • If you have a $500/month policy via with no tax credit (about 1.1 million people today), you'll go from paying $500/month to $675/month...a 35% increase.
  • If you have a $500/month policy OFF-exchange, directly through the insurance company (about 6.2 million people today), you'll also go from paying $500/month to $675/month.

I've heard varying opinions about whether all off-exchange individual policies are included in the same risk pool as exchange QHPs or not, but according to at least one actuary, they are:

@_KJKelly @charles_gaba ACA compliant all subject to single risk pool via risk adj. and cost sharing restrictions - no CSR variations tho

— rebeccastob (@rebeccastob) March 6, 2015

@_KJKelly @charles_gaba all ACA compliant plans are subject to risk adjustment in a state/market combination

— rebeccastob (@rebeccastob) March 6, 2015

@_KJKelly @charles_gaba I am positive

— rebeccastob (@rebeccastob) March 6, 2015

Knock off a couple hundred thousand for Oregon/Nevada/New Mexico (assuming they're in the clear), and you're still talking about perhaps 14 million people across 34 states who will be directly screwed here.

It could be even higher, actually. In addition to the 14 million or so noted here, there's also still a few million people in "grandfathered" or "transitional" policies (you know, the ones that were allowed to be extended by a few years after the "you can keep it" brouhaha?). I don't think those policies are subject to this rate spike, but I could be wrong...and those will all be phased out within the next few years anyway.

Oh, and don't forget that along with the premium tax credits, I'm pretty sure that the Cost Sharing Reductions for those on subsidized Silver plans would be killed as well, which means that several million people would have to shell out a few hundred bucks more for co-pays, deductibles and so forth. Not sure how many this would affect, not that it matters since none of them would be able to afford the 5-6x premium increases anyway.

But wait, there's more: Some insurance companies may react to the mess by effectively saying "screw this noise, I'm outta here", and just stop offering policies on the individual market in one or more of those states altogether. That would mean less competition, not more...which would in turn could allow the other carriers to jack up prices even more. The RAND Corporation issued a report projecting premium increases of up to 47% based on a King victory, not 35%.