An Employer's Guide: What do the Supreme Court's landmark decisions mean to business?
Part I: Affordable Care Act
Part II: Same-sex marriage
The Affordable Care Act is the law of the land, and the Supreme Court last month protected the health insurance subsidies for those living in states with and without health care exchanges.
That means Missourians who have signed up for insurance on the federal exchange are entitled to subsidies if they meet income guidelines.
The decision in the King v. Burwell case is a victory for the status quo, according to Harvey Tettlebaum, a partner with Kansas City-based law firm Husch Blackwell LLP.
No change for businesses
The move seems to have little impact on businesses.
“It left intact the subsidies that were being provided to individuals who were participating – as they were in Missouri – in a federally sponsored exchange instead of a state-sponsored exchange. The effect is to essentially leave everything as it was,” said Tettlebaum, a member of Husch’s health care, life sciences and education team.
Now, the ACA will continue to roll out, and companies required to provide insurance for employees still must meet those obligations or face fines.
According to HealthCare.gov, firms with 100 or more full-time equivalent employees were required to insure at least 70 percent of their full-time workers by the start of this year and cover 95 percent by 2016. Small businesses with 50-99 FTEs need to start insuring them by Jan. 1.
Employers that don’t meet ACA insurance requirements face penalties of $3,000 per FTE receiving subsidies or $2,000 per FTE companywide, whichever is less. For plan years beginning in 2015, the penalty is $2,000 for each FTE minus the first 80 employees. For plan years beginning next year and beyond, employers can exclude 30 FTEs from the penalty calculation.
No (exchange) worries
In Missouri, lawmakers have opted not to build a state exchange, and Tettlebaum said that might have been a wise move.
“What we’ve seen is that with a number of the states that have exchanges, they’ve suffered economically,” he said. “Or the states have abandoned them in favor of a federal exchange. As it’s turned out, the number of states that are operating their own exchanges successfully is a fairly small number.
“It’s a very complicated business to operate these exchanges.”
According to Politico.com, the state of Maryland spent $118 million in federal funds on a fatally crippled exchange; $248 million went to Oregon’s exchange, which failed; and Massachusetts and Nevada each spent $50 million on troubled systems.
According to the Kaiser Family Foundation, the federal government spent about $4.7 billion to help roll out state exchanges between 2011 and 2014.
Medicaid expansion
In Missouri, the question becomes: Does the King v. Burwell ruling make Medicaid expansion more likely? The short answer is no, Tettlebaum said.
To support the ACA, the U.S. government promised to fully cover Medicaid expansion in Missouri to the tune of $4.7 billion between 2014 and 2017.
However, lawmakers have balked at expansion, citing concerns the state would be liable for a portion of the costs beginning in 2017.
“The concern was that it would put Missouri into a deep fiscal hole,” Tettlebaum said.
“Were the government to amend the law and extend those expansion benefits indefinitely, then I think the legislature would take another look.”
According to a Kaiser Family Foundation report in April, Missouri and 20 other states had not expanded Medicaid. If they did, the federal government would spend $472 billion more between 2015 and 2024 to support the expanded programs, and the states would spend $38 billion more during the same time to insure some 4.3 million more people.[[In-content Ad]]
