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Court Case Shouldn’t Scare Off Marketplace Enrollees

Contrary to Senate Republican leaders’ recent claim, residents of 34 states with federally run health insurance marketplaces will not have to repay their premium tax credits if the Supreme Court rules in June that health reform doesn’t authorize the credits in those states.  People who need health coverage shouldn’t be scared off from enrolling by false claims they will have to repay the subsidies.  And Republican leaders should refrain from using this mistaken claim to frighten people into remaining uninsured.

In a December 17 letter, the senators urged the Administration to inform the public that tax-credit recipients in states with federally run marketplaces risk having to repay their subsidies, depending on the Court’s decision in King v. Burwell.  Plaintiffs in the King case claim that under the Affordable Care Act (ACA), premium credits to help eligible people afford marketplace coverage are supposed to be available only in states that set up their own marketplaces.  The senators’ letter claims that if the plaintiffs prevail, the “tax credits could end immediately after the ruling” and “Obamacare would then require many credit recipients to repay some or all of the credit amount already received.”

That’s flatly incorrect.

Even if the Supreme Court ruled for the plaintiffs, people would not have to repay the premium credits they’ve already received.  The Internal Revenue Code gives the Treasury Secretary discretion over whether to apply court decisions retroactively.  Given the Administration’s vigorous defense of the subsidies and the ACA, there is no question that Treasury Secretary Jack Lew would exercise his discretion to apply the ruling prospectively, which means repayment of premium tax credits received before the decision would not be required.

Thus, there’s no reason for people to forgo health coverage, possibly jeopardizing their health or risking catastrophic medical costs, until the Supreme Court decides the King case.  Moreover, the Supreme Court may very well find — properly in our view, based on a careful reading of the law— that the premium credits can continue in all states.