More About Judy Solomon

Judy Solomon

Solomon is Vice President for Health Policy at the Center on Budget and Policy Priorities, where she focuses on Medicaid and the Children’s Health Insurance Program and issues related to the implementation of health reform, particularly policies to make coverage available and affordable for low-income people.

Full bio and recent public appearances | Research archive at CBPP.org


Ruling Against Health Reform Subsidies Would Be Wrong — and Harmful

March 4, 2015 at 5:00 am

As the Supreme Court hears oral arguments in King v. Burwell this morning, it’s critical that the Court recognize that the Affordable Care Act (ACA) provides premium tax credits for consumers in all states, as we’ve explained.  Invalidating the credits for people in states that didn’t create their own exchanges would be wrong from a legal perspective and would harm millions of Americans.

The ACA clearly states that if a state elects not to establish its own exchange, “the Secretary [of Health and Human Services] shall . . . establish and operate such Exchange within the State.”  In other words, the federal government stands in the shoes of states that elect not to operate their own exchanges by establishing and operating the exchanges on their behalf.

As Chief Justice John Roberts has said, the exchanges are “an element of a comprehensive national plan to provide universal health insurance coverage” (emphasis added).  Leaving millions of people in 34 states unable to afford coverage is not a national plan — yet that’s exactly what would happen if residents of states with federally operated exchanges weren’t eligible for help buying coverage in the exchange.

If the Supreme Court invalidates premium credits in the federal exchange, the number of uninsured Americans would jump by roughly 8 million, as many people would find coverage unaffordable without subsidies, according to studies from the RAND Corporation and the Urban Institute.

Millions more would face dramatic premium increases because younger and healthier people would be especially likely to go without coverage, leaving those who continue to buy coverage older and less healthy, on average — and thus costlier to cover.  RAND estimates that premiums would jump by 47 percent; the Urban Institute estimates a 35 percent increase.

A diverse group of Americans would be hurt.  Most tellingly, 81 percent are full- or part-time workers who don’t get coverage at work.

While some health reform critics claim they have alternative reform plans in case the Supreme Court rules against the premium credits, their claims are hard to take seriously.  The recent “plan” from three Senate Republican leaders — Health, Education, Labor and Pensions Committee Chairman Lamar Alexander; Republican Policy Committee Chairman John Barrasso; and Finance Committee Chairman Orrin Hatch — is extremely vague and would likely undo consumer protections and market reforms that help millions of Americans get affordable coverage, as we’ve noted.

Similarly, the recent proposals from three House Republican leaders — Education and the Workforce Committee Chairman John Kline; Ways and Means Committee Chairman Paul Ryan; and Energy and Commerce Committee Chairman Fred Upton — lack essential details and would likely make marketplace coverage unaffordable for millions of Americans, especially people who are older or have pre-existing conditions, forcing many back to the ranks of the uninsured and underinsured.

Millions of Americans have benefited from the coverage they’ve received under the ACA. It’s imperative that the Supreme Court make the right decision on the merits and not turn back the clock on health reform.

Ending Subsidies in Marketplace States Would Hurt Diverse Group

January 26, 2015 at 1:31 pm

I recently cited studies from the Urban Institute and RAND Corporation showing that millions more Americans would be uninsured and premiums would rise significantly if the Supreme Court overturns health reform subsidies for people getting coverage through the federal marketplace.  A follow-up Urban report tells us more about the 8.2 million people estimated to lose coverage.  Of those losing subsidies and becoming uninsured:

  • 81 percent are full- or part-time workers;
  • 62 percent live in the South;
  • 61 percent are white, non-Hispanic; and
  • 60 percent have incomes below twice the poverty line.

Importantly, the report points out that “[e]stimates presented in this analysis reflect effects at a point in time, and therefore understate the number of people who would be affected over the course of a year and over multiple years, as individuals’ employment and income fluctuate.”  (Emphasis added.)

One reason why many of the people losing tax credits would end up uninsured is that they don’t have an offer of employer coverage.  Urban estimates that almost two-thirds of those now receiving tax credits have a family member who works at a small firm (fewer than 50 workers) and just over a quarter have a family member who is self-employed.  About 15 percent of those receiving tax credits are between ages 55 and 64, many of them likely early retirees.  These aren’t static categories, of course; people retire, start a business, and change jobs all the time.

Before health reform, many Americans found health coverage expensive or even unavailable — especially older people not yet eligible for Medicare and those with chronic conditions or a history of illness.  It’s critical that the Supreme Court not turn back the clock for millions of people who need help getting coverage, now and in the future.

More Uninsured, Higher Premiums if Subsidies End in Federal Marketplace

January 12, 2015 at 1:53 pm

Millions more Americans would be uninsured and premiums in the individual (nongroup) market would jump if the Supreme Court disallowed health reform subsidies for people getting coverage through the federal marketplace, new studies from the Urban Institute and RAND Corporation show.

These studies show why it’s critical for the Supreme Court to recognize that health reform provides subsidies in all states.

As we’ve explained, plaintiffs in a case before the Court 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.

Invalidating the subsidies for people in states that didn’t create their own marketplaces would result in 8.2 million more people uninsured and 35 percent higher premiums for those who get coverage through the individual market, the Urban study finds.  Similarly, RAND finds that 8.0 million more would be uninsured and premiums would rise by 47 percent.

The number of uninsured would jump because many people would find coverage unaffordable without subsides.  Premiums would jump because younger and healthier people would be especially likely to do without coverage, leaving those who continued to buy coverage older and less healthy, on average — and thus costlier to cover.

Both studies show that premiums would rise for everyone in the individual market, including those who buy coverage outside the federal marketplace.  That’s because health reform requires insurers to base their premiums on a single risk pool for all coverage they offer, both inside and outside the marketplace.

These price increases would have a significant impact, even on people with incomes too high to qualify for subsidies.  The number of people with incomes above 400 percent of the poverty line — the maximum level to qualify for a subsidy — buying coverage through the federal marketplace would fall by 42 percent, Urban estimates.

Of course, the impact on lower-income people would be even greater, since they would face higher premiums plus the loss of subsidies (and have more limited budgets to start with).  Fully 91 percent of people with incomes below 200 percent of the poverty line would leave the federal marketplace, according to Urban.

Court Case Shouldn’t Scare Off Marketplace Enrollees

January 5, 2015 at 3:58 pm

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.

3 Reasons Why Oklahoma Decision Is Wrong About Health Subsidies

October 1, 2014 at 1:14 pm

A central piece of health reform authorizes the federal government to provide tax credits to help low- and moderate-income people buy coverage in the new health insurance marketplaces.  A federal district court judge in Oklahoma ruled yesterday that the law only authorizes the tax credits in states that have set up their own exchanges, not in states with a federally operated exchange.  (Other federal courts have split on the issue, which may eventually reach the Supreme Court.)  But this argument rests on a distorted reading of the law.  As I’ve explained:

  1. Section 1321 of health reform (the Affordable Care Act or ACA) says that if a state does not establish its own exchange or won’t be ready to operate its exchange in 2014, “the Secretary shall (directly or through agreement with a not-for-profit entity) establish and operate such Exchange within the State” (emphasis added).   In other words, the federal government will essentially “stand in the shoes” of a state that elects not to operate an exchange by establishing and operating the exchange on the state’s behalf.  That’s what the federal government has done in Oklahoma and other states that chose not to create their own exchange.
  2. Section 36B of the Internal Revenue Code, which section 1401 of the ACA added to the Code, specifically refers to federal exchanges in requiring all exchanges — state and federally operated — to report to the federal government on the amount of advance payments of premium credits that taxpayers receive.  That provision would make no sense if people buying coverage through a federally operated exchange weren’t eligible for credits.
  3. To help residents of states with state-run exchanges buy coverage but not residents of other states would clearly conflict with the ACA’s purpose, which is to ensure that all Americans have a path to affordable coverage, regardless of where they live.  As Chief Justice John Roberts noted in referring to the ACA’s Medicaid expansion, the exchanges are “an element of a comprehensive national plan to provide universal health insurance coverage.”