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Wednesday
Jun172015

How A Supreme Court Decision Could Boost Arkansas's Economy By Bringing Hundreds of Millions of Dollars and Thousands of New Jobs to Arkansas

In a study published today, the Advance Arkansas Institute found that Arkansas’s economy will benefit if the Supreme Court decides in King v. Burwell that the Obama administration acted illegally in offering health insurance subsidies through its federal insurance exchanges. One implication of such a decision is that, if Arkansas reacts to it by establishing a state Obamacare exchange, this would amount to a huge new Obamacare tax increase on Arkansans.

According to AAI’s paper, “The Consequences of King v. Burwell: How A Federal Exchange Could Block An Obamacare Tax Increase,” this decision by the Supreme Court could produce, on net, thousands of new jobs and hundreds of millions of dollars in benefits to the state’s economy this year -- even using conservative assumptions.

The Supreme Court will announce its decision in King v. Burwell later this month. This case centers on the text of the Affordable Care Act, or Obamacare. At issue is whether the federal government can offer health insurance subsidies through insurance exchanges established by the federal government, or only through health insurance exchanges established by the state, as the ACA’s text reads. Arkansas’s health insurance exchange is a federal exchange, so this ruling would have a significant effect in the state.

If the Supreme Court rules in favor of the plaintiffs and finds federal-exchange insurance subsidies illegal, it would mean that Arkansans could lose a total of $164 million in financial help this year. However, this decision would also end the individual mandate to purchase insurance for many Arkansans, and end the mandate that employers must either provide a certain level of health insurance for their employees or face penalties. A conservative estimate of the financial benefits to individuals and employers from ending these two mandates is $302 million.

“This paper shows that the upside of ending these illegal insurance subsidies almost certainly outweighs any negative effects such a decision would have,” said Dan Greenberg, President of the Advance Arkansas Institute. “If the Supreme Court rules against the federal government in King, Arkansas will likely see vast net benefits from freeing Arkansas employers and employees from the punitive pair of Obamacare mandates.” AAI’s paper also includes information from a recent American Action Forum study, which concludes that the economic growth created by removal of Obamacare’s regulatory shackles would cause 16,000 new jobs to be added to the Arkansas economy two years from now, with an additional 4,000 Arkansas jobs by 2024.

This study does not overlook the hardship that would be caused by the end of health insurance subsidies for the relatively small number of Arkansans who use them. Roughly 2 to 3 percent of Arkansas households would be significantly affected by subsidy loss. The paper does point out, however, that the Obama Administration has various policy measures it could undertake to lower the cost of insurance for this group. For instance, it could allow them to purchase lower-cost comprehensive insurance policies or support an end to Obamacare regulations that have driven up the cost of insurance in the state.

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