POLITICS

States Take Few Steps to Fill Gap if Supreme Court Blocks Health Subsidies

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WASHINGTON — As the Supreme Court prepares to rule on whether to block health insurance subsidies in 34 states that use the federal insurance exchange, Pennsylvania and Delaware are the best prepared. They have submitted detailed plans for creating their own exchanges by next year, a move intended to keep subsidies flowing to their residents, though possibly with an interruption.
Mississippi’s insurance commissioner, Mike Chaney, says he has a tentative plan for establishing a state exchange, but federal officials would have to loosen the rules. In Illinois, the state hospital association laid out options for quickly establishing an exchange in a blunt memo to Gov. Bruce Rauner and state legislators this month.
But in the vast majority of states that rely on the federal exchange, HealthCare.gov, there is little or no evidence that anyone has a plan to preserve the subsidies that help more than six million residents of those states afford their insurance premiums. Most of the affected states have Republican governors, and many, including Scott Walker of Wisconsin, Rick Scott of Florida and Dennis Daugaard of South Dakota, insist it is Congress’s job to come up with a remedy if the subsidies disappear.

Graphic: The Health Care Supreme Court Case: Who Would Be Affected? 

Michael O. Leavitt, who was secretary of health and human services under President George W. Bush, tried to nudge more federal exchange states into action in a letter to their governors and legislators last week.
“They’re not scrambling as of yet over this,” Mr. Leavitt said. “But when the force of millions of people who are going to have their insurance affected begins to influence this debate, it’s going to look different to those who are feeling the pressure. And I think it will be the governors.”
The case before the Supreme Court, King v. Burwell, focuses on a section of the Affordable Care Act that says subsidies should flow to insurance customers “through an exchange established by the state.” The plaintiffs argue that this language means only people who use state-run exchanges, not the federally run HealthCare.gov, can receive subsidies. At this point, only 13 states and the District of Columbia fully run their own exchanges. Three other states have a “federally supported state exchange” and may also not be affected by the decision.
About 6.4 million people stand to lose the subsidies that help them afford health care received through the federal exchange, according to the Obama administration. The average monthly subsidy is $272, although it ranges from $158 in Arizona to $536 in Alaska. Analysts believe many people would drop their coverage and prices would rise for everyone who buys their own health insurance in the affected states, whether or not they received subsidies, because older and sicker people would be the most likely to keep their plans.
Mr. Leavitt is among many political observers predicting that any solution offered by Republicans in Congress in the short term would be vetoed by President Obama, at which point it would fall to governors and legislators to figure out a path forward. So he is urging those politicians to collectively persuade the Obama administration to “dramatically simplify” its tangle of rules for creating and running state exchanges.
But even if establishing an exchange became easier, the Republican-controlled legislatures in many states that currently use the federal exchange would be unlikely to approve a switch. Many Republican state lawmakers, especially in the Deep South, have been vocal opponents of the Affordable Care Act. While some governors might be able to create exchanges by executive order, legislatures in more than half a dozen states have barred them from doing so.
Even if governors do have the power to create an exchange single-handedly, “they may imperil the rest of their legislative agenda” by doing so, said Nicholas Bagley, an assistant professor at the University of Michigan Law School who has been studying states’ options.
Mr. Bagley, who supports the Affordable Care Act, also pointed out that to create an exchange, “you need money, and money typically comes from the legislature.”
That could prove to be an obstacle for Gov. Tom Wolf of Pennsylvania, a Democrat whose legislature is controlled by Republicans. Even though Mr. Wolf has completed the planning and paperwork necessary to move ahead with a state exchange, he would need the legislature to approve a financing plan.
“We are committed to working with the legislature to move forward on this,” said Jeffrey Sheridan, a spokesman for Mr. Wolf. He added that if the Supreme Court sided with the Obama administration, Pennsylvania would drop its plans for a state exchange and continue to rely on HealthCare.gov.
 
U.S. & POLITICS By Aaron Byrd and Emily B. Hager 1:36
The Two Americas of Health Care

The Two Americas of Health Care

How King v. Burwell, the latest Supreme Court challenge to the Affordable Care Act, could create two American health care systems divided by access to care.
 By Aaron Byrd and Emily B. Hager on  February 25, 2015. 
Pennsylvania’s plan for converting to a state exchange could prove to be a model for other states at risk of losing subsidies. It would continue to use the HealthCare.gov technology for determining eligibility for subsidies and for enrollment — the hardest things an exchange does — while taking on most of the other duties, like consumer outreach and the operation of a call center.
Three other states that established exchanges but ran into technical and financial problems — Nevada, New Mexico and Oregon — are now using that model. And a fourth, Hawaii, is moving toward it.
Starting in 2017, the states will most likely “lease” the HealthCare.gov technology from the federal government, using funds collected from an assessment on insurers in their states.
Should the subsidies be blocked, conservative groups like Americans for Prosperity would pressure Republican governors and legislators not to create exchanges. In some states, including Florida and Tennessee, these groups have been effective in persuading state lawmakers to oppose expanding Medicaid under the health care law.
“Many of these legislators come from deep-red districts and worry a lot more about a primary challenge than they do about getting challenged from the left,” Mr. Bagley said.
Levi Russell, a spokesman for Americans for Prosperity, said the group would “be involved one way or another.” But he also said he believed predictions of voter backlash over lost subsidies were overblown, noting that only a sliver of the voting population would be affected. Most Americans get health insurance through work and do not have to buy their own.
“For every one person getting a subsidy,” Mr. Russell said, “there’s probably another three or four who are paying for that subsidy, which is contributing to the growing cost of health care. So I think it’s off base to say there will be panic and rioting in the streets.”
Mr. Chaney, the insurance commissioner in Mississippi, said he was fairly certain that his governor, Phil Bryant, a Republican up for re-election this year, would not support his plan to create a state exchange, even though 80,000 residents could lose subsidized insurance as a result.
“He’s got a pretty good approval rating, and he doesn’t have a real strong opponent,” Mr. Chaney said. “So he’s just not worried.”
More interesting to watch, perhaps, could be certain Republican governors who are subject to term limits and not worried about re-election, like Gov. Bill Haslam of Tennessee. Mr. Haslam, who just began his second term, pushed this year to expand Medicaid there, but the legislature refused to go along. Gov. Rick Snyder of Michigan, who successfully pushed for Medicaid expansion and who tried unsuccessfully several years ago to get the Legislature to approve a state exchange, is another Republican who may be willing to take the political risk.
Arkansas has also filed an application for a state-based exchange and received permission from the federal government to move ahead with it. Excluding the piece that serves small businesses, the state’s exchange would not be ready until 2017. And the Republican-controlled legislature passed a law this year requiring a vote on whether to proceed with the exchange if the Supreme Court invalidates the subsidies.
“They could decide not to go forward,” said Craig Wilson of the Arkansas Center for Health Improvement, an independent health policy group.