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 The Supreme Court is due to hear opening arguments in the case
known as King v. Burwell on March 4, marking the second major
challenge to President Barack Obama’s Affordable Care Act (ACA)
after the justices ruled in 2012 against a claim that it was
unconstitutional. The latest case tests the tax-credit subsidies at
the core of Obamacare.
In its ruling expected by June, the high court could bar the
federally run insurance marketplace from providing the subsidies in
at least 34 states. That could throw the insurance system into
turmoil as states respond in starkly different ways.
In response to Reuters' queries, spokespeople for the Republican
governors of Louisiana, Mississippi, Nebraska, South Carolina and
Wisconsin said the states were not willing to create a local
exchange to keep subsidies flowing. Republicans argue that Obamacare
is unacceptable government intervention that raises costs for
consumers and businesses.
“State exchanges are the federal government’s way of sticking states
with the cost and responsibility of a massive new bureaucratic
program," said Chaney Adams, a spokeswoman for South Carolina
Governor Nikki Haley.
 "The right decision was made for South Carolina, and Governor Haley
would make it again today.”
State government officials in Georgia, Missouri, Montana and
Tennessee – a mix of Republicans and Democrats - said that
opposition by majority Republican state legislators could make it
all but impossible to set up a new exchange.
Those nine states combined are home to 1.4 million people who have
signed up for subsidized coverage in 2015, according to government
data. The fate of 5.1 million residents in the remaining 25 states
that have signed up for subsidized benefits on the HealthCare.gov
exchange is also unclear.
Six states - Delaware, Maine, Ohio, Pennsylvania, South Dakota and
Virginia – are discussing contingency plans to keep the subsidies
but each faces substantial logistical or political barriers,
according to officials.
Ten states did not respond to Reuters queries, while three others
had no comment. Iowa, Wyoming, Oklahoma and West Virginia said they
were not currently considering setting up exchanges; Alaska said it
has not ruled it out; and Arkansas said it was moving toward
creating a state exchange in 2017.
Republicans are opposed to Obamacare, but such a ruling could have a
political cost in their states if hundreds of thousands of
low-to-middle-income people are priced out of health coverage. Even
if states say they don't plan to set up exchanges, that could change
closer to the ruling or afterwards as they come under pressure to
avert spiraling insurance costs.
“We can say with some confidence that the insurance markets are
likely to melt down, because only the sick people will stay in them
and the others will find it unaffordable,” said Drew Altman, who
heads the non-partisan Kaiser Family Foundation.
STATES WEIGH WORKAROUNDS
The plaintiffs in King v. Burwell contend that the Affordable Care
Act allows subsidies to be distributed only through state-based
exchanges. Thirteen states and the District of Columbia set up their
own exchanges from October 2013.
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The remainder of states either opposed the law or could not find
ways to make their own exchanges work, so the federal government
stepped in. Insurers including Aetna Inc, Cigna Corp and Humana Inc
are major players in the HealthCare.gov markets.
About 87 percent of enrollees in those states qualify for Obamacare
subsidies, which can reduce a family’s healthcare bill by thousands
of dollars annually. A Milwaukee family of four earning the median
U.S. household income of $53,000, for example, could receive $7,800
a year in subsidies, according to the Kaiser Family Foundation. A
ruling against Obamacare would raise their monthly premium payments
by at least $652.
Congress could respond to a negative ruling with legislation to keep
subsidies in place. But partisan gridlock would make any action a
challenge.
Health policy experts say the most likely fix to a ruling against
the administration would involve a new type of partnership with the
federal government or between states.
Maine and Delaware have considered a model in which the state
creates the exchange in name but still relies on the federal
government’s technology systems to run it. Marketplaces for Nevada,
New Mexico and Oregon have operated in that fashion.
But experts say this model could be rejected by the Supreme Court,
because the ACA does not list the federal government as an entity
with which states can contract for exchange services.
Other workarounds that have been discussed include setting up
regional exchanges that cover multiple states, or keeping the
HealthCare.gov website operating as a place to sign up for insurance
but allowing states to disburse the federal subsidies.
At the very least, states that are open to setting up their own
exchange hope the Supreme Court allows for a transition period if it
rules against the administration.
“A state-based exchange from scratch in six months is probably not
doable. We’re trying to see what other states are doing and what may
work and may not work,” said Eric Cioppa, Maine's leading insurance
official.
(Reporting by David Morgan; Editing by Michele Gershberg and Stuart
Grudgings)
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