States ill-pre­pared for any loss of health­care sub­si­dies

Los Angeles Times - - FRONT PAGE - By Noam N. Levey

WASH­ING­TON — Mil­lions of Amer­i­cans could soon lose health in­sur­ance when the Supreme Court de­cides the lat­est chal­lenge to the Af­ford­able Care Act this month, but states have made few con­crete plans to deal with the po­ten­tial fall­out, and they may get lit­tle help from Wash­ing­ton, Pres­i­dent Obama warned Mon­day.

“If some­body does some­thing that doesn’t make any sense, then, it’s hard … to fix,” the pres­i­dent said, sug­gest­ing his ad­min­is­tra­tion can’t do much if the jus­tices side with the health law’s Repub­li­can crit­ics.

When the court rules this month, the jus­tices may elim­i­nate in­sur­ance sub­si­dies in as many as 37 states that use the fed­eral Health­Care.gov mar­ket­place es­tab­lished through the health law. The law’s chal­lengers ar­gue that a strict read­ing of the statute makes those sub­si­dies avail­able only in states that es­tab­lished their own mar­ket­places, rather than hav­ing the fed­eral gov­ern­ment op­er­ate the mar­ket­place for them.

A state could re­store the aid if it runs its own mar­ket­place, as Cal­i­for­nia and 12 other states and the Dis­trict of Columbia al­ready do.

Just two states whose res­i­dents are in jeop­ardy — Penn­syl­va­nia and Delaware — have out­lined strate­gies for pre­serv­ing sub­si­dies, how­ever.

“I’m afraid the po­ten­tial for ma­jor dis­rup­tions is only now start­ing to dawn on peo­ple,” said for­mer Utah Gov. Mike Leav­itt, a Repub­li­can who served as Health and Hu­man Ser­vices sec­re­tary

un­der Pres­i­dent Ge­orge W. Bush. Leav­itt is work­ing with a group of for­mer fed­eral and state health of­fi­cials on con­tin­gency plans to help states.

In many places, Repub­li­can leg­is­la­tors and gov­er­nors op­pose any ac­tion to ac­com­mo­date the fed­eral health law.

But even GOP gov­er­nors who are look­ing for ways to pro­tect their res­i­dents are strug­gling to fig­ure out what they can do.

“It’s re­ally bleak,” said a health of­fi­cial from one South­ern state, who asked not to be iden­ti­fied out of con­cern that speak­ing pub­licly would make his state a tar­get for con­ser­va­tive po­lit­i­cal ac­tivists. Groups op­posed to Oba­macare have pres­sured state leg­is­la­tures not to ex­pand health cov­er­age un­der the law.

Many of­fi­cials are hop­ing — qui­etly, in the case of Repub­li­cans — that the jus­tices will side with the ad­min­is­tra­tion and leave the law in­tact.

But if that does not hap­pen, the lack of con­tin­gency plan­ning — abet­ted by the Obama ad­min­is­tra­tion’s re­fusal to pub­licly dis­cuss op­tions for states to main­tain aid for their res­i­dents — threat­ens to wreak havoc with most of the na­tion’s in­sur­ance mar­kets and set off a blame game be­tween the Obama ad­min­is­tra­tion and con­gres­sional Repub­li­cans.

Obama took a shot at his op­po­nents in his re­marks Mon­day at a news con­fer­ence while at the G-7 con­fer­ence in Ger­many.

He called the chal­lengers’ claims a “con­torted” and “twisted in­ter­pre­ta­tion” of the law and said the jus­tices should not even have con­sid­ered the case.

And, the pres­i­dent said, if the court backs the chal­lengers, Congress could eas­ily re­store sub­si­dies by pass­ing a sim­ple bill that clar­i­fies that they are avail­able in all states, as the law’s ar­chi­tects have said they should be. “Congress could fix this whole thing with a one-sen­tence pro­vi­sion,” he said.

Con­gres­sional Repub­li­cans, how­ever, have said they will con­sider restor­ing aid only as part of a bill that also re­peals ma­jor parts of the law, in­clud­ing the man­date re­quir­ing peo­ple to have cov­er­age and the min­i­mum in­sur­ance stan­dards.

“Let’s be clear: If the Supreme Court rules against the ad­min­is­tra­tion, Congress will not pass a so­called ‘ one-sen­tence’ fake fix,” said Sen. John Bar­rasso (R-Wyo.), who has been work­ing on a Repub­li­can re­sponse to the case. “Repub­li­cans didn’t cre­ate the on­go­ing mess.”

The GOP de­mands would prob­a­bly pre­cip­i­tate a stand­off be­tween Congress and the White House that could drag on for months, even as con­sumers across the coun­try lose cov­er­age and pre­mi­ums sky- rocket amid the col­lapse of in­sur­ance mar­kets.

Repub­li­can con­gres­sional lead­ers haven’t been able to agree among them­selves on what to ask for, de­spite pledg­ing this year to have an al­ter­na­tive by June.

“Po­lit­i­cal grid­lock is a sig­nif­i­cant pos­si­bil­ity,” Leav­itt said. “And in the ab­sence of a fed­eral so­lu­tion, enor­mous pres­sure will come to bear on states.”

The re­sult could jeop­ar­dize ac­cess to med­i­cal care for more than 6 mil­lion Amer­i­cans who rely on the sub­si­dies.

“The con­se­quences of los­ing the fi­nan­cial as­sis­tance that makes health in­sur­ance af­ford­able would be ab­so­lutely dev­as­tat­ing for low- and mid­dle-in­come peo­ple with a dis­ease such as can­cer,” said Christo­pher Hansen, pres­i­dent of the Amer­i­can Can­cer So­ci­ety’s Can­cer Ac­tion Net­work.

The mar­ket­places — which opened in 2013 and now cover about 10 mil­lion peo­ple — al­low Amer­i­cans who don’t get health benefits at work to shop on­line among plans that must all of­fer ba­sic benefits and can­not turn away cus­tomers, even if they are sick.

Con­sumers qual­ify for sub­si­dies if they make less than four times the fed­eral poverty level — about $47,000 for a sin­gle adult and $97,000 for a fam­ily of four.

Build­ing a mar­ket­place from the ground up would be al­most im­pos­si­ble for most states.

Cal­i­for­nia, Con­necti­cut, Mary­land and other states that op­er­ate their own mar­ket­places spent years build­ing them at a cost of al­most $4 bil­lion in fed­eral aid.

Few gov­er­nors or state leg­is­la­tors want to take on the re­spon­si­bil­ity or the ex­pense. In Illi­nois, the Demo­cratic state Leg­is­la­ture re­fused in De­cem­ber even to take up leg­is­la­tion to cre­ate a mar­ket­place.

Some ad­vo­cates hope that three states that now rely on the U.S. Depart­ment of Health and Hu­man Ser­vices to jointly op­er­ate their mar­ket­places may of­fer an al­ter­na­tive model.

Ore­gon, Ne­vada and New Mex­ico have of­fi­cially es­tab­lished their own mar­ket­place, but use the fed­eral Health­Care.gov web­site to al­low con­sumers to pur­chase health plans. That ap­proach could shield their res­i­dents, depend­ing on how a court rul­ing is writ­ten.

But repli­cat­ing that ar­range­ment may re­quire states to col­lect fees from in­sur­ance com­pa­nies and to pay the fed­eral gov­ern­ment for us­ing Health­Care.gov. Those steps will prob­a­bly re­quire ap­proval from GOP­con­trolled leg­is­la­tures in most states, a huge po­lit­i­cal bar­rier. The process would also take time.

When a group of state health of­fi­cials from around the coun­try gath­ered last month in Chicago to dis­cuss con­tin­gency plans, many con­cluded the model wasn’t fea­si­ble, ac­cord­ing to par­tic­i­pants.

“We’re un­der the ham­mer of a dead­line here,” said one par­tic­i­pant.

An­other po­ten­tial model might al­low states to do even less of­fi­cially, but still qual­ify as state-based mar­ket­places.

Seven states — Arkansas, Delaware, Illi­nois, Iowa, Michi­gan, New Hamp­shire and West Vir­ginia — are “part­ner­ship” states that over­see health plans and pro­vide con­sumer as­sis­tance to res­i­dents, though the states still use the fed­eral Health­Care.gov site.

An­other seven also help reg­u­late health plans be­ing sold on Health­Care.gov, though they are not for­mal part­ner­ship states. They are Kansas, Maine, Mon­tana, Ne­braska, Ohio, South Dakota and Vir­ginia.

Even al­low­ing th­ese 14 states to qual­ify as state mar­ket­places would be dif­fi­cult, how­ever, re­quir­ing ad­di­tional fed­eral reg­u­la­tions and af­fir­ma­tive moves by state lead­ers to back the health­care law.

And fed­eral health­care of­fi­cials have said re­peat­edly in re­cent months that they won’t be able to of­fer states much help if the court in­val­i­dates the sub­si­dies in more than half the coun­try.

“[Our] ad­min­is­tra­tive abil­ity, if the court makes those de­ci­sions, is limited,” Health and Hu­man Ser­vices Sec­re­tary Sylvia Mathews Bur­well said Thurs­day at a fo­rum or­ga­nized by the Wall Street Jour­nal. “The num­ber of unin­sured would jump dramatically.”

Alex Wong Getty Images

AF­FORD­ABLE CARE ACT sup­port­ers rally in March. Many of­fi­cials are hop­ing that the jus­tices will side with the ad­min­is­tra­tion and leave the law in­tact.

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