Sub­sidy rul­ing could be­come an is­sue in gov­er­nors’ races

Modern Healthcare - - NEWS - By Paul Demko

Eliot Cut­ler, in­de­pen­dent can­di­date for Maine gov­er­nor, called a news con­fer­ence last week to de­cry the rul­ing by a fed­eral ap­pel­late court that could lead to the elim­i­na­tion of pre­mium sub­si­dies for Oba­macare en­rollees in Maine and 35 other states re­ly­ing on the fed­eral in­sur­ance ex­change.

“Had there been a state ex­change de­signed specif­i­cally for Maine … fam­i­lies across the state of Maine would not be won­der­ing when they go to sleep tonight if and when they will lose their health in­sur­ance,” Cut­ler said.

So far Cut­ler, who trails Repub­li­can Gov. Paul LePage, a hard-line Oba­macare foe, and Demo­cratic nom­i­nee U.S. Rep. Mike Michaud in the polls, is one of the first po­lit­i­cal can­di­dates across the coun­try to use the court de­ci­sion to fire up sup­port among vot­ers who ben­e­fit from the health­care re­form law’s sub­si­dies. But some ex­perts say other po­lit­i­cal can­di­dates may fol­low as they and vot­ers have time to as­sess the rul­ing.

The ram­i­fi­ca­tions of last week’s 2-1 rul­ing by the U.S. Cir­cuit Court of Ap­peals for the District of Columbia in Hal­big v. Burwell, which dis­al­lowed pre­mium sub­si­dies in states us­ing the fed­eral ex­change, are po­ten­tially im­mense. If that opinion is ul­ti­mately up­held by the U.S. Supreme Court and en­rollees in those states are de­nied sub­si­dies, more than 7 mil­lion Amer­i­cans would lose some $36 bil­lion in pre­mium as­sis­tance in 2016, ac­cord­ing to the Ur­ban In­sti­tute. It’s ex­pected

“Rick Scott’s re­fusal to bring Repub­li­cans and Democrats to­gether on af­ford­able health­care now means that 1 mil­lion mid­dle-class Florid­i­ans may find their af­ford­able health in­sur­ance far more ex­pen­sive.”


that many if not most would drop their cov­er­age. Those peo­ple would be dis­pro­por­tion­ately in Repub­li­can-led states, some of which saw big en­roll­ment on the fed­eral ex­change.

“It be­comes health re­form for blue states,” said John Holahan, an au­thor of the Ur­ban In­sti­tute re­port. “In the rest of the coun­try you don’t have health re­form.”

Repub­li­cans could face a back­lash if their con­stituents re­al­ize they could lose ben­e­fits due to a law­suit broadly backed by GOP politi­cians. That could be prob­lem­atic for Repub­li­can gov­er­nors fac­ing tough re-elec­tion con­tests in states such as Florida, Ge­or­gia, Maine, Penn­syl­va­nia and Wis­con­sin. Those gov­er­nors al­ready are un­der pres­sure from hos­pi­tals and other busi­ness groups to ex­pand Med­i­caid to lower-in­come adults as al­lowed un­der the Pa­tient Pro­tec­tion and Af­ford­able Care Act.

“If the end re­sult is if you live in New York you get (sub­si­dies) and if you live in Ge­or­gia you don’t, I don’t think that’s po­lit­i­cally palat­able,” said Kevin Wag­ner, a po­lit­i­cal science as­so­ciate pro­fes­sor at Florida At­lantic Univer­sity. “You start hit­ting mid­dle-class peo­ple, and they vote.”

In Florida, Demo­cratic gu­ber­na­to­rial can­di­date and for­mer Gov. Char­lie Crist quickly used the Hal­big rul­ing to at­tack Repub­li­can Gov. Rick Scott. Florida had among the high­est rates of ex­change en­roll­ment in the coun­try, with roughly 1 mil­lion sign-ups by mid-April. More than 90% of Florida ex­change en­rollees qual­i­fied for pre­mium sub­si­dies that on av­er­age cov­ered 80% of their monthly pre­mi­ums. “Rick Scott’s re­fusal to bring Repub­li­cans and Democrats to­gether on af­ford­able health­care now means that 1 mil­lion mid­dle-class Florid­i­ans may find their af­ford­able health in­sur­ance far more ex­pen­sive,” the Wall Street Jour­nal quoted a Crist cam­paign spokesman say­ing last week.

In Penn­syl­va­nia—where Repub­li­can Gov. Tom Cor­bett, a strong Oba­macare op­po­nent—is be­hind in the polls, health­care has been pushed to the back­ground be­hind ed­u­ca­tion fund­ing and the econ­omy as the top two is­sues, said Terry Madonna, a poll­ster and po­lit­i­cal science pro­fes­sor at Franklin & Mar­shall Col­lege, Lan­caster, Pa.

But there is the po­ten­tial for Demo­cratic can­di­date Tom Wolf—who has promised to take ag­gres­sive ac­tion to ex­pand ac­cess to health­care—to ex­ploit the le­gal threat to the sub­si­dies. It could be a po­tent is­sue given that 318,000 Penn­syl­va­ni­ans signed up for cov­er­age through the fed­eral ex­change and about 81% re­ceive pre­mium sub­si­dies.

Demo­cratic gov­er­nors in states that did not es­tab­lish a state-run ex­change—such as Illi­nois Gov. Pat Quinn, who is fac­ing a tough re-elec­tion con­test—also could face pres­sure to take ac­tion. Demo­cratic state Rep. Robyn Gabel said she may push a bill to es­tab­lish a state-run ex­change when the Illi­nois Leg­is­la­ture re­con­venes in Novem­ber. “Hav­ing the sub­si­dies only be avail­able to peo­ple who en­roll in a state ex­change is a very com­pelling rea­son to pass this bill,” Gabel said.

Some an­a­lysts ar­gue that gov­er­nors, if they want to, could find an easy le­gal

work­around to es­tab­lish a state-run ex­change that would com­ply with the Hal­big rul­ing. Ni­cholas Ba­gley, an as­sis­tant pro­fes­sor of law at the Univer­sity of Michi­gan, wrote that a state could “es­tab­lish an ex­change and ap­point a state-in­cor­po­rated en­tity to over­see and man­age it. That state-in­cor­po­rated en­tity could then con­tract with Health­ to op­er­ate the ex­change.”

At­tor­ney Mark Rust, chair of Barnes & Thorn­burg’s health­care prac­tice in Chicago, said the seven states such as Illi­nois with so-called part­ner­ship ex­changes—which rely on Health­ for en­roll­ments but ful­fill other du­ties such as plan man­age­ment—al­ready may meet the stan­dard for hav­ing a state-based ex­change. Other states could fairly eas­ily con­vert to this hy­brid model, he added.

Wag­ner said the po­lit­i­cal dy­nam­ics of health­care re­form have changed since 2010, when Repub­li­cans wrested con­trol of 11 gover­nor­ships from Democrats. “It’s not an ab­strac­tion any­more. There are mil­lions of peo­ple signed up,” he said. “His­tor­i­cally we don’t take (ben­e­fits) away, and (politi­cians) who try to tend to be find­ing another job.”

Still, most ob­servers be­lieve the po­lit­i­cal fall­out from the rul­ing will be lim­ited. That’s in part be­cause it’s widely an­tic­i­pated that the Hal­big rul­ing will be over­turned, pos­si­bly by the Supreme Court. Hours af­ter Hal­big was is­sued, a 4th U.S. Cir­cuit Court of Ap­peals panel unan­i­mously held in a sim­i­lar case that pay­ing sub­si­dies through the fed­eral ex­change is le­gal. The Obama ad­min­is­tra­tion im­me­di­ately an­nounced that it would ap­peal the Hal­big rul­ing to the full D.C. ap­pel­late court, which has a ma­jor­ity of Demo­cratic ap­pointees.

Be­yond that, po­lit­i­cal re­ac­tion could be muted be­cause there likely will be no fi­nal le­gal res­o­lu­tion, and no im­pact on sub­si­dies, un­til af­ter Elec­tion Day. “There’s no im­me­di­ate harm to any­one,” Madonna said. “For that rea­son I just don’t think it plays out as a sig­nif­i­cant is­sue.”

Su­san MacManus, a po­lit­i­cal science pro­fes­sor at the Univer­sity of South Florida, said the ex­change sub­sidy is­sue is prob­a­bly too com­pli­cated to res­onate with vot­ers. In Florida, the is­sue more likely to sway vot­ers is Repub­li­cans’ re­fusal to ex­pand Med­i­caid. “The Repub­li­can gov­er­nor did not take the Med­i­caid money,” MacManus said. “That’s go­ing to be the big­ger health­care is­sue.”

Florida Demo­cratic gu­ber­na­to­rial can­di­date and for­mer Gov. Char­lie Crist

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