Most states un­likely to cre­ate ex­changes to save sub­si­dies

Modern Healthcare - - NEWS - By Lisa Schencker and Vir­gil Dick­son

Don’t count on many states to quickly es­tab­lish their own in­sur­ance ex­changes to keep their res­i­dents cov­ered if the U.S. Supreme Court this month strikes down pre­mium sub­si­dies in states us­ing the fed­eral ex­change.

Elected of­fi­cials in most of the 34 to 37 states where sub­si­dies are at risk don’t know or won’t say what they’ll do if the jus­tices elim­i­nate the Af­ford­able Care Act sub­si­dies in their states, a Mod­ern Health­care sur­vey of the states found. In­stead, many states are play­ing wait-and-see, hop­ing Congress or the Obama ad­min­is­tra­tion will bail them out if thou­sands of res­i­dents sud­denly lose af­ford­able cov­er­age. Even in states where gov­er­nors or law­mak­ers want to set up a state-run ex­change, fierce Repub­li­can op­po­si­tion, high costs, lo­gis­ti­cal hur­dles and tim­ing likely would prove in­sur­mount­able bar­ri­ers.

The high court is ex­pected to is­sue a rul­ing in late June in King v. Bur­well, in which ACA op­po­nents claim that the law’s lan­guage al­lows sub­si­dies only through ex­changes “es­tab­lished by the state” and not through the fed­eral ex­change.

“Even un­der the best of cir­cum­stances, with all the po­lit­i­cal winds at their back, the states would have a hard time ramp­ing up for Nov. 1 open en­roll­ment,” said Ni­cholas Ba­gley, an as­sis­tant pro­fes­sor of law at the Uni­ver­sity of Michi­gan, who sup­ports the ACA.

If the court rules against the ad­min­is­tra­tion, an es­ti­mated 6.4 mil­lion Amer­i­cans in states us­ing the fed­eral ex­change would lose sub­si­dies to­tal­ing $1.7 bil­lion, ac­cord­ing to the Kaiser Fam­ily Foun­da­tion. Most, par­tic­u­larly younger and health­ier peo­ple, likely would drop cov­er­age. That would se­verely dis­rupt the in­di­vid­ual in­sur­ance mar­kets. Un­less the court stays its rul­ing, those los­ing sub­si­dies would likely have to pay full pre­mi­ums by Aug. 1 or face cov­er­age can­cel­la­tion, Ba­gley said.

Un­der ex­ist­ing HHS rules, states that want to es­tab­lish their own ex­changes for 2016 en­roll­ment would have to ob­tain con­di­tional fed­eral ap­proval for their plan by mid-June. Some ex­perts, how­ever, say the Obama ad­min­is­tra­tion likely would do ev­ery­thing it could to clear the way for states to set up their own ex­changes. But ad­min­is­tra­tion of­fi­cials and other ex­perts say HHS has lit­tle lee­way.

In ad­di­tion, fed­eral funds to help states es­tab- lish their own ex­changes are no longer avail­able. And at least nine states have bans on im­ple­ment­ing fur­ther pro­vi­sions of the ACA with­out leg­isla­tive ap­proval, ac­cord­ing to the Na­tional Con­fer­ence of State Leg­is­la­tures.

Ne­vada, New Mex­ico and Ore­gon each au­tho­rized a state-run ex­change but cur­rently are us­ing the fed­eral ex­change for most Oba­macare en­roll­ment func­tions. Legal ex­perts say it’s not clear whether a court rul­ing strik­ing down the sub­si­dies would af­fect their res­i­dents.

Some states may con­sider set­ting up ex­changes that rely on the fed­eral Health­Care.gov tech­nol­ogy. But Ba­gley notes that the ad­min­is­tra­tion has of­fered no guid­ance to states about how they can es­tab­lish a state ex­change along those lines.

Michael Can­non, the Cato In­sti­tute’s

direc­tor of health pol­icy stud­ies and a key strate­gist be­hind the legal chal­lenge to the sub­si­dies, said it’s prob­a­bly too late for states to set up their own ex­changes in time for the next open en­roll­ment in Novem­ber.

But head­ing into the 2016 elec­tions, even Repub­li­can lead­ers in red states would be acutely sen­si­tive to vot­ers’ re­ac­tions to a mas­sive loss of cov­er­age. What fol­lows is a roundup of where the states in ques­tion stand on es­tab­lish­ing their own ex­change if the Supreme Court strikes down the sub­si­dies.

Likely to try

In Penn­syl­va­nia, new Demo­cratic Gov. Tom Wolf has sub­mit­ted a plan to the CMS to launch a state ex­change to pre­serve sub­si­dies for 349,000 res­i­dents who cur­rently re­ceive them. But it’s un­clear if the GOP-con­trolled House and Se­nate would try to block the ef­fort. GOP leg­isla­tive lead­ers went along with Med­i­caid ex­pan­sion un­der the ACA last year.

Delaware, which has a Demo­cratic gover­nor and a Demo­cratic-con­trolled Leg­is­la­ture, has sub­mit­ted a “blue­print” ap­pli­ca­tion to po­ten­tially run a state-based ex­change while con­tin­u­ing to rely on the fed­eral gov­ern­ment’s en­roll­ment plat­form. Cur­rently, about 19,000 res­i­dents re­ceive pre­mium sub­si­dies.

Might try

Illi­nois, a blue state which has a new Repub­li­can gover­nor and a Demo­cratic-con­trolled Leg­is­la­ture, came close to es­tab­lish­ing its own ex­change in pre­vi­ous years when the state had a Demo­cratic gover­nor who sup­ported the ACA. Leg­is­la­tion to set up an ex­change passed the Se­nate but not the House. Now, how­ever, Gov. Bruce Rauner, who has op­posed the ACA in the past, has in­di­cated that he won’t make a de­ci­sion un­til the rul­ing comes out. Cur­rently, about 232,000 Illi­noisans re­ceive sub­si­dies.

Pur­ple Ohio is a key swing state in next year’s elec­tions and Repub­li­can Gov. John Ka­sich, one of the first GOP gov­er­nors to ex­pand Med­i­caid, has said he’s open to es­tab­lish­ing a state-run ex­change to pre­serve cov­er­age. But that likely would be a hard sell in the Repub­li­can-con­trolled Leg­is­la­ture, which strongly re­sisted Med­i­caid ex­pan­sion. Cur­rently, about 161,000 Ohioans re­ceive sub­si­dies.

In Arkansas, a red state, there were pre­vi­ous dis­cus­sions about es­tab­lish­ing a state-run ex­change by 2017. But that was be­fore a Repub­li­can gover­nor re­placed a Demo­cratic one in the 2014 elec­tions and more con­ser­va­tive Repub­li­cans gained a stronger hold on the Leg­is­la­ture. Even so, Arkansas, which ex­panded Med­i­caid

At least nine states have bans on im­ple­ment­ing fur­ther pro­vi­sions of the ACA with­out leg­isla­tive ap­proval, ac­cord­ing to the Na­tional Con­fer­ence of State Leg­is­la­tures.

early on, is con­sid­ered one of the like­li­est GOP-led states to con­sider a state-run ex­change. Cur­rently, about 48,000 res­i­dents re­ceive sub­si­dies.

Utah, a red state with a Repub­li­can gover­nor and GOP-con­trolled Leg­is­la­ture, pre­vi­ously set up a small-busi­ness ex­change un­der the ACA and may be will­ing to con­sider set­ting up its own in­di­vid­ual-mar­ket ex­change. Gov. Gary Her­bert cur­rently is talk­ing with the ad­min­is­tra­tion about ex­pand­ing Med­i­caid.

“We would need to ne­go­ti­ate var­i­ous con­di­tions with the ad­min­is­tra­tion,” a spokesman for the gover­nor said. Cur­rently, about 86,000 res­i­dents re­ceive sub­si­dies.

In­di­ana, which has a Repub­li­can gover­nor and a GOP-con­trolled Leg­is­la­ture, re­cently ex­panded Med­i­caid un­der the ACA. Doug Leonard, pres­i­dent of the In­di­ana Hos­pi­tal As­so­ci­a­tion, said that, while it’s too soon to say whether the state’s elected of­fi­cials will move to es­tab­lish a state ex­change, Gov. Mike Pence seems com­mit­ted to ex­pand­ing cov­er­age. Cur­rently, nearly 160,000 In­di­anans re­ceive sub­si­dies.

Mon­tana, a red state with a Demo­cratic gover­nor and a Repub­li­can-con­trolled Leg­is­la­ture, re­cently passed a law to ex­pand Med­i­caid un­der the ACA. A spokesman for Gov. Steve Bul­lock said op­tions for a post- King rul­ing are be­ing dis­cussed but de­clined to elab­o­rate.

“The gover­nor clearly wants to make sure the folks in Mon­tana have health in­sur­ance,” he said.

But the Mon­tana Leg­is­la­ture hasn’t been keen on es­tab­lish­ing an ex­change, said Dick Brown, pres­i­dent of the Mon­tana Hos­pi­tal As­so­ci­a­tion. Cur­rently, nearly 42,000 Mon­tanans re­ceive sub­si­dies.

In Michi­gan, Gov. Rick Sny­der, con­sid­ered a Repub­li­can mod­er­ate who ex­panded Med­i­caid, has said it is im­por­tant to wait to see how the Supreme Court rules, then watch how fed­eral law­mak­ers re­spond. But it might be tough to win ap­proval from the state’s GOP-con­trolled Leg­is­la­ture. Cur­rently, about 228,000 Michi­gan­ders re­ceive sub­si­dies.

New Hamp­shire, a pur­ple state with a Demo­cratic gover­nor and a GOP-con­trolled Leg­is­la­ture, now has a part­ner­ship ex­change and has ex­panded Med­i­caid. But GOP law­mak­ers pushed through a law bar­ring the state from es­tab­lish­ing an ex­change. There is pending leg­is­la­tion that would re­verse that. Cur­rently, nearly 30,000 New Hamp­shire res­i­dents re­ceive sub­si­dies.

In New Jer­sey, a blue state, ob­servers are watch­ing to see what po­si­tion Repub­li­can Gov. Chris Christie, who is ex­plor­ing a run for pres­i­dent, will take on set­ting up a state-run ex­change, which likely would have the sup­port of the Demo­crat­ic­con­trolled Leg­is­la­ture. Christie has ex­panded Med­i­caid. Cur­rently, about 172,000 res­i­dents re­ceive sub­si­dies.

Un­likely to try

There are 23 states where fierce op­po­si­tion to Oba­macare from Repub­li­can lead­ers, and other fac­tors make it un­likely that there will be any im­me­di­ate ef­forts to es­tab­lish a state- run ex­change. Those states are Alabama, Alaska, Ari­zona, Florida, Ge­or­gia, Iowa, Kansas, Louisiana, Maine, Mis­sis­sippi, Mis­souri, Ne­braska, North Carolina, North Dakota, Ok­la­homa, South Carolina, South Dakota, Ten­nessee, Texas, Vir­ginia, West Vir­ginia, Wis­con­sin and Wy­oming. That’s un­likely to change even if the Supreme Court knocks out the sub­si­dies re­ceived by a to­tal of 4.86 mil­lion peo­ple in those states.

Paul Salles, CEO of the Louisiana Hos­pi­tal As­so­ci­a­tion, said there’s “zero dis­cus­sion” about set­ting up a state ex­change in Louisiana, where Repub­li­can gover­nor and pres­i­den­tial as­pi­rant Bobby Jin­dal has been a lead­ing ACA critic.

There are 23 states where fierce op­po­si­tion to Oba­macare from Repub­li­can lead­ers, a lack of re­sources and/or other fac­tors make it un­likely that there will be any im­me­di­ate ef­forts to es­tab­lish a state-run ex­change.

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