June 15, 2015 - The Kansas City Star
3 states get feds' OK for health insurance marketplaces
By MARC LEVY and RICARDO ALONSO-ZALDIVAR
Associated Press
HARRISBURG, Pa.
The Obama administration gave conditional approval Monday to Arkansas,
Delaware and Pennsylvania to expand their roles in the insurance marketplaces
created under the 2010 health care law, ahead of a high court decision that
could wipe out federal health insurance subsidies for millions.
Letters from U.S. Health and Human Services Secretary Sylvia Burwell to
Pennsylvania Gov. Tom Wolf and Delaware Gov. Jack Markell, both Democrats, and
Arkansas Republican Gov. Asa Hutchinson say the approval reflects the
expectation that the states' roles in the marketplaces will expand beginning in
the 2016 policy year.
Right now, the federal government operates the marketplaces in about three
dozen states, including Pennsylvania, while some states, including Delaware and
Arkansas, are in charge of some functions. But plaintiffs in a lawsuit before
the U.S. Supreme Court say the Obama administration is unlawfully providing
subsidies to millions who buy insurance through the federally run marketplaces.
If the court agrees, it could mean the end of the subsidies to most or all of
those states.
Conversely, federal subsidies could continue to flow to states that run their
own marketplaces, keeping insurance premiums lower. That is what helped
compelled the applications by Delaware and Pennsylvania.
In a statement, Wolf said his state is "now in a better position to provide
security to those who may lose their subsidies, and possibly, not be able to
afford their health insurance." However, approval from the Republican-controlled
Legislature would be required for any money needed to run a marketplace and
potentially for the legal authority, and it is not clear where the body will
stand on the issue.
Hutchinson, who took office in January, followed through on actions under his
Democratic predecessor, Gov. Mike Beebe, to seek more control over the state's
marketplace, although the state's Republican-controlled Legislature earlier this
year approved a measure that holds up plans for a state-run marketplace until
the high court rules. The Legislature would then have to decide on the
marketplace if justices side with the plaintiffs.
Delaware officials said Monday they have made no final decision on whether to
move entirely to a state-based marketplace or leave some functions to the
federal government. Its status as a partnership state that already runs some
marketplace functions puts it in a legal "gray area" when it comes to the
potential impact of the subsidies case, Delaware Health and Social Service
Secretary Rita Landgraf said.
Pennsylvania is also looking at a model that would leave some functions to
the federal government, such as using the federal web portal healthcare.gov to
enroll people.
Delaware and Pennsylvania received conditional approval to run marketplaces
for individual and small business coverage plans beginning in 2016. Arkansas
received the conditional approval to run the small business marketplace in 2016
and the individual marketplace in 2017.
The Obama administration's initial approval lays out a path for other states
to follow if the Supreme Court overturns the subsidies. It also underscores that
there's bipartisan concern over the uncertainty generated by the case.
Other GOP governors may look to Hutchinson's example, especially if Congress
cannot agree on a fix.
If the court rules against the subsidies, President Barack Obama is expected
to put the onus on Congress for restoring the aid. At the same time, Burwell has
now signaled that she is willing to work with any state — Republican or
Democratic — to come up with an administrative work-around.
Arkansas, Delaware and Pennsylvania are exceptions among the states that
would be most affected by a ruling invalidating the subsidies. Twenty-six of the
states where subsidies are most at risk have Republican governors, and many of
those legislatures are also under GOP control.
More than 10 million people nationwide have signed up for private health
insurance this year under Obama's signature health care law. In the states
involved in the court case, 6.4 million people are receiving subsidies worth
more than $1.7 billion a month in total.
The court case revolves around the literal meaning of a handful of words in
the complex law.
Plaintiffs say the law only allows subsidies in states that set up their own
insurance marketplace. Only 13 states and Washington, D.C., are running their
own markets this year. The Obama administration says that, when read in context,
the law allows subsidies in all 50 states regardless of whether federal
healthcare.gov is in charge of sign-ups.