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 establish 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.