Few contingencies are ready if health care law falls
Washington — Millions of Americans could soon lose health insurance when the Supreme Court decides the latest challenge to the Affordable Care Act, but states have made few, if any, concrete plans to deal with the chaotic fallout potentially just weeks away.
When the court rules later 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.
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.
"This would be hard to fix," the president told reporters while at the G-7 conference in Germany last week.
The result could jeopardize access to medical care for more than 6 million Americans who now 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 some 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.
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.
The Obama administration, the law's congressional architects and many outside legal experts disagree. Obama called the challenge, known as King v. Burwell, "a twisted interpretation of four words," noting: "Frankly, it probably shouldn't even have been taken up."
If the court backs the challengers, Congress could restore subsidies and avoid any disruption of markets by passing a one-page bill that clarifies that subsidies are available in all states. "Congress could fix this whole thing with a one-sentence provision," the president said Monday.
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.
Those demands would likely precipitate a stand-off between Congress and the White House that could drag on for months, even as consumers across the country lose coverage and premiums skyrocket amid the collapse of insurance markets.
GOP congressional leaders haven't even been able to agree among themselves on what to ask for, despite pledging earlier 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."
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 likely require approval from GOP-controlled 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. These include 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 health care law.
And federal health care 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 M. Burwell said Thursday at a forum organized by the Wall Street Journal. "The number of uninsured would jump dramatically."