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Court Spares States from Difficult Choices on Health Care

By Marissa Evans, CQ Roll Call

June 25, 2015 -- The Supreme Court's decision to uphold a key provision of 2010 health care law spared legislators in 34 states from what many of them might have seen as a Hobson's choice: Create a health insurance marketplace under the provisions of the law that some vociferously opposed, or leave an estimated 6.4 million low- and moderate-income constituents without access to affordable coverage.

The King v. Burwell case challenged whether under the law subsidies could be given to residents of states that didn't set up marketplaces for residents to buy private health insurance. About 87 percent of enrollees on the federal exchange—the vehicle for buying health insurance in states without marketplaces—received an average of $272 in tax credits nationwide. 

Last week's ruling preserved the status quo, whether lawmakers liked it or not.

Consider Texas Republican Gov. Greg Abbott's response to the ruling: 

"The Supreme Court abandoned the Constitution to resuscitate a failing health care law. Today's action underscores why it is now more important than ever to ensure we elect a President who will repeal Obamacare and enact real healthcare reforms."

With such sentiments lingering in many states, it appears unlikely that President Barack Obama's signature legislative achievement will be embraced nationwide in the near term. 

"You won't see more movement toward a state-based market because there won't be pressure to do so," said Heather Howard, director of Princeton University's State Health Reform Assistance Network.

Texas and Florida, which have two of the largest uninsured populations in the country, are examples. 

About 1.3 million Florida residents were receiving an average of $294 to help them buy coverage through the federal marketplace during the last open enrollment period. During the 2015 regular and special legislative sessions in Tallahassee, the closest state lawmakers came to authorizing a marketplace was a private one for low-income residents under Medicaid expansion. That bill failed. 

Republican Wisconsin Gov. Scott Walker, who is also a likely presidential candidate, has more than 166,000 residents keeping their subsidies, which averaged $315. Walker has said in prior speeches and interviews that he won't allow Wisconsin to have a state marketplace. 

Republican State Sen. Leah Vukmir, chairwoman of the Wisconsin Senate's Committee on Health and Human Services (HHS), said she and her colleagues "prefer states to be the laboratories of reform" when it comes to health care issues. She said while the decision allows consumers to keep their subsidies it's still not helping them afford the rising cost of insurance plans.

"It hasn't solved the problem it was supposed to," Vukmir said in an interview. "There was hope it would give states the ability to go back to the drawing board and basically continue to do things we had done in the past and now unfortunately unless there's a change with the next presidential election, those next reforms are much harder to do." 

Vukmir said there's no will in the Wisconsin legislature to create a state marketplace and that she will instead push for a bill to create more transparency about health care costs. 

Before the court case, 16 states and the District of Columbia had set up their own marketplaces for residents to buy health insurance.

Some of the other states were moving toward establishing marketplaces as a precaution in case the court struck down the subsidies in non-marketplace states. Marketplace plans submitted by Arkansas, Delaware, and Pennsylvania were conditionally approved by the Centers for Medicare and Medicaid Services on June 15. 

But Democratic Pennsylvania Gov. Tom Wolf said yesterday that his state's plan would be dropped.

"I took steps to protect Pennsylvania's consumers by putting in place a contingency in the event the Supreme Court ruled people are not eligible for subsidies, but I am pleased to say that we will no longer need to rely on this plan," Wolf said in a news release. "My administration will be notifying the federal government that we will be withdrawing our plan to set up a state-based health insurance marketplace in Pennsylvania."

The state was on track to follow Nevada, New Mexico and Oregon by using federal technology to operate the backend of the exchange. Other states could still pursue that option—though they'll have to pay a fee for the support starting in 2017. States already using that arrangement are in talks with the Centers for Medicare and Medicaid Services over the fees. 

Arkansas won't back away from pursuing a state exchange just yet. Republican Gov. Asa Hutchinson's Legislative Taskforce on Healthcare Reform will be giving recommendations by the end of the year on whether the state should move forward with an exchange. The conditional waiver gives them time.

"I am convinced now more than ever that we need to proceed with caution to measure the costs to the taxpayers and the reliability of the outcome as we consider the potential of a state exchange," Hutchinson said in a news release. 

Trish Riley, executive director for the National Academy of State Health Policy, said that now the decision has come out it "gives states more certainty and more options" for how they move forward and think about coverage affordability and innovation. 

"A close eye will be kept on different state exchanges and how they grow and expand their reach," Riley said.

She also said it wouldn't be surprising to see states looking more closely at applying for state innovation waivers. Those waivers would allow states to finance entirely new approaches to providing affordable health care by using federal dollars that otherwise would have gone to pay for insurance premium subsidies in the state. 

"It's a heavy lift for states and it's not available until 2017 but it provides an opportunity for states to think of additional ways to reform health insurance," Riley said.

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