WASHINGTON Feb 17 Five Republican state
governors say they will not rescue a crucial part of Obamacare
if it is struck down by the Supreme Court, underlining the
prospect for a chaotic aftermath to a ruling that could force
millions of Americans to pay much more for coverage or lose
their health insurance.
The Supreme Court is due to hear opening arguments in the
case known as King v. Burwell on March 4, marking the second
major challenge to President Barack Obama's Affordable Care Act
(ACA) after the justices ruled in 2012 against a claim that it
was unconstitutional. The latest case tests the tax-credit
subsidies at the core of Obamacare.
In its ruling expected by June, the high court could bar the
federally run insurance marketplace from providing the subsidies
in at least 34 states. That could throw the insurance system
into turmoil as states respond in starkly different ways.
In response to Reuters' queries, spokespeople for the
Republican governors of Louisiana, Mississippi, Nebraska, South
Carolina and Wisconsin said the states were not willing to
create a local exchange to keep subsidies flowing. Republicans
argue that Obamacare is unacceptable government intervention
that raises costs for consumers and businesses.
"State exchanges are the federal government's way of
sticking states with the cost and responsibility of a massive
new bureaucratic program," said Chaney Adams, a spokeswoman for
South Carolina Governor Nikki Haley.
"The right decision was made for South Carolina, and
Governor Haley would make it again today."
State government officials in Georgia, Missouri, Montana and
Tennessee - a mix of Republicans and Democrats - said that
opposition by majority Republican state legislators could make
it all but impossible to set up a new exchange.
Those nine states combined are home to 1.4 million people
who have signed up for subsidized coverage in 2015, according to
government data. The fate of 5.1 million residents in the
remaining 25 states that have signed up for subsidized benefits
on the HealthCare.gov exchange is also unclear.
Six states - Delaware, Maine, Ohio, Pennsylvania, South
Dakota and Virginia - are discussing contingency plans to keep
the subsidies but each faces substantial logistical or political
barriers, according to officials.
Ten states did not respond to Reuters queries, while three
others had no comment. Iowa, Wyoming, Oklahoma and West Virginia
said they were not currently considering setting up exchanges;
Alaska said it has not ruled it out; and Arkansas said it was
moving toward creating a state exchange in 2017.
Republicans are opposed to Obamacare, but such a ruling
could have a political cost in their states if hundreds of
thousands of low-to-middle-income people are priced out of
health coverage. Even if states say they don't plan to set up
exchanges, that could change closer to the ruling or afterwards
as they come under pressure to avert spiraling insurance costs.
"We can say with some confidence that the insurance markets
are likely to melt down, because only the sick people will stay
in them and the others will find it unaffordable," said Drew
Altman, who heads the non-partisan Kaiser Family Foundation.
STATES WEIGH WORKAROUNDS
The plaintiffs in King v. Burwell contend that the
Affordable Care Act allows subsidies to be distributed only
through state-based exchanges. Thirteen states and the District
of Columbia set up their own exchanges from October 2013.
The remainder of states either opposed the law or could not
find ways to make their own exchanges work, so the federal
government stepped in. Insurers including Aetna Inc,
Cigna Corp and Humana Inc are major players in
the HealthCare.gov markets.
About 87 percent of enrollees in those states qualify for
Obamacare subsidies, which can reduce a family's healthcare bill
by thousands of dollars annually. A Milwaukee family of four
earning the median U.S. household income of $53,000, for
example, could receive $7,800 a year in subsidies, according to
the Kaiser Family Foundation. A ruling against Obamacare would
raise their monthly premium payments by at least $652.
Congress could respond to a negative ruling with legislation
to keep subsidies in place. But partisan gridlock would make any
action a challenge.
Health policy experts say the most likely fix to a ruling
against the administration would involve a new type of
partnership with the federal government or between states.
Maine and Delaware have considered a model in which the
state creates the exchange in name but still relies on the
federal government's technology systems to run it. Marketplaces
for Nevada, New Mexico and Oregon have operated in that fashion.
But experts say this model could be rejected by the Supreme
Court, because the ACA does not list the federal government as
an entity with which states can contract for exchange services.
Other workarounds that have been discussed include setting
up regional exchanges that cover multiple states, or keeping the
HealthCare.gov website operating as a place to sign up for
insurance but allowing states to disburse the federal subsidies.
At the very least, states that are open to setting up their
own exchange hope the Supreme Court allows for a transition
period if it rules against the administration.
"A state-based exchange from scratch in six months is
probably not doable. We're trying to see what other states are
doing and what may work and may not work," said Eric Cioppa,
Maine's leading insurance official.
(Reporting by David Morgan; Editing by Michele Gershberg and