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Feds Grant Flexibility To Other States As Kansas Awaits Ruling On Subsidies

With a U.S. Supreme Court decision on Affordable Care Act subsidies looming, state preparations again have exposed deep political divides over the federal health care law.

Democratic governors in Pennsylvania and Delaware moved to protect their residents’ federal health insurance subsidies in advance of a ruling in the King v. Burwell case, which could come before the end of the week.

But leaders in most Republican-led states stood pat while criticizing the law that provided the subsidies for being written in a way that could take them away if the court rules that only states with their own health insurance exchanges are eligible.

In Kansas, where Republicans hold supermajorities in both chambers, 70 GOP legislators recently signed a letter stating they would not establish a state-based exchange and urging Congress to “reconsider or re-examine Obamacare.”

A statement released Monday from Sen. Mary Pilcher-Cook and Rep. Dan Hawkins, who head the Legislature’s health committees, went further, urging Congress to repeal the law entirely.

“The people of Kansas didn’t write this law, they didn’t want this law, and they’re tired of having to pay for this law,” said Pilcher-Cook, a Republican from Shawnee. “Obamacare is nothing more than Washington telling us how to buy health care, and if Congress won’t stand up for our citizens, I will. We will not spend one more penny fixing Congress’ mistakes, whether that means rejecting Medicaid expansion or a state exchange.”

About 77,000 Kansans receive federal subsidies for insurance through healthcare.gov that could disappear depending on how the justices rule.

The joint statement from Hawkins and Pilcher-Cook states that “if the Justices invalidate the subsidies, states will once again be pressured to implement Obamacare by establishing a state-based exchange,” but Kansas will not relent.

Contingency plans

Thirty-four states use the federal insurance exchange, healthcare.gov; the rest, as well as the District of Columbia, retain some control over their exchanges. 

In Pennsylvania, Gov. Tom Wolf’s administration got permission from the federal government to continue using the federal exchange at healthcare.gov while taking other steps to make it a state-partnership exchange.

Ron Ruman, a spokesman for the Pennsylvania Insurance Department, said that plan will shield the subsidies that about 380,000 Pennsylvanians use to buy health insurance while saving the state the startup costs that quickly ballooned in other states that established their own exchanges.

“Our role essentially would be approving the (exchange) plans, which is something we do with many of our other insurance plans anyway,” Ruman said.

Additionally, Pennsylvania would take over certain administrative functions like running a call center and a consumer education program. It also would take the role of levying a fee on insurance plans sold on the exchange — currently 3.5 percent — and then remit some of that money to the federal government for use of healthcare.gov.

Ruman said those are contingency plans in case the U.S. Supreme Court rules for the plaintiffs in King v. Burwell. If the court doesn’t, Pennsylvania would maintain the status quo and allow residents to use healthcare.gov under full federal administration.

“Right now we really are dependent on what the court would say initially,” Ruman said. “Our goal and our plan is to, if need be, have this up and running by open enrollment November 1.”

Jim Grant, spokesman for the Delaware Department for Health and Social Services, said that state’s plan is much the same but with different starting points. Delaware already had a “partnership exchange” in which it used healthcare.gov but handled consumer outreach, customer assistance and plan certification.

The only difference in the new plan, he said, would be the state of Delaware taking responsibility for levying the exchange fee and remitting some of the proceeds to the federal government for use of healthcare.gov.

Arkansas began plans to transition to a state exchange under Democratic Gov. Mike Beebe. Under his successor, Republican Gov. Asa Hutchinson, those plans have been put on hold pending the King v. Burwell decision. The state has conditional federal approval to make the transition, but not until 2017, according to the original timeline.

Kansas awaits ruling

Clark Shultz, legislative liaison for the Kansas Insurance Department, said Kansas Insurance Commissioner Ken Selzer has been in talks with state legislators and the Kansas congressional delegation about how to respond to the King v. Burwell ruling.

Shultz said continuing to use healthcare.gov but taking over some administrative responsibilities could be “a viable solution in states where the Legislature would adopt that.”

“I suppose you could make the case that if you do that, that’s a state declaring that the federal exchange is going to be their state exchange,” he said. “That’s part of the (legal) battle, I suppose. Now does that fulfill the obligations? You know, we don’t know what the court is going to say.”

While much of the attention about the upcoming decision has focused on its effects on consumers losing subsidies, Shultz said Selzer also has been in talks with insurance company leaders about what it could mean to their industry.

Insurance companies are concerned that if a decision immediately invalidates subsidies, it could cause healthy Kansans to stop paying their suddenly unsubsidized premiums. That would leave insurers still on the hook for sick clients’ medical bills without the benefit of a larger premium pool to diffuse risk.
The insurance companies would not be able to adjust their premiums until the next open enrollment period.

The implications of that worst-case scenario for the insurance industry could spur Congress to extend the ACA subsidies at least through the end of the year and possibly until after the 2016 election.

Republicans leaders in both chambers and the all-Republican Kansas congressional delegation havehinted at a short-term extensionwhile Congress works to dismantle the law and replace it with something more to the GOP’s liking.

Shultz said the insurance department will adjust to the court ruling when it comes down.

“We’re trying to protect the consumer, and Commissioner Selzer has truly tried to make that his issue in his talks with others and trying to be there to offer alternatives as conditions allow,” Shultz said.

Andy Marso is a reporter for KHI News Service in Topeka, a partner in the Heartland Health Monitor team.

Andy Marso is a reporter for KCUR 89.3 and the Kansas News Service based in Topeka.
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