No backup should Supreme Court scrap ACA subsidies

By the end of this month, the Supreme Court will announce its decision in King v. Burwell, the latest high-stakes fight over the Affordable Care Act. If the government loses, more than 6 million residents of the 34 states that declined to establish their own health care exchanges could lose subsidies that help them purchase insurance.

In principle, those 34 states could restore subsidies by creating their own insurance exchanges. Political leaders certainly will come under intense pressure to do so, although time is short to get an exchange up and running for 2016.

Given the potential need for swift action, do the states have contingency plans in place? Could they move quickly in the wake of an adverse decision?

In question is whether the law specifically allows subsidies only for state-run exchanges. Iowa has neither a state-run nor a federally run program, but a partnership, so Iowans would be among those who would be unable to receive subsidies.

With financial support from the Commonwealth Fund, a study was conducted of five states that could lose tax credits: Florida, Michigan, New Hampshire, North Carolina and Utah. Dozens of interviews conducted by the research team with political leaders, agency officials and advocacy organizations in those states indicate that the states are almost completely underprepared for the Supreme Court's decision in King.

As North Carolina Gov. Pat McCrory, a Republican, said in March, 'There's no B plan.”

The difficult politics surrounding health care reform make it hard for either Democrats or Republicans to engage in serious planning. Democrats don't want to get ahead of the Obama administration or signal to the Supreme Court that a ruling will not have major consequences.

Republicans, who control at least one house in the legislature in all but three of the 34 states that use the federal exchange, told us that while they fear being blamed if people lose insurance, they also worry about the political repercussions of supporting any element of the ACA, including the creation of a state exchange.

The safest approach is to sit tight. Pennsylvania and Delaware are the only states whose leaders have indicated they will create a state exchange if the government loses in King. An exchange bill is before the Maine Senate after having passed the House.

Of the states examined, New Hampshire is best positioned to move quickly after the ruling comes down in King. Some policymakers there hope to pass a law - nicknamed the 'magic wand” - that simply declares the federal healthcare.gov website to be a state-based exchange within New Hampshire's borders.

In each of the five states, political resistance to new exchanges is expected to be fierce. The speaker pro tempore in the Florida House of Representatives, for example, said 'Florida has no desire to create a state-based exchange,” even if the government loses in King. Republicans' recent rejection of Medicaid expansion suggests that they aren't bluffing.

Legislators in Michigan believe that any discussion of a state exchange could spur a resurgence of the Tea Party, whose opposition doomed Republican Gov. Rick Snyder's original effort to create an exchange.

And the leader of the North Carolina Senate is an ardent foe of the ACA.

Timing is another concern. State policymakers don't know when they would need to make tough decisions. When will the court's ruling go into effect, and when will people lose coverage? Will Congress pass a temporary patch? If so, how long will it last?

Policymakers also expressed frustration with the Obama administration's silence about its plans. Most states expect the administration to make it easier for them to transition to state exchanges.

But they are reluctant to make concrete plans when they don't know what the federal government expects of them.

In the states that have failed to lay the groundwork, it probably will be impossible to set up an exchange in time for 2016. Open enrollment for next year is scheduled to begin this fall - meaning insurance companies proposed rates to state regulators months ago.

Even with the full-throated support of the political establishment, many leaders said they would need at least 12 to 18 months to create a new exchange.

Compounding the timing challenge, only one legislature of the five states studied - Michigan - and eight of the 34 affected nationally will be in session after the court's ruling. Although a special session appears likely in Utah, creating an exchange may not be on the agenda.

It's far from clear that special sessions will be called elsewhere.