Future of State Exchanges Uncertain After King v. Burwell Ruling

The Supreme Court's recent ruling in King v. Burwell could end states' efforts to establish their own exchanges under the Affordable Care Act and might lead to some already-established state exchanges switching to the federal exchange, Modern Healthcare reports (Dickson, Modern Healthcare, 6/25).

Background

On Thursday, the Supreme Court voted 6-3 to uphold the Affordable Care Act's subsidies to help U.S. residents purchase coverage through the federal exchange. A ruling striking down the subsidies could have eliminated about $28.8 billion in subsidies to 9.3 million individuals in 34 states in 2016, according to an Urban Institute analysis (California Healthline, 6/25).

Incentive is Gone

With subsidies ensured in all states, it is unlikely additional states will move forward with plans to establish their own exchanges, according to Modern Healthcare.

Sabrina Corlette, senior research fellow at Georgetown University's Center on Health Insurance Reforms, said, "There is probably minimal incentive at this point to create an exchange from scratch."

Further, some states that already created their own exchanges could consider switching to the federal exchange (Modern Healthcare, 6/25).

Corlette said that some states underestimated the difficulty and expense of running their own exchanges. "There may be a little bit of buyers' remorse going on in some state capitals right now," she said (Sanger-Katz, "The Upshot," New York Times, 6/25).

According to Modern Healthcare, it is possible that some states will want some aspect of control over their exchanges and might consider a federal-state partnership. For example, Hawaii and Vermont -- where state officials have struggled with IT issues related to their exchanges -- might consider relying on HealthCare.gov for enrollment (Modern Healthcare, 6/25).

Plans Unclear for Three States; Pa. Dropping Exchange Efforts

Meanwhile, the next steps are unclear for four states that had been considering contingency plans if the high court struck down the subsidies, the Washington Post reports.  Arkansas, Delaware, Michigan and Pennsylvania were in development or considering building their own exchanges, according to the Post (Phillips, Washington Post, 6/25).

Pennsylvania Gov. Tom Wolf (D) on Thursday announced that his state would withdraw its application to take over aspects of the state's exchange in the wake of the high court ruling (Levy, AP/Sacramento Bee, 6/25).

According to the Post, the other three states now have the option of ending the work they have done to establish their own exchange, despite some of the states already having made "significant progress" (Washington Post, 6/25).

Ruling Spares States

In related news, the Supreme Court's ruling to maintain the subsidies eliminated a difficult choice for many states -- establish an exchange despite significant opposition in their state, or allow numerous state residents to go without coverage, CQ News reports.

National Academy of State Health Policy Executive Director Trish Riley said the ruling "gives states more certainty and more options" moving forward. Further, Riley said it would not be surprising to see states examine ways to become more innovative in how they use federal funding to provide health care. Riley said she expects more states to apply for innovation waivers from CMS (Evans, CQ News, 6/25).