Hatch To Offer Plan if Federal Exchange Subsidies Are Struck Down

On Monday, Sen. Orrin Hatch (R-Utah) announced he will introduce a "short-term solution" to help U.S. residents obtain subsidies to purchase coverage through the federal exchange if the Supreme Court rules they are illegal, Modern Healthcare reports (Demko, Modern Healthcare, 2/23).

Background

The subsidies have been challenged in the upcoming Supreme Court case King v. Burwell. At issue in the case is that while the Affordable Care Act says subsidies are available to help certain U.S. residents purchase coverage offered "through an exchange established by the State," a May 2012 IRS rule allows the subsidies to be used in an exchange administered either by a state or the federal government. The high court will hear oral arguments in the case in March and will release a decision by the end of June (California Healthline, 1/23).

If the court strikes down the federal exchange subsidies, the ruling would eliminate about $28.8 billion in subsidies to 9.3 million individuals in 34 states in 2016, according to an Urban Institute analysis (Urban Institute, January 2015).

Hatch Announces Backup Plan

Hatch said his plan would "address immediate concerns and set the stage for a more permanent fix in the future" (Modern Healthcare, 2/23). However, he noted that the patch might have to remain in place until 2017, when President Obama leaves office (Fram, AP/San Francisco Chronicle, 2/23).

Hatch did not offer any details on the plan but said he would "in the coming days" (Ferris, The Hill, 2/23). Still, he said he believes Congress will act to address the issue if the subsidies are struck down by the high court. He added, "I don't think we can stand by and simply let the shortcomings of the law harm millions more. We need to help the people who will be hurt by losing their subsidies because of Obamacare's broken promises" (Modern Healthcare, 2/23).

According to The Hill, House Republicans have also said they are working on a contingency plan in case the subsidies are ruled illegal. Three House Republican leaders are heading the effort, including:

• House Majority Leader Kevin McCarthy (R-Calif.); and
• House Ways and Means Committee Chair Paul Ryan (R-Wis.) (The Hill, 2/23).

Heritage Foundation Analysis Challenges Urban Institute

Meanwhile, a new Heritage Foundation analysis challenges the Urban Institute's estimates of how many U.S. residents would be affected by a ruling striking down the subsidies.

Heritage Foundation Senior Research Fellow for Health Policy Studies Edmund Haislmaier, who conducted the analysis, said that based on the number of individuals who enrolled through the federal exchange during the first two open enrollment periods, it is more likely that about 5.5 million people would lose the subsidies. He said, "Of those, I would guess that a fair number, at least half probably, previously had coverage but were forced out of it or priced out of it because of Obamacare."

Haislmaier also questioned claims that a ruling striking down the subsidies would cause a large spike in premiums and the number of uninsured U.S. residents, because he noted that the individual market is only a small portion of the overall insurance market. He said, "This is not a large share of [insurers'] business. I just find some of these claims completely stretched" (Modern Healthcare, 2/23).

ACA Repeal Efforts Could Be Stifled

In related news, Senate Republicans' plans to possibly use the budget process to vote to repeal the ACA could be stifled on technical grounds, The Hill reports (Bolton, The Hill, 2/24).

Some ACA opponents argue that reconciliation could be used because the ACA affects revenue and spending. Under the process, the opponents have said the Senate could pass a one-sentence provision repealing the law.

However, Republican sources said that Senate Parliamentarian Elizabeth MacDonough has brought up issues related to GOP queries about whether reconciliation can be used to repeal the ACA in one sentence. Instead, Republicans would have to repeal single provisions of the ACA piece-by-piece during reconciliation, according to The Hill.

However, one GOP aide said the matter is not yet settled, noting, "As far as we know there's been no formal ruling" (The Hill, 2/24).