Reform Law Opponents Question Subsidies for Insurance Exchanges

In the wake of the U.S. Supreme Court's decision to uphold the federal health reform law, critics of the Affordable Care Act are shifting their attention to states, as they begin to set up the health insurance exchanges required under the law, the New York Times reports.

According to the Times, opponents of the reform law argue that it remains unclear whether low-income residents in states that fail or decline to establish the exchanges on their own would be eligible to receive federal subsidies to purchase coverage through the exchanges. Officials in one-third of states have openly indicated resistance to creating the exchanges, the Times notes.

The law states that the subsidies -- or tax credits -- would be provided to residents to purchase health policies offered "through an exchange established by the state," but a rule issued by the Obama administration permits the tax credits to be used in either a state- or federal-administered exchange, according to the Times.

Rep. Phil Roe (R-Tenn.) said the White House's rule "contradicts the explicit statutory language" of the health reform law, while Senate Finance Committee ranking member Orrin Hatch (R-Utah) accused the administration for assuming the role of Congress and rewriting the law to provide subsidies for individuals enrolled in federal exchanges. Roe has co-sponsored legislation with Rep. Scott DesJarlais (R-Tenn.) to invalidate the rule.

Despite the opposition, Internal Revenue Service Commissioner Douglas Shulman has defended the rule, saying the law "includes language that indicates that individuals are eligible for tax credits whether they are enrolled through a state-based exchange or a federally facilitated exchange" (Pear, New York Times, 7/7).

States Face Political, Technical Challenges

Governors are facing political and technical challenges to establish the state-based insurance exchanges, as the Nov. 16 deadline to inform the federal government of their decisions on the exchanges approaches, National Journal reports.

According to National Journal, states must:

• Appoint officials to ensure that the insurance plans offered through the exchanges meet federal standards;
• Create databases that efficiently confirm an applicant's eligibility, based on annual income, and identify the plans they qualify for; and
• Establish simple consumer-friendly websites and call centers to address applicants' questions and concerns.

Cindy Gillespie -- a former health adviser to presumptive Republican presidential nominee and former Massachusetts Gov. Mitt Romney, who now advises states on the exchanges -- said "it's going to be very hard" for states "that have not done significant work" to produce an efficient blueprint by November.

Meanwhile, more than 70 House Republicans last week sent a letter to the governors of all 50 states urging them not to set up the exchanges.

At least one governor -- South Carolina's Nikki Haley (R) -- responded that her state would not establish an exchange (McCarthy, National Journal, 7/9).