In our last blog post on King v. Burwell, we highlighted the main legal arguments of the highly anticipated King v. Burwell Supreme Court (SCOTUS) case—which, in brief, examines whether Federally-facilitated marketplaces (FFMs) can offer subsidies to individuals purchasing health insurance outside of State-established marketplaces. With media attention growing, and the decision deadline quickly approaching, States, Congress, and the White House are under significant pressure to ease mounting concerns regarding the ACA in a post-King world. Many actors have already taken steps to alleviate the consequences expected should SCOTUS rule in favor of King; however, Congress has yet to establish a concrete plan of action.
With the decision less than 2 weeks away, time is running out for proactive Congressional action. Health Centers and their stakeholders could be differentially affected by a ruling for King depending on the actions their state or Congress ultimately decide to take—providing even more reason to examine the various proposals on the table. This is the second in a series of posts that will examine the case, its implications for health centers and the health care system, and what contingency plans (or lack thereof) policymakers have been discussing should the court invalidate the subsidies.
What states are already doing?
If the Court rules for King, in the absence of congressional action, states would be able to preserve their subsidies by switching to state-established marketplaces. To date, only two states—Delaware and Pennsylvania—have announced plans to replace their existing Federally-facilitated marketplaces (FFMs) with state-established marketplaces to preserve premium subsidies. With the next open enrollment period just a little over four months away, time is not on these states’ side—especially considering states who’ve established their own marketplaces took 12 to 18 months!
The remaining 32 FFM states are faced with the same decision; however, with high political opposition from Republican-led state legislatures, it is unlikely we will see sweeping marketplace transitions across the country. Those states choosing not to proactively transitions towards state-established marketplaces are instead playing a waiting game—relying on Congress or the White House to ease transitions towards state-established marketplaces if necessary.
What are Congress’ options?
Although their contingency plan remains ambiguous to date, Congress has the power to significantly ease transitions towards state-established marketplaces and protect subsidies immediately following the King v. Burwell ruling against the subsidies in FFM states. Many Republicans have submitted formal proposals or hinted towards extending subsidies—at least temporarily—following the King v. Burwell decision. Below are a number of bills or proposals currently under Congressional consideration.
- Extend Subsidies to All Marketplaces – The “One Sentence Fix”
At the G7 conference last Monday, President Obama proposed a one sentence fix to preserve subsidies—namely changing the existing legislation to clearly establish subsidy eligibility in all 50 states. The proposal did not prove popular among Republican congressmen who immediately opposed the idea.
- Extend Subsidies, Repeal Mandates – “Preserving Freedom and Choice in Health Care” Bill
In April, Senator Ron Johnson (R-WI) introduced the “Preserving Freedom and Choice in Health Care” Bill. The Bill would extend subsidies until August 2017 for existing enrollees while also removing the individual and employer mandate. The Bill is currently cosponsored by 31 Republican congressmen, including Senate Majority Leader Mitch McConnell. HHS Secretary Burwell has already indicated that Obama would not sign the Bill if it made it to his desk.
- Declining Subsidies Over Time – “Winding Down Obamacare” Act
Senator Ben Sasse (R-NE) introduced the Winding Down Obamacare Act in March of 2015. The Act would preserve subsidies for 18 months. For the first 6 months, federal subsidies would cover 65% of the cost of insurance premiums. Over the next 12 months, insurance subsidies would gradually decline to zero—effectively winding down the ACA. The bill was introduced to Senate Finance Committee the day after the King v. Burwell hearing in March.
- Tax Credits, Repeal Mandates – “Patient Freedom” Act
In late May, Senator Bill Cassidy (R-LA) introduced the Patient Freedom Act to a Senate Committee. Under the Act, States that choose not to switch over to a state marketplace would have the option to receive a per capita patient grant or tax credit to fund health insurance premiums. Unlike the ACA, the money would go directly to the patients “Health Savings Account.” However, in order to receive funding, states would need to repeal the individual and employer mandate, as well as the federal essential health benefits mandate. The bill has 19 cosponsors, including Senate Majority Leader Mitch McConnell.
- Repeal ACA All Together- “Empowering Patients First” Act
In May, Representative Tom Price (R-GA) re-introduced the Empowering Patients First Act. The Act would completely repeal the ACA and substitute it with “patient-centered solutions.” The Act was referred to committee on May 15th, with no further action taken to date.
- No Legislative Action
Although unlikely due to the chaos and confusion it would produce, States and Congress could elect to simply do nothing. If SCOTUS rules for King, the defendant will have 25 days to request a rehearing. Subsidies would likely end within that 25 day period. Typically, subsidies are distributed between the 20th and 24th of each month, meaning July’s subsidies could be the last subsidies distributed to FFMs under the ACA. If subsidies end in July, individuals will need to either pay their new unsubsidized premium within 30 days, or forgo insurance.
What is the Obama administration saying?
The Obama administration has continued to remain grounded in the conviction that SCOTUS will rule in favor of Burwell. In a House Ways and Means Committee meeting last Wednesday, HHS Secretary Sylvia Burwell announced the Obama administration has no contingency plan in place, stating the burden to produce a solution will lie on both States’ and Congress’ shoulders. Burwell did however, indicate the President would not sign any legislation that appeals the ACA and plans to aid states in their transitions to state-based marketplaces if necessary.
What if SCOTUS rules for Burwell?
If SCOTUS rules in favor the defendant, no congressional action would be required to uphold subsidies across the US. Subsidies would continue to be made available to qualified individuals who sign up for marketplace coverage during this fall’s enrollment period. However, a ruling for Burwell does not safeguard the ACA from future legislative attack on other founding principles of the ACA.