By Sarah Ferris - 06/08/15 06:00 AM EDT
It may be easier than expected for states to save their ObamaCare subsidies, if the Supreme Court rules against the law this month.
Two states — Pennsylvania and Delaware — said this week they would launch their own exchanges, if needed, to keep millions of healthcare dollars flowing after the decision. Both want to use existing pieces of the federal health insurance exchange, like its website and call center — a path that would be far less costly than the way most other states have created their exchanges.
If those plans win approval, many of the other 36 states that stand to lose their subsidies could then pursue a similarly simple strategy.
“I think that’s a pretty easy workaround,” Thomas Scully, the former director of the Centers for Medicare and Medicaid Services during the George W. Bush administration, said about the two states’ plans.
“The administration has a lot of flexibility, potentially, to define a state exchange,” he added.
But that would spell trouble for Republicans who view the King v. Burwell case as their best chance yet to dismantle President Obama’s healthcare law. GOP members of Congress have repeatedly said they must create a backup plan for states so that they are forced to make ObamaCare “fixes.”
With the ruling inching closer, many of the 34 states that could lose big from the King v. Burwell ruling have been quietly plotting how to avert the potential chaos from a decision against the Obama administration.
More and more state officials are thinking about buying technology from the federal government to keep their subsidies.
"Some have suggested the state could designate the federal government as its agent and continue the status quo," said Communications Director Chris Stadelman.
Dan Crippen, executive director of the National Governors Association, said Friday that states can look at Nevada, New Mexico and Oregon, which are already sharing the federal government’s IT.
A multi-state exchange — an option buried in the text of the Affordable Care Act that has recently seen resurgence — could also cut costs, Crippen said Friday.
Connecticut, which is already leasing its insurance exchange technology to Maryland, is in contact with “eight to 10” other states considering the same possibility, according to its commissioner.
Scully, the former CMS commissioner, said he predicts that about 10 states in the “deep South” would be resistant to any plan seen as propping up the health care law. Half a dozen Republican governors, including Florida Gov. Rick Scott and Wisconsin Gov. Scott Walker have ruled out any creation of a state-based exchange.
But Scully predicted that the rest of the states would find ways to hire the CMS, and possibly other states, as a contractor.
“You can hire whoever the hell you want as a contractor,” he said. “You can contract a bunch of people in Philippines to do a call center. Why can’t you contract CMS for an exchange?”
The biggest question states are facing is one that the Obama administration has been refusing to answer publicly: What exactly would it take to create a state-run exchange?
“If I was a state trying to figure out what was to happen, the first question I would ask is, ‘What’s the minimum criteria to become a state exchange?’ ” said Pat Kelly, the director of Your Health Idaho.
“The answer to that question drives the question of whether you can implement in 90 days or nine months. Can it be done? Well sure, but it depends what you have to do within that period,” added Kelly, whose state launched its own exchange last year.
The White House has repeatedly said there is no policy solution that would prevent a market meltdown if the court rules against the subsidies.
When pressed on Thursday on whether states could use other states’ technology to set up exchanges, White House spokesman Josh Earnest called the question “extraordinarily complicated” and deferred to the health department.
“As a general matter, what our professionals have said — those who are steeped in the details of the health law and who are aware of the legal arguments that underpin this policy — that there is no simple, straightforward administrative fix,” he added.
While a state-based exchange is not defined in the Affordable Care Act, experts say the commonly understood definition has been blurred since the rollout of the law, as more states share technology.
The private sector is also increasingly stepping in with “off-the-shelf” technology to run the marketplaces.
“There are more options for state-based exchanges than there used to be,” said Chris Koller, president of the Milbank Memorial Fund, which hosted a private meeting of more than a dozen states last month to discuss contingency plans.
He declined to name which states attended but said the meeting had been requested by several concerned state leaders.
The examples set by Maryland and Idaho, which both delivered presentations at the Milbank Fund meeting, could become newly relevant following the ruling, Koller said.
As Idaho’s state health officials set up their exchange, they noticed a benefit compared to other states: They didn’t have to go first.
“We weren’t the first people to go out and buy that new shiny piece of technology,” Kelly said.