Miami-Dade County

Florida has no back-up plan if Supreme Court decision guts Obamacare subsidies

Supporters of the Affordable Care Act gather in front of the Supreme Court during a rally in March while the court heard oral arguments in the case of King v. Burwell that could determine the fate of health care subsidies for more than 6 million people, including 1.3 million in Florida.
Supporters of the Affordable Care Act gather in front of the Supreme Court during a rally in March while the court heard oral arguments in the case of King v. Burwell that could determine the fate of health care subsidies for more than 6 million people, including 1.3 million in Florida. Getty Images

There is no official plan. There is no time to execute one, even if there were a plan. And, perhaps most importantly, there appears to be no political leadership in Florida to act if the Supreme Court rules this month that more than 6 million Americans, including about 1.3 million Florida residents, can no longer receive federal subsidies that help pay for their health insurance under the Affordable Care Act, according to health policy experts.

Many scenarios could play out if the Supreme Court rules that billions of dollars in health insurance subsidies, including an estimated $389 million a month for Florida residents, can only be distributed through exchanges established by a state, as the plaintiffs argue in King v. Burwell.

But absent a ruling that provides for a temporary extension of subsidies for residents of the 34 states that rely entirely on the federal exchange at HealthCare.gov, health policy analysts say any long-term solution comes down to state action — or Congress.

“There aren’t a lot of fallback options in place at this time,’’ said Cynthia Cox, associate director of health reform and private insurance for the Kaiser Family Foundation, a California-based health policy research nonprofit group.

In Florida, legislators have no official plan — though conversations have been taking place — and they likely will look to the federal government first for a solution if the Supreme Court rules for the challengers, said Diane Hilligoss, a University of Michigan law student and researcher who interviewed Florida lawmakers and others in the spring for a study published by Health Affairs, a health policy journal.

“Almost universally, the first response is to look to the federal level to see what their plan is,” Hilligoss said. “Even those that may be a little bit more neutral or even partial to the Affordable Care Act still think that the first response needs to come from the federal level.”

One reason state officials may be relying on a federal response, Hilligoss said, is the timing of the Supreme Court's ruling. The Legislature began a special session June 1, after failing to adopt a state budget during the regular session in March and April, largely over Medicaid expansion. The legislative special session ends June 20.

“It is highly likely that we won’t know the outcome of King until the special session ends,” she said, “in which case the likelihood that another special session would be called to respond to a potential King victory, in our research, seemed very unlikely.”

Florida legislators questioned about contingency plans have said they will wait for the Supreme Court ruling before deciding what to do, and several have told the Herald that they expect Congress to act in the event that subsidies end.

Florida Gov. Rick Scott, who has the authority to call a special session, has said that he has no intention of intervening in what he sees as a federal problem. This week, Scott’s press office said his position has not changed since he authored an Op-Ed for a news website, Politico.com, in March.

In the editorial, Scott invited President Obama to visit Florida and offer a solution if the ruling ends subsidies. Scott also suggested one of his own: that the President “reform” the insurance exchange system by redirecting the subsidies away from insurers and directly to Floridians in the form of deposits into individual healthcare accounts.

A longtime critic of the health law, Scott has led Florida’s opposition almost since his 2010 election. That year, Florida fought against the ACA by returning a $1 million federal grant to establish a state-run exchange.

Florida has also refused to expand Medicaid, which could ultimately provide government-run healthcare to about 850,000 people in a state with one of the highest uninsured rates, 24.3 percent in 2013. Only Texas had a higher rate at 24.8 percent, according to U.S. Census Bureau estimates.

Despite political opposition to the health law, more Floridians signed up for coverage under Obamacare in 2015 than residents of any other state.

More than 1.4 million Floridians paid their monthly premiums and remained in an Obamacare plan as of March 31, according to the U.S. Department of Health and Human Services.

The vast majority — 93.5 percent, or about 1.32 million — received subsidies to pay their monthly premium in March, and nearly one million of those Floridians also received government help to cover out-of-pocket costs, such as deductibles and co-payments.

Floridians received an average subsidy of $294 a month to pay their health plan premiums, according to federal officials. If subsidies are struck down, those Floridians could face premiums that will skyrocket by an average of 359 percent, according to a Kaiser analysis.

The average premium in Florida for Obamacare plans is about $384 a month without a subsidy, said Sara Collins, an economist and vice president for healthcare coverage and access at The Commonwealth Fund, a left-leaning private foundation that supports health policy research.

In a study released this week, the Commonwealth Fund found that the number of uninsured adults ages 19 to 44 has declined from 20 percent of Americans in summer 2013, or just before the ACA’s coverage expansions took effect, to about 13 percent after the end of the second open-enrollment period in spring 2015, representing a decline of an estimated 12.1 million uninsured adults since the law took effect.

More than half of those who gained health insurance coverage through the ACA were previously uninsured, the survey found.

“It’s not like these are little, short-term fixes for people,’’ Collins said. “These plans are working quite well for people, enabling them to get healthcare they wouldn’t have been able to get before.’’

Hilligoss said that some of the Florida legislators, administrators, consumer advocates and academics she interviewed considered Florida Health Choices — a voluntary, market-based health insurance exchange created by the state in 2008 — part of a potential solution.

“That is something individuals in Florida seem to think would give them a head start,” she said, “because they don’t have to create it from scratch.”

With legislative approval, Florida Health Choices might serve as a state-based exchange, which would make Florida eligible for subsidies if the court rules that federal exchange subsidies are not lawful under the ACA.

But the exchange, which opened for business last year, has a full-time staff of three people and, as of April, covered about 80 people.

Rose Naff, chief executive of Florida Health Choices, said she has not been part of any conversations that included the state exchange as a solution if federal exchange subsidies are voided. But Naff said, there isn’t enough time or money set aside to pursue that option.

“To me,’’ she said, “probably the scarcest resource in all of this is time, even more scarce than dollars.’’

When officials from states across the country flew to Chicago in early May for a closed-door meeting to discuss options if the Supreme Court strikes down the federal exchange subsidies, one of their primary concerns was the amount of time available to set up their own exchanges with reliable infrastructure, said Christopher Koller, former health insurance commissioner for Rhode Island and now president of the Milbank Memorial Fund, an endowed foundation that hosted the meeting.

Some states, such as Nevada, New Mexico and Oregon, switched from state-based exchanges to hybrid operations keep local control and oversight but outsource the information technology to the federal government. Residents of these states are not considered to be at risk of losing their subsidies if the Supreme Court were to rule for the challengers.

Such exchanges can be created, Koller said, but they take a lot of work and political leadership.

“IT is the easy part,’’ said Koller, who refused to identify which affected states were represented at the meeting. “The hard part is building the political will and the common vision for building an exchange.’’

Kaiser Family Foundation’s Cox and most health policy analysts expect that if the federal exchange subsidies were to be voided, health insurers in the 34 affected states could cancel those policies for nonpayment after 30 days because the recipients would have no tax credits for the purposes of the law.

Most Americans relying on subsidies to pay for their health insurance would likely drop their plans — except for the sickest individuals, who are desperate to hold on to their healthcare, Collins said.

The loss of subsidies also would undermine the health law’s requirement that nearly all Americans buy coverage. Without subsidies, many more people would be exempt based on the ACA’s affordability rule, which states that Americans do not have to buy coverage if it costs more than 8 percent of their annual income.

With fewer healthy members to offset the costs, insurers likely would leave markets or raise premiums dramatically, causing even more people to drop health plans and leading to a market collapse often referred to as a “death spiral.’’

The simplest solution to a Supreme Court ruling for the challengers, said Cox of the Kaiser Family Foundation, would be for Congress to amend the language of the health law to explicitly allow eligible Americans living in one of the 34 states entirely dependent on the federally-run exchange to continue receiving subsidies.

“That would be a simple revision to the law itself,’’ Cox said, “but it would not be a simple process because the law is so contentious.’’

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