Although a panel of federal judges ruled Tuesday that people who buy insurance through the federal health insurance exchange should not receive federal tax subsidies, Cover Oregon officials say the ruling — if it’s upheld — will not affect Oregonians.
After the failure of Cover Oregon’s exchange technology, board members voted to allow the federal exchange, Healthcare.gov, to manage Oregonians’ eligibility determinations and enrollments starting in November, which is when people begin enrolling in plans that take effect in 2015.
Cover Oregon leaders, at a board meeting in Portland on Tuesday, said Oregon in 2015 will be considered a “supported state-based exchange,” and thus technically will not be considered among the more than 30 states that rely on the federal exchange.
In a statement, Cover Oregon spokeswoman Ariane Holm emphasized the ruling applied to states that did not establish their own marketplaces.
Oregon established its own marketplace in 2011.
“Our understanding is that since Oregon’s health insurance exchange is designated as a state-based marketplace in 2014, and a supported state-based marketplace in 2015, this ruling does not affect Oregon,” she wrote.
This year, 80 percent of people who enrolled in private plans through Cover Oregon — or 65,617 out of 82,017 people — received tax subsidies in accordance with their financial need, according to Cover Oregon. Nationally, 87 percent of enrollees received subsidies at an average of $264 per month, according to a U.S. Department of Health and Human Services report. Healthcare.gov administers insurance coverage for 36 states. Another 14 states and the District of Columbia have set up their own exchanges.
If the ruling is upheld, nearly 5 million Americans would see average monthly premium increases of 76 percent, according to an analysis by the health care consulting group Avalere Health.
Regardless of how the ruling shakes out, people will continue to receive subsidies for plans that are in effect in 2014.
Three judges with the U.S. Court of Appeals for the District of Columbia Circuit ruled 2-1 that the language in the Affordable Care Act does not allow for federal income tax dollars to be spent on subsidies for individuals who purchase insurance through the federal exchange.
The U.S. Department of Justice announced Tuesday it plans to appeal the ruling, which pertains to a case called Halbig v. Burwell, meaning it will go before the full Court of Appeals for the District of Columbia Circuit. Since the court leans Democratic, it is widely expected to reverse the panel’s ruling.
To muddy the water further, shortly after the D.C. ruling, the Fourth U.S. Circuit Court of Appeals in Richmond, Virginia, came to the opposite conclusion, arguing that the law does allow people to receive subsidies when purchasing plans from the federal exchange.
Much of the disagreement centers on a vague sentence within the Affordable Care Act that directs the federal government to provide subsidies to people “enrolled through an exchange established by the state.” Several health policy experts said Tuesday that although the language is unclear, Congress’ intent behind the law was to provide subsidies for every American who needed them.
Ultimately, the Supreme Court could be asked to hear the case, but that could be years down the road. In the meantime, the Obama administration announced Tuesday that tax subsidies would continue despite the District of Columbia judges’ ruling.
The federal government has allowed Cover Oregon to move forward in 2015 with the supported state-based exchange model on a temporary basis. Regardless of whether the D.C. ruling is upheld, Cover Oregon officials will need to develop an exchange model for beyond 2015 that will either rely fully on the federal marketplace, fall under the state’s purview or a combination of the two.
Aaron Patnode, Cover Oregon’s new executive director, said at the Tuesday meeting that Cover Oregon officials will find out whether they can extend Oregon’s supported state-based exchange status. He emphasized the exchange in the future will still need to be self-sustaining, yet the mechanism for how that will happen is unclear.
“We’ll find a way to do it quickly, and I want to make sure it’s done responsibly,” he said.
Under the supported state-based exchange format, Cover Oregon will retain control over a number of exchange functions, including certification and decertification of policies, helping people choose plans and training assisters to do so, working with stakeholders, consulting with tribes and maintaining a call center.
There are “shades of gray” between what constitutes a fully state-based exchange and a fully federally facilitated one, said Jesse Ellis O’Brien, a Portland-based health care advocate with the consumer advocacy group OSPIRG.
“To a certain extent, this is all kind of a metaphysical question: At what point does state involvement become so light that it’s no longer a state program?” he said.
At the moment, however, Ellis O’Brien said it seems as though Cover Oregon will retain enough exchange responsibilities to technically remain a state-based exchange in 2015.
Ultimately, if the District of Columbia judges’ ruling stands, Larry Levitt, senior vice president for special initiatives with the Kaiser Family Foundation, wrote in an email to The Bulletin that he thinks the Obama administration would make its exchange technology readily accessible to states so they could easily establish their own exchanges “using the nuts and bolts of healthcare.gov to enroll people.” That maneuver, however, could require regulatory changes and take time, he said.
For its part, Ellis O’Brien said OSPIRG hopes Cover Oregon decides to retain control over much of the exchange’s functions. A state-based exchange has the potential to make health care work better for consumers than a federal marketplace because it can set state-specific standards and negotiate with insurance companies to provide better services at a lower cost, he said.
“A state-based marketplace is in many ways in a better position to do that because it can respond to the needs of the state,” Ellis O’Brien said. “We would like to see a marketplace that could respond to the real health needs of Oregonians. We’re not there yet. We’re quite far from there, but that’s what we would want to see.”
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