4 options for states if Supreme Court rules subsidies are illegal

If the U.S. Supreme Court determines in the King v. Burwell case that the federal subsidies are illegal, there are still options available for the 34 states that rely on the federal insurance exchange, former senior officials from the U.S. Department of Health & Human Services write in a new analysis.

Former HHS Secretary Mike Leavitt and five other senior agency officials write in the report, "King vs. Burwell Contingency Planning: A Framework for Governors and State Legislators to Consider," that the state lawmakers must empower themselves because it's unlikely that the Obama administration and Congress will be able to find a solution given the current political environment.

Leavitt says the affected states have four options pending the ruling:

  • Do nothing and hope the political fallout is manageable
  • Build a state-based health insurance exchange under the existing Affordable Care Act rule
  • Participate in the Congressional debate to help reach a viable solution 
  • Align with other states andd identify points of flexibility the Obama administration can authorize

"We believe states could petition the [HHS] secretary to provide the flexibility that is necessary to rapidly establish state-based solutions," Leavitt states in an announcement about the analysis. "This would also allow states to maintain control of insurance markets."

Along with the other senior officials, Leavitt believes that states can work together to collectively request federal changes to simplify the creation of a state exchange. For example, using existing HHS authority, the agency could pass rules that:

  • Allow states to develop their own approach, including signing up consumers through direct enrollment with insurers, web brokers and private exchanges
  • Permit states to establish their own exchanges without immediately creating a governing board
  • Let states collaborate and share expenses for exchange features, including call centers, project management and training
  • Adjust timelines for insurers' plans to qualify for sale on the exchanges

Pennsylvania and Delaware recently proposed an alternative solution to ensure their residents can continue receiving subsidies--they want to launch their own state-based exchanges by using parts of Healthcare.gov, FierceHealthPayer previously reported.

To learn more:
- here's the statement 
- download the analysis