With the Supreme Court preserving Obamacare’s insurance subsidies, states that don’t have their own exchanges don’t seem keen on pursuing them any time soon.
The court ruled 6-3 Thursday to strike down a challenge that the federal government could provide subsidies only to residents in states that set up their own exchanges. Some states had toyed with setting up an exchange as a backup plan, but now are shying away from that.
If the court had gone the other way, 34 states would have seen millions of residents lose tax credits used to help pay for the cost of healthcare. That could have forced residents to drop their insurance coverage as it became unaffordable.
Three states received conditional approval from the federal government to set up their own exchanges in case the court struck down the subsidies: Pennsylvania, Delaware and Arkansas.
Now that the subsidies were upheld, it appears doubtful those states will continue to pursue an exchange.
Pennsylvania Gov. Tom Wolf announced on Thursday that the state would no longer pursue an exchange since the backup plan is not needed. “I am pleased to say we will no longer need to rely on this plan,” the Democrat said.
It is not clear if Arkansas will still pursue an exchange, even though the state has a partnership exchange with the government. Under a partnership exchange, residents use healthcare.gov to sign up for Obamacare but the state has customer service representatives to help with questions about insurance options.
Delaware and Pennsylvania, on the other hand, do not have partnership exchanges and solely rely on healthcare.gov.
Arkansas Gov. Asa Hutchinson chided the court’s decision, calling it “disappointing.”
He also said a state task force would continue to look into finding solutions for Medicaid, which was expanded, and other healthcare reforms.
A spokesman for the governor said the authority to set up an exchange was already approved by the legislature in 2013.
While Delaware is a blue state, the governor has not indicated whether it will maintain the status quo or create an exchange. The governor’s office did not return a request for comment on the state’s plans.
Other small states that already run their own exchanges, such as Hawaii, may be tempted to transition to a model in which they can lease healthcare.gov from the federal government, University of Michigan law professor Nicholas Bagley told the Washington Examiner.
“It’s expensive to run an exchange, and the federal government can take advantage of significant economies of scale,” he said.
However, it doesn’t appear likely that bigger states are going to change course.
“States like Michigan that declined to establish their own exchanges aren’t likely to revisit that decision given that their residents will get subsidies no matter what,” Bagley said.
