Pennsylvania Gov. Tom Wolf’s administration will pull the plug on its effort to start running the insurance marketplace created by the 2010 health care law if the U.S. Supreme Court allows federal health insurance subsidies to keep flowing to hundreds of thousands in Pennsylvania, a spokesman said Tuesday.
The administration’s application to the federal government is strictly a contingency plan, Wolf press secretary Jeff Sheridan said.
“If they rule that these individuals are eligible for subsidies, then we are not moving forward with this,” Sheridan said.
The assessment came a day after President Barack Obama’s administration gave conditional approval to Pennsylvania to expand its role in running the marketplace.
In its application to the federal government, the Wolf administration said it was pursuing the strategy to be ready for the 2016 coverage year in case the high court agrees with plaintiffs in a lawsuit challenging an element of the health care law.
Plaintiffs in the lawsuit say the Obama administration is unlawfully providing subsidies to millions who buy insurance through the federally run marketplaces, like the one in Pennsylvania. If the court agrees, it could mean the end of the subsidies to most or all of those states.
Conversely, federal subsidies could continue to flow to states that run their own marketplaces, keeping insurance premiums lower there.
Should the court uphold the subsidies, Pennsylvania “may instead choose to pursue implementation for the 2017 plan year to allow for additional planning and development time,” the Wolf administration said in the application. The court’s decision is expected by the end of the month.
Seeking legislative approval for the right to take over certain functions — such as regulating insurance plans, directing consumer outreach and running a call center — has not been a topic of the administration’s discussions with legislative leaders. House Majority Leader Dave Reed, R-Indiana, said he thought it was premature.
“I do think the Supreme Court decision really plays huge role in this,” Reed said.
The federal government imposes a 3.5 percent user fee on premiums for plans sold through healthcare.gov, and Sheridan said the administration believes it can simply use money from that to underwrite any work it takes on to run the marketplace.
Under its application, Pennsylvania, like some other states, would enlist the federal government to perform some duties, such as eligibility determinations and enrollment through the healthcare.gov website. That could raise the question of whether the marketplace really is run by the state, if the Supreme Court outlaws subsidies to states where the federal government runs the marketplace.
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