States shifting to the federal Obamacare Web platform this year — and those trying to get away from it — are confident their consumers can get government subsidies to help them pay for health coverage, even if the courts uphold a ruling that restricts the tax credits to insurance exchanges established by a state.
The Obama administration has roughly six weeks to ask the entire D.C. Circuit Court of Appeals take a second look at its bombshell ruling in Halbig v. Burwell, a 2-to-1 decision that said the Internal Revenue Service unlawfully extended the subsidies to states that rely on the federally run marketplace.
A second appellate court said federally run exchanges could take in subsidies, setting up a potential battle before the Supreme Court.
In the meantime, several of the 15 state-run exchanges are in a state of flux and looking at what the court battle could mean for their residents down the road. The key point from exchange personnel in each of these states is that while they might rely on federal web support, or have in the past, they consider their market to be established by the state.
"These rulings reinforce our commitment to remaining a state-based marketplace that continues the Commonwealth's nation-leading access to affordable, quality health insurance," said Jason Lefferts, spokesman for the Massachusetts exchange.
Although Massachusetts paved the way for President Obama's reforms with a state exchange system in 2006, its revamped marketplace failed to live up to expectations in Obamacare's first sign-up period. The state prefers to improve its state platform, hCentive, but it is looking at federal Web options as well.
"While we review the decision's potential impact, we will continue our work on the dual track plan, which ensures that no matter what, we will have a working website this fall," Mr. Lefferts said.
Similarly, Oregon and Nevada, which established their own Web portals but will rely on the federal HealthCare.gov site this fall after glitch-filled rollouts, say their exchanges are still state-established and insulated from the court battle.
"Nevadans will be eligible for Advance Premium Tax Credits if either of the two court cases prevail," said C.J. Bawden, spokesman for the Nevada exchange.
Rachel Wray, a spokeswoman for Oregon Gov. John Kitzhaber, a Democrat, noted the state 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," Ms. Wray said.
The law's subsidies are a key selling point for Obamacare, because without them enrollees vital to the overhaul's success would drop unaffordable coverage. With so much riding on the outcome of Halbig and similar lawsuits, what it means to be "state-established" or "federally facilitated" could be more important than ever.
"'Exchange' isn't the website," but rather "an institution" set up by state legislatures or executives to effectuate numerous aspects of the law, said Timothy Jost, a health policy expert at Washington and Lee University School of Law who says subsidies should flow to all the states.
Michael Cannon, a health policy director at the Cato Institute and a key architect of the legal theory behind Halbig, sees it differently.
"The [health care law] does not permit states to contract with the feds to run a state-established exchange," he said. "So if the states are contracting with the feds, they're failing and the secretary is required by law to 'establish and operate such Exchange within the State.'"
The Halbig suit is one of several dramatic plot lines in what should have been a relatively quiet period for Obamacare. Its first open enrollment period ended in mid-April, and the second is slated for mid-November.
While court battles linger, the law's supporters are trying to reassure customers on the federal exchange who rely on the subsidies.
Jessica McCarron, spokeswoman for Enroll America, a nonprofit that encourages people to get covered on the health exchanges, said the publicity around Halbig will not diminish demand for Obamacare-related coverage.
"Based on what we've seen in the past, consumers aren't concerned with the politics of the issue, they care about what this means for them and their families," she said. "We've also seen that even more sustained negative news coverage — like the problems with HealthCare.gov — didn't diminish demand in the past, and certainly didn't prevent the overwhelming success we saw with 8 million enrolling during the first open enrollment."
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