Supreme Court’s Obamacare decision ripples through the states

The Supreme Court’s decision to uphold Obamacare’s subsidies on the federal exchange is reverberating in states that had been retooling their approach to the health care law, or at least girding for a more dramatic outcome to the closely watched case.

With the law’s tax credits on firm ground, states are either backing off plans to set up their own markets or talking about ditching their websites in favor of the federal HealthCare.gov portal, which is working fine after a troublesome start in fall 2013.

Pennsylvania Gov. Tom Wolf, a Democrat, said he will withdraw his blueprint for a state-run exchange, a backup plan he submitted to the Health and Human Services Department in case the justices struck down subsidies that 382,000 of his residents used to afford plans on HealthCare.gov.

“I took steps to protect Pennsylvania’s consumers by putting in place a contingency in the event the Supreme Court ruled people are not eligible for subsidies, but I am pleased to say that we will no longer need to rely on this plan,” he said.

In a 6-3 decision, the justices Thursday said more than 6 million Americans, living in 34 states that didn’t set up their own exchanges will continue getting subsidies, making insurance affordable for them and preserving the economics underpinning the law.

While Pennsylvania tears up its Plan B, officials in Delaware said they will continue to “weight the costs and benefits” of a state-run exchange against their current model — a federal-state partnership that uses HealthCare.gov — and make a decision by the end of July.

Arkansas, too, had submitted contingency plans for a state exchange. Republican Gov. Asa Hutchinson said he was disappointed with the Supreme Court’s decision, though, and threw cold water on talk of a state-run marketplace.

“I am convinced now more than ever that we need to proceed with caution to measure the costs to the taxpayers and the reliability of the outcome as we consider the potential of a state exchange,” he said.

Other states could be tempted to ditch their faulty websites and join the 37 states that use HealthCare.gov.

Vermont Lt. Gov. Phil Scott, a Republican, said his state should consider a regional exchange with Connecticut or switch over to the federal exchange.

“For 18 months, officials have dismissed repeated calls to explore alternatives to our dysfunctional exchange, saying to do so would put Vermonters at risk of losing their subsidies,” he said Thursday. “Now, with today’s U.S. Supreme Court ruling that federal subsidies can be offered in both state and federal health care exchanges, that fear is eliminated, and it’s clear we must immediately explore alternatives to Vermont Health Connect.”

Minnesota State Rep. Tara Mack, a Republican, responded to the ruling by saying it is time for the state to abandon its state exchange, which has experienced technological problems. She said “with over $250 million already wasted on the broken MNsure website, it’s time to stop throwing good money after bad.”

Their calls to action reflect a broad shift toward use of HealthCare.gov, which stumbled out of the gate but recovered after a team of technical gurus salvaged the site in late 2013, setting up a relatively successful finish to Obamacare’s first enrollment period and a calm second round.

State exchanges in Oregon and Nevada couldn’t recover from early glitches, however, so they turned to the federal government for their web enrollment needs.

“Over time it seems likely that additional state exchanges might transition to using HealthCare.gov, especially as they continue to grapple with how to ensure sustainability long-term,” said Elizabeth Carpenter, a director at Avalere Health, a D.C.-based consultancy. “However, those states are likely to remain active in managing their insurance markets and conducting other on-the-ground activities such as consumer outreach and support.”

Hawaii’s health exchange is set to use HealthCare.gov during Obamacare’s next signup round, although an aide to Gov. David Ige, a Democrat, said Friday that “enrollees who have purchased health care coverage through our state-based marketplace were never in danger of losing their tax credits.”