Palmetto Promise Institute May 2015 King v Burwell: e Obamacare Off-Ramp? Fast Facts e US Supreme Court holds the future of Obamacare in its hands as it decides King v Burwell (and the compan- ion case Halbig v. Burwell). Not sure what the significance of those cases is? Well, you’re not alone. As Obamacare turns five, here is what you need to know about the cases that could open the door to a much-needed reassessment of the currently broken federal healthcare scheme…and the alternative plan that could begin to put South Carolina patients back in charge. Healthcare ity: • 37% of Americans think Obamacare has hurt their family with 17% saying it helped and 46% saying ACA made no difference. • 49% think Obamacare has harmed the nation, 33% helped, and 18% say Obamacare has made no difference. When the Affordable Care Act (ACA) was signed into law in early 2010, its effect on everyday Amer- icans was hotly debated. Now, after nearly two full years of Obamacare trauma, the truth has become increasingly clear: federally-controlled healthcare is both unaffordable and handcuffing. (Based on the botched website rollout and patient privacy issues, we could also add incompetent.) Health insurance premiums are still rising, health plans that people liked are being cancelled, networks of quality doc- tors are being narrowed, and reliable estimates say 18 million Americans are still uninsured. It turns out that losing your plan and your doctor was just the tip of the Obamacare iceberg. e Obamacare experience has been largely nega- tive for many Americans. According to a new poll by the Foundation for Government Accountabil- A February 2015 Elon University poll conducted right over the border in North Carolina shows that 49% of respondents think the ACA will make the health care situation in North Carolina worse. at’s up 2 pessimism percentage points since last October when ACA dissat- isfaction pulled incumbent US Sen. Kay Hagan down. Only 35.6% of registered voters in the purple state of North Carolina think Obamacare will make healthcare better. So, Obamacare’s failing. But are we stuck with it? LEGAL ARGUMENTS Not if plaintiff David King is successful. If the US Su- preme Court (SCOTUS) rules on June 4, 2015 in his favor, Obamacare would be turned on its head. King, with support from the Competitive Enterprise Institute and friend of the court (amicus) briefs from Alabama, Georgia, Indiana, Nebraska, Oklahoma, South Carolina, and West Virginia, points out that the language of the Affordable Care Act requires healthcare exchanges to be creatures of state governments, and without these state-based exchanges, federal subsidies to help citizens pay for their healthcare would be illegal under Section 1321 of the ACA. King’s attorneys argued before SCOTUS that Section 1401 of ACA authorizes premium subsidies only to in- dividuals who enroll in coverage “through an Exchange established by the State.”
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Palmetto Promise Institute
May 2015
King v Burwell: The Obamacare Off-Ramp?Fast FactsThe US Supreme Court holds the future of Obamacare in its hands as it decides King v Burwell (and the compan-ion case Halbig v. Burwell). Not sure what the significance of those cases is? Well, you’re not alone. As Obamacare turns five, here is what you need to know about the cases that could open the door to a much-needed reassessment of the currently broken federal healthcare scheme…and the alternative plan that could begin to put South Carolina patients back in charge.
Healthcare
ity:
• 37%ofAmericansthinkObamacarehashurttheir familywith 17% saying it helped and 46%sayingACAmadenodifference.
AFebruary2015ElonUniversitypoll conducted rightover the border inNorthCarolina shows that 49% ofrespondents think theACAwillmake the health caresituationinNorthCarolinaworse.That’sup2pessimismpercentagepointssincelastOctoberwhenACAdissat-isfaction pulled incumbentUSSen.KayHagandown.Only 35.6% of registered voters in the purple state ofNorthCarolina thinkObamacarewillmakehealthcarebetter.
So,Obamacare’sfailing.Butarewestuckwithit?
LEGAL ARGUMENTSNotifplaintiffDavidKingissuccessful.IftheUSSu-premeCourt (SCOTUS) rules on June 4, 2015 in hisfavor,Obamacarewouldbeturnedonitshead.
King, with support from the Competitive EnterpriseInstitute and friend of the court (amicus) briefs fromAlabama,Georgia,Indiana,Nebraska,Oklahoma,SouthCarolina,andWestVirginia,pointsoutthatthelanguageoftheAffordableCareActrequireshealthcareexchangestobecreaturesofstategovernments,andwithoutthesestate-basedexchanges,federalsubsidiestohelpcitizenspay for theirhealthcarewouldbe illegalunderSection1321oftheACA.
King’s attorneys argued before SCOTUS that Section1401ofACAauthorizespremiumsubsidiesonlytoin-dividualswhoenrollincoverage“throughanExchangeestablishedbytheState.”
Palmetto Promise Institute
King v Burwell: Obamacare Off Ramp?May 2015
Post O ff ice Box 12676 • Columbia , SC 29211 • 803.708.0673 • www.PalmettoPromise.org
According to the nonpartisan Urban Institute, if Kingis successful, approximately 241,000 South Carolinianswouldlosetheirtaxcreditsubsidieswhichhaveavalueof$766 million,or$3,180perperson.192,000moreSouthCarolinianswouldremainuninsured.
AKingvictoryinKing v. BurwellmaywelldependonthemindsetofAssociateJusticeAnthonyKennedy.Basedonoral arguments, earlier this month, King’s lawyers andbackersareoptimistic.
• Individuals in those stateswould no longer beunderthemandatetobuyhealthinsurance.Thatmeansconsumerswouldno longer be forced to buy expensiveObamacare insurance-insurance that meets arbitrarilyhighminimumfederalstandards. • Employersinfederalexchangestateswith50ormoreemployeeswouldnolongerbeunderthemandatebecausefederaldollarswouldnotbeexpendedforsubsi-dies,removingthemandatetrigger.
ThisentireexerciseprovidesawindowintotheheartofObamacare’s blatantly strong arm tactics.DespitewhattheAdministrationnowargues,atthetimethebillwasbeing written, now infamous ACA architect JonathanGrubersaidthattheprovisiontoropeinthestateswas
WHAT DOES THIS MEAN?So what does this mean for South Carolinians andpeople in other states caught in the crosshairs if theCourtoverturnsthecurrentsubsidies?
OneschoolofthoughtisthatObamacareisthelifelineforAmerican healthcare andmust be salvaged at allcosts.ThisopinionwillbetrumpetedfromtheAdmin-istration and itsmedia allies, and enormous pressurewillbeputonCongresstoallowthefederalexchangesubsidies…or on states to cave and set up their ownexchange.
BasedontheexampleofExchangestates–whichhadyearstopreparefortheirexchangerolloutsand$5bil-lion in federal assistance for setting them up – thiswouldbeadisasterforSouthCarolina.
AccordingtoThe Washington Post,asofMay1,2015,half of the 17 state-run exchanges are struggling fi-nancially.Enrollmentislow,callcentersareexpensive,and web sites are crashing (four states finally pulledtheplugontheirwebsitesalltogether).Oregonclosedtheir exchange inMarch,Colorado is expecting userfeestotriple.Hawaiiisn’tsuretheywillbesustainablebytheirgoalyearof2022,needing$28 millionbeforethen. Maryland has turned to Connecticut for help.
And in theDistrict ofColumbia,in a strange twist,89% of the ex-change budget comes from userfees on products not available ontheexchange.
Stepping back from the precipicea bit, a pro-King ruling does notsignal theendof theworld.Morepositively,shouldKingbesuccess-ful, the actual result could be onethatwouldputasmileonthefaceofJay,AdamsandHamilton:pow-er for the states and freedom forpatients…andbusinesses.
Palmetto Promise Institute
King v Burwell: Obamacare Off Ramp?May 2015
Post O ff ice Box 12676 • Columbia , SC 29211 • 803.708.0673 • www.PalmettoPromise.org
ArulinginfavoroftheplaintiffswouldblocktheACA’semployermandate,becausethemandatepenaltiesonlyap-plywhenemployerswithmorethan50workersfailtoofferACA-compliantcoverageandanemployeebecomeseligi-bleforanACApremiumsubsidy.Thoseemployerswouldbe shielded from mandate penalties totaling $2,000 perworkerperyear.Thatmeansmorecapitalforbusinessestohiremoreworkers,increasehourslostduetoObamacare-drivenreductions,andincreasedeconomicgrowth.
PROTECTING PATIENTS: NEXT STEPSIftheSupremeCourtdecidesagainsttheObamaadmin-istrationinKing v. Burwell,whileitdoesn’tmeantheau-tomatic end ofObamacare, it doesmean thatCongressmustmake significant reforms---orelse coveragewillbeprohibitivelyexpensiveformillionsofAmericans.
1. Senator Ben Sasse (R-NE) introduced a plan thatwouldallowthoselosingcoveragetokeepitfor18monthswithtaxcreditsshrinkingtozero.
2. Rep. Ben Flores (R-TX) and his colleagues in theconservativeRepublicanStudyCommitteehavebeendis-cussingaplanthatwouldrepealObamacareentirely,createindividualandbusinesstaxdeductions,andexpandHealthSavingsAccounts(HSAs).
3. Sen. Ron Johnson (R-WI)hasintroducedaplanwith31Senateco-sponsors,includingMajority Lead-er Mitch McConnell.TheJohnsonplanwouldallowpeople to keep their current coverage until August2017andeliminateboth the individualandbusinessmandate.
4. Senators Orrin Hatch (R-UT),Richard Burr (R-NC) and Lamar Alexander (R-TN) have discussedgeneralprinciplesofaplan.
5. Rep. Paul Ryan (R-WI)Planhasalsodevelopedaplan(seetablebelow).Ryan,alongandRepublicancolleagues John Kline (R-PA), and Fred Upton (R-MI)presentedtheirplaninthepagesofThe Wall Street Journal.AccordingtotheRyanplan,healthcarefree-domcanbeachievedinthewakeofapositiveKingde-cision,butitwillnotcometothestatesautomatically.
Congresswillneedtocleanupitsmessandempowerthe states. Stateswill then need to seize the oppor-tunitypresentedbyaKingvictory.Insteadofsigningoffonanend-runAdministrationplantocomplywithKing thatwould involve the state settingupa rumpexchange run byWashington, state legislaturesmustimplementboldpoliciesthatlowercostsandincreaseaccesstoqualityhealthcare.Statesmustalsoprotectthemostvulnerable,guaranteeaccessforpatientswithpre-existingconditions,makeinsurancerulesthatre-sultinmoreaffordableandcustomizablehealthinsur-ancechoices,andprovidenewoptionsforbusinesseslooking to provide value-based, wellness-focusedhealthcaretotheiremployees.
As the table indicates,SouthCarolina, if freed fromtheshacklesofthefederalexchange,couldchartanewcourseforpatients,offeringanadvanceabletaxcredittohelpSouthCarolinianspurchaseinsurance.
Palmetto Promise Institute
King v Burwell: Obamacare Off Ramp?May 2015
Post O ff ice Box 12676 • Columbia , SC 29211 • 803.708.0673 • www.PalmettoPromise.org
Thiscreditcould: • affirmatively opt outof ACA mandates that re-strictchoiceandbanafford-ableplansSouthCarolinianswant; • replace confusionandred tapewithsimplicitybyallowinginsurerstocom-pete across state lines andsmallbusinessestobandto-getherasagroup. • make the credit“ad-vanceable”sothatconsumerscangettheirfullcrediteachquarter (not just at tax sea-son); • make the tax credit“refundable”sothatconsum-erscangetthefullamountofthe credit whether they pay
SUMMARYWhatshouldbetheresponseofstatesiftheU.S.SupremeCourtinKing v. Burwelloverturnsfederalexchangesubsidies?
1. Do No Harm.Don’tsetupastateexchange.
2. Put Pressure on Washington.ACAisaproblemthatstartedinWashingtonandit’suptoWashingtontofixtheproblemitcreated.Statesmustdemandmoreflexibilityforthemselvesandmorecontrolforthepatientsintheirborders.
3. Lead Boldly.Nowisthetimeforstatestobelookingatstate-basedinnovationssimilartotheRyanPlanthatlowercosts,increaseaccessandputpatientsinchargeoftheirhealthcaredecisions.
