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With Health Care Subsidy Lawsuit Resolved, Twin States Face Different Questions



Friday, June 26, 2015
Thursday’s long-awaited decision by the Supreme Court, which rejected, by a 6-3 vote, the latest conservative challenge to the Affordable Care Act, shed new light on some steps ahead for health care reform in the Twin States.

In New Hampshire, the court’s decision reassured residents who buy health insurance on a federally operated exchange that they could continue to collect premium subsidies.

In Vermont, a leading Republican seized upon the court’s ruling in favor of the Obama administration to call for the Green Mountain State to consider junking its state-operated exchange, which has been problem-plagued, and seek a new venue for individuals to shop for health insurance.

At issue before the court was the Obama administration’s implementation of the landmark 2010 health care reform law and the administration’s interpretation of which shoppers were eligible for the law’s insurance premium subsidies through tax credits.

The challengers claimed that such subsidies were allowable only in Vermont and the 15 other states, plus the District of Columbia, that had set up their own exchanges.

The administration defended its decision to make subsidies available to residents of all states, including New Hampshire and 33 others that used an exchange set up by the federal government. Under the administration’s interpretation, about 6.4 million residents of those states have been collecting subsidies.

The Court majority, in an opinion authored by Chief Justice John Roberts, made short shrift of the challengers’ claims. If their view prevailed, he wrote, “it would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very ‘death spirals’ that Congress designed the (Affordable Care) Act to avoid.”

Noting the failure of previous health care reform efforts that required insurers to sell coverage at a set price to all comers, Roberts noted that the ACA was modeled on a 2006 Massachusetts law that also required all residents to purchase coverage and provided premium subsidies to those with low incomes. Denying those credits to residents in some states would undermine the clearly stated purpose of the law, Roberts wrote.

Roberts chided Congress for its “inartful drafting” of the legislation but rejected the challenge as one premised on the view that Congress had intended to make “the viability of the entire Affordable Care Act turn on … a sub-sub section of the Tax Code.”

In Vermont, a different argument has been unfolding. The state, which in 2011 passed a law committing itself to providing publicly financed health insurance for all residents, had opted to set up its own exchange in order to, at least in part, lay the groundwork for further reform. And that, to put it mildly, did not go so well.

Many Vermonters had problems getting insurance through the website, called Vermont Health Connect. Efforts to repair and improve the site faltered, and the site’s lingering woes seemingly undermined the political clout of Gov. Peter Shumlin, a Democrat who narrowly won re-election in 2014 and soon retreated from the state’s broader health care reform agenda.

On Thursday, Shumlin enjoyed a rare moment in the sun. “We have insured nearly 20,000 Vermonters who previously did not have insurance, and now Vermont has the second lowest rate of uninsured in the nation,” he said in a statement.

But Vermont’s Republican Lt. Gov. Phil Scott issued his own statement accusing the Shumlin adminstration of having “dismissed repeated calls to explore alternatives to our dysfunctional exchange” because of the threat that such a move might cost some Vermonters their premium subsidies.

Now that the subsidies were secured, Scott wrote, the state should “immediately explore alternatives to Vermont Health Connect” which could include setting up an exchange in a partnership with Connecticut or some other state, with the federal exchange or by sending Vermonters into the federal exchange. “For too long, Vermonters have been underserved and frustrated by this $200 million system.”

Lawrence Miller, Shumlin’s chief of health care reform, reacted angrily to Scott’s statement and said that “people (were) ill-served” by his comments. “We’ve looked at a whole range of alternatives,” he said. The potential loss of subsidies had been only “one of several considerations” preventing the state from abandoning the exchange, he said.

Miller also said that the $200 million of federal funding that supported development of the new state exchange also helped the state develop the capability to sign up and administer Medicaid coverage online. It also paid for some upgrades to mainframe computer systems at the state’s hospitals, he said. Also, a new system would have to find a way to compute state subsidies that are paid to some Vermonters on top of the federal premium subsidies, he said.

The exchange question traveled a twisting road to the Supreme Court. The version of the ACA passed by the House of Representatives in 2009 called for a single national exchange where individuals without health insurance from employers or government programs could shop for individual policies. The Senate version passed that year called for each state to set up its own exchange. The law Congress passed in 2010, and that Obama signed, allowed states to choose whether to set up their own exchanges or have their residents participate in the federal exchange.

New Hampshire

New Hampshire sent its consumers into the federal marketplace. In the 2013 open season, nearly 33,000 enrolled, and 77 percent received premium subsidies. Nearly 46,000 enrolled in last year’s open season, and 66 percent received subsidies. The 30,000 recipients of federal subsidies collected, on average, $264 a month.

“I’m a small business owner, so it’s my only option. My husband also is self-employed, it’s his only option,” said Brie Delisi, 37, of Northwood. “For the two of us, paying $300 a month is pretty darn affordable.”

Delisi owns a boutique in Portsmouth. Her husband is a carpenter, and they are expecting a baby in January. Without the subsidies, their premiums would double.

“To us, it’s a very, very valuable product, and I would’ve been pretty disappointed had they taken it away,” she said. “I hope it definitely stays in effect, because it’s helping a lot of people like us who don’t have insurance through their employers.”

Gov. Maggie Hassan, a Democrat, issued a statement urging the state “to keep building on the new competition in our health insurance marketplace to continue making coverage more affordable and more accessible for all of our people and businesses.”

Health reform advocates joined the chorus. “We are pleased at the outcome of today’s Supreme Court ruling, which preserves the ability for New Hampshire residents to access affordable coverage,” said Tom Bunnell, a spokesman for New Hampshire Voices for Health. “The ruling ensures that New Hampshire can move forward with its unique and innovative version of Medicaid (expansion), and transition the (New Hampshire) Health Protection Program enrollees to the private Marketplace in January of 2016,” he added.

James Weinstein, the chief executive of Dartmouth-Hitchcock, issued a statement noting the “decisive margin” in Thurday’s ruling. He said that he was “particularly gratified by the decision that affirms subsidies for New Hampshire residents on the federal insurance exchange.”

In Vermont, about 35,000 residents are currently covered by insurance from Vermont Health Connect, and about 64 percent received federal premium subsidies. Most of those receiving federal premium subsidies also collected state subsidies, according to a presentation provided by Miller. The average monthly federal subsidy to the more than 22,000 Vermonters is $275.

Sen. Jeanne Shaheen, applauded the ruling.

“For those of us who supported the Affordable Care Act, it was always our intention to provide subsidies to families who needed help purchasing health insurance, regardless of where they lived,” Shaheen said. “The Affordable Care Act is not perfect, and I will continue working to improve it, but today is a big victory for all those families across the country whose health care hung in the balance.”

Republicans who opposed the law and have worked to repeal it pointed to the need for further reform.

“Unfortunately, today’s ruling does not address the underlying problems with the law that are leading to higher premiums and deductibles, and less choice for Granite Staters,” said Sen. Kelly Ayotte. “Republicans and Democrats should work together to enact real reforms that will make health care more affordable and allow consumers greater choice.”

Rick Jurgens can be reached at rjurgens@vnews.com or 603-727-3229.