What a Supreme Court Ruling on King v Burwell Could Mean For The Affordable Care Act in Illinois

The US Supreme Court could rule as soon as Monday on whether health insurance subsidies under the Affordable Care Act can only be offered for policies obtained through insurance exchanges run by the states, not by the federal government.

A ruling in King vs Burwell that allows the subsidies to continue for states that have not set up their own health insurance exchanges would mean a continuation of the status quo.

But a ruling against the subsidies for federally run exchanges would have a big impact on Illinois, where about a quarter of a million people receive such subsidies through an exchange run by the state in partnership with the federal government. I talked about the case with two people who are watching it closely.

Jeff Ingrum is the CEO of Health Alliance, the medical plan provider owned by Urbana-based Carle Foundation, which also owns Carle Hospital and Carle Physicians Group. About 10,000 to 12,000 Health Alliance members receive insurance through the Illinois exchange, and a good portion of those receive subsidies.

Ingrum says if a court ruling ends up eliminating the subsidies for those members, Health Alliance would work with them to see if they can provide other, affordable insurance options. If not, he says they may have to drop their insurance coverage and rely on charity care from local hospitals and medical clinics --- at least until Congress and the White House devise a way to restore their subsidies.

But Ingrum says that may be difficult with the current political climate. He hopes that if the Supreme Court will consider the timing if they rule against the insurance subsidies for states like Illinois.

Ingrum would like there to be a “transition period” of 18 to 24 months, before the subsidies are ended, that would keep them going until after the election of a new president and a new Congress in 2016.

Ingrum says waiting until then to end the subsidies would allow the country to “get through the next election, so the political parties know who’s going to be the next president of the United States, which parties are going to control which houses of congress. And at that point, hopefully then, the parties can sit down together can craft a solution”.

When asked about his own views on the Affordable Care Act, Ingrum says it has both good features and flaws. He says he would rather see the law repaired and improved, instead of eliminated entirely.

Meanwhile, attorney Mark Rust sees difficulties for both hospitals and insurers, of the Supreme Court rules against the Obama administration in the King vs. Burwell case.

Rust is the Managing Partner of the Chicago office of the law firm of Barnes and Thornburg, and an expert on the Affordable Care Act. Rust has used his expertise in representing medical clinics, hospitals and managed care organizations.

Rust says if the Supreme Court strikes down the subsidies, and Congress fails to act to restore them, rates for insurance offered through Illinois’ health insurance exchanges could spike as must as 50%, because the healthiest people would drop their coverage. At the same time, he says some insurers would likely pull out of the exchange, while the ones who stay will have to shoulder more risk.

For hospitals, Rust believes that they’ll have to adjust to having less patients covered by insurance, and more of them relying on charity and emergency room care, returning to a situation that existed before the Affordable Care Act was enacted.

But Rust believes that Illinois could cope with a ruling ending the subsidies, even with no action by Congress, by creating its own health insurance exchange. Currently the state works in partnership with the federal government’s exchange, largely because of the estimated $92 million it would cost to set up an exchange of its own.

Rust says that partnership now puts Illinois in a “tremendous position” to continue using the federal government’s technology by simply leasing it. He says that would meet the requirements of the Affordable Care Act, and could be done for a fraction of the cost of setting up a new state exchange.

“The fact is, that now that technology is in place that federal government has established, it is unnecessary for any state to put a lot of its own money into technology. It is capable, --- as long as (the Department of Health and Human Services) agrees --- to simply lease that technology from the federal government.”

Rust has hopes that Gov. Bruce Rauner would agree to such an arrangement. He says that while Rauner may not like the Affordable Care Act, he has not shown himself to be “doctrinaire” about such matters. Rust believes that Rauner would work with Democratic lawmakers to restore the Affordable Care Act subsidies, as long as it doesn’t cost too much.

The Rauner administration has not said what it will do if the Supreme Court rules against subsidies, except to say it would “take appropriate action” depending on the ruling.