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States try to protect health exchanges from court ruling

A number of states are scrambling to show that they—not the federal government—are or will soon be operating their insurance exchanges under the 2010 health law, in light of two court decisions this week.

The efforts are aimed at ensuring that millions of consumers who get insurance through the exchanges would be able to retain their federal tax credits if courts ultimately rule against the Obama administration.

A federal appeals court in Washington, D.C., ruled on Tuesday that the wording of the law means that only consumers in states operating their exchanges could get the federal tax credits. Hours later, a federal appeals court based in Richmond, Va., reached a different conclusion, a conflict that may have to be resolved by the Supreme Court.

Amid the uncertainty, some of the 36 states in which the federal government has a role in the exchanges are moving to shore up their status. Some are saying publicly that their exchanges have always been state-operated. Others are trying to make the case that they should be considered to have state exchanges regardless of federal involvement. Still others, such as Arkansas, are pushing ahead to take over their exchanges, which would likely free them from the effects of any court decision.

The health law says little about the issue except that states running their own exchanges must carry out tasks themselves or contract with a qualified private company to do so. The federal government approves state applications to run exchanges, with requirements that include state officials authorizing the move, and the state ensuring key tasks are carried out, such as operating a call center and reviewing health plans.

Among the 36 states, the level of federal involvement varies. That means states see gray areas to work with, if they want to, though the ultimate decision about their status would likely hinge on additional court decisions and determinations by the Obama administration.

Click for more from The Wall Street Journal.