Supreme Court

No Plan B? White House, states in bind if Supreme Court strikes ObamaCare subsidies

Congress examining how states spent billions in healthcare dollars

 

With a major Supreme Court decision on ObamaCare potentially just days away, neither the Obama administration nor state governments seem to have a comprehensive plan in place in the event the court strikes down a key component of the law. 

Rather than offering a plan B, the White House is only giving assurances of the strength of its legal case. 

"Our message to the American people is that they should be confident in their health care they have now because it is rooted in a sound legal basis," said Josh Earnest, the White House press secretary. 

The Supreme Court is expected this month to deliver its decision in King v. Burwell. That ruling will decide whether Americans can receive Affordable Care Act tax subsidies in states that use the federal exchange known as HealthCare.gov -- as opposed to states that use their own exchanges. 

Those challenging the subsidies point to a section in the ACA that specifies tax subsidies can come through an "Exchange established by the State." Opponents argue that language requires those seeking tax subsidies to do so only through state-based health insurance exchanges. 

Yet 34 states are using the federal exchange, having failed to set up their own. A ruling against them could have severe consequences. 

The Kaiser Family Foundation estimates a ruling banning subsidies for Americans in those 34 states would cost more than 6 million people about $1.7 billion in monthly health-care tax credits. 

Some state governments relying on the federal exchange say they are planning for that possibility. "I am continuing to take steps, as part of my contingency plan, in order to protect 382,000 Pennsylvanians from potentially losing subsidies that help them afford health care coverage," said Pennsylvania Gov. Tom Wolf. "[M]y administration submitted an application to set up a State-Based Marketplace to ensure Pennsylvanians do not lose coverage in the event of an adverse Supreme Court decision." 

Michigan and Texas say they're watching the case closely, as are dozens of other potentially affected states. 

But absent a fix from a divided Congress, states without them may have to create their own exchanges, investing significantly in establishing them with no guarantee of their success. 

States with exchanges already spent billions of federal dollars establishing them to mixed results. 

That money is gone. States without exchanges would have to create ones using their own funding, if the court rules against the subsidies. 

Some exchanges have done well, like in Connecticut. Maryland scrapped its initial system and replaced it with a better one. Others, like Oregon, have failed. 

"The state of Oregon's exchange has just completely collapsed and they're giving up and they're going to let the federal government take over. But in the process they've wasted $300 million of taxpayer money and the same thing may happen in Rhode Island," said John C. Goodman, an economist and the president of the Goodman Institute for Public Policy Research. "The federal government is threatening to take over the exchange in Hawaii. At least half the state exchanges are having serious financial problems." 

Of the state exchanges' performances, the administration will only say it is committed to their success. 

"We remain committed to working with states to ensure that all Americans have the ability to shop for quality, affordable health coverage," said Meaghan Smith, the director of communications for health care at the Department of Health and Human Services. "CMS continues to work with states on the options and steps they need to take to best serve their state's consumers in 2016 and beyond," she said of the Centers for Medicare and Medicaid Services. 

Republicans in Congress, meanwhile, say they're crafting a plan B. Rep. Paul Ryan, R-Wis., said Thursday "we will be ready with an alternative plan" if the court strikes down the subsidies.

Rich Edson is a Washington correspondent for Fox News Channel. Prior to that, he served as Fox Business Network's Washington correspondent.