SCOTUS Decision on Healthcare Subsidies Could Disrupt N.H. Insurance Market

Jun 23, 2015

The United States Supreme Court is expected to decide a case this month that could be do or die for President Obama’s signature healthcare law. At issue are the subsidies available to people who purchase insurance plans on Healthcare.gov, also called the healthcare exchange. New Hampshire is one of 36 states using this federally-operated insurance marketplace, and if the Supreme Court rules in favor of the plaintiff in the case, about 30,000 people in New Hampshire may see their subsidies disappear.

For more analysis of what this Supreme Court decision could mean for New Hampshire residents, we turn to Lucy Hodder. She’s a professor of Law at UNH School of Law, and formerly Governor Maggie Hassan’s legal counsel. She spoke with NHPR's Peter Biello. 

The Affordable Care Act has been challenged in court before. What’s this new challenge and how is it different from the others?

This challenge is different in that it’s before the US Supreme Court, and any time a case gets all the way up there, it matters. And it certainly matters in this case because at issue are four words in the entire 900-page statute that say subsidies are available to those enrolled through an exchange “established by the state.” If that means what the plaintiffs say it means, over 30,000 citizens in New Hampshire and in states throughout the country will not be able to access subsidies because they have what’s called “federally facilitated” or “federally operated” exchanges.

So the subsidies for about three-quarters of the people who bought plans on the exchange could disappear, and that’s about 30,000 people in New Hampshire. And the prediction is that would cause disruption for the entire market, including people without subsidies. Why is that?

The expectation is that these subsidies have made insurance on the exchange affordable for these 30,000 people, and if it’s no longer affordable, they may not buy insurance, which means that they will leave the marketplace plans. Many of the new five carriers on the marketplace, a very competitive marketplace we have in New Hampshire, may decide that, if they lose this relevant population, they can no longer take the risk for who remains, and they’ll pull out of the marketplace, which will just create a slow decline of the opportunities and competition, put the marketplace in a very risk-based scenario and maybe even cause some carriers to leave the state or go under as a result.

The Obama Administration has made it clear if the court guts the law, fixing it will be the job of Congress or states. What are some actual solutions that could work in New Hampshire?

I think what needs to happen in New Hampshire is those who are concerned or want to maintain continuity of coverage put their heads together to figure out how to solve the problem once we get the decision. It may be that we are all okay. Or the decision could lay out a roadmap of what the fix might be.

If the state can’t create its own exchange, what could it possibly do? Is there any other option?

There are two states—Delaware and Pennsylvania—that are exploring some kind of relationship with the federal government where they lease the exchange, but it really depends on what the Supreme Court decides these four words mean, and what avenue we have next in New Hampshire.

Those four words—the language in the law seems to be pretty clear. Do you see any other possible interpretations of this law?

When you’re looking at a statutory interpretation, which this is, the court looks at the plain meaning of the words, but it also looks at those words in context of the statute as a whole and the intent of Congress. And I think the argument for the government is that if you put those words in context of the entire statute, where there’s no prohibition against states entering into a partnership or relying on Healthcare.gov, that the actual intent of Congress was not to eliminate the availability of subsidies for states that chose to rely on Healthcare.gov. And if you read it in context with the rest of the statute that becomes more clear.

The New York Times says that if the Supreme Court rules for the plaintiff and invalidates these subsidies, there would essentially be “two American healthcare systems”—one for the states that operate their own exchanges, like Vermont and Massachusetts, and one for the others, like New Hampshire, Maine, and the majority of others. Do you agree with that assessment?

I certainly think if the plaintiffs win, the four plaintiffs from Virginia win, it will create some chaos in the states that have not established a state-based exchange, depending on what the court says, and that sort of sets an unfair example, based on what we’ve been told by the federal government and New Hampshire signed on to an amicus brief basically saying, “Look, we were told by the federal government that we could rely on Healthcare.gov. That’s what we did. It’s working. We have competition on our exchange. We have affordable coverage on our exchange. You can’t take that back now.” But it will certainly create a lot more chaos in the states that have relied on Healthcare.gov.