DES MOINES, Iowa — Roughly 24,000 Iowans stand to lose hundreds of dollars in annual assistance to pay for their health care, pending a U.S. Supreme Court ruling expected next summer.
The potential issue could be avoided if Iowa operated its own health insurance exchange rather than defaulting to the federal government’s. But that appears unlikely based on the comments of top elected officials, who continue to express concerns with the federal health care law.
The U.S. Supreme Court has decided to hear a case that questions the legality of federal subsidies for private health insurance purchased via the federal government under the new health care law. A ruling for the plaintiffs would threaten the financial assistance provided by the federal government to low-income individuals who purchase insurance through the federal portal.
According to federal data, 29,163 Iowans purchased health insurance through the federal marketplace for 2014, the first year under the health care law’s mandate that most people purchase insurance or pay a penalty on their taxes.
Of those people, 83 percent received financial assistance that reduced the average monthly premium from $350 to $108, federal data says.
If the Supreme Court ruling strikes down the federal subsidies, those 24,000 Iowans will face purchasing health insurance at the full price, without financial assistance.
Individuals in the 27 states with federally facilitated marketplaces are in the same suddenly rocky boat.
The 107,425 low-income Iowans who got their health insurance through the state’s Iowa Health and Wellness Plan will not be affected either way by the Supreme Court decision.
Under the federal health care law, states have the option of creating their own health insurance marketplace — an online portal through which individuals can shop for and purchase insurance — or default to the federal government’s portal.
Iowa is one of seven states that partners with the federal government on its exchange. The state handles some administrative responsibilities, but individuals use the federal portal for purchasing plans and obtaining financial assistance.
At the heart of the case to be heard by the U.S. Supreme Court is language in the law that appears to make unclear whether financial assistance can be provided for all insurance plans purchased through the program or only those purchased in states that established their own exchange. Passages refer to subsidies in exchanges established by “the state,” and there appears to be legal confusion over whether “the state” is meant in a literal sense or as a reference to state or federal government.
If the Supreme Court rules only states can establish subsidies, that could end the subsidies in the states that did not establish their own exchange, which includes Iowa.
However, the court's decision wouldn't necessarily be the final word, because states at any time can alter their insurance exchange.
No changes on Iowa's horizon
Such changes do not appear imminent in Iowa, where Gov. Terry Branstad has remained opposed to a state-based health insurance exchange. He cited uncertainty with the health care law because of legal issues and troubled state exchanges in other states, including Maryland and Oregon.
“The whole Obamacare has a lot of uncertainties with it. … I think there’s going to be a lot more litigation, a lot more questions. We don’t want to make the mistake that some other states did,” Branstad said last week. “There are other states that have had similar problems. We don’t want to make those kind of mistakes. Our Iowa Health and Wellness Plan (the state’s version of the health care law), which we were able to put in place by getting a waiver from HHS — and that was a long and difficult process — is working effectively.”
Branstad said he wants to see what impact new Republican control of the U.S. Senate will have on the health care law, although widespread changes seem unlikely, at least during the next two years while President Barack Obama is still in office.
“I guess we’ll have to see what happens. You’ve got a new majority in the Senate. We’ll have to see what gets worked out at the national level with regard to these issues of Obamacare,” Branstad said. “But I’ve said from the get-go that (the health care law) is unaffordable and unsustainable.”
Some Democrats in the Iowa Legislature have advocated for a state-based exchange. But Iowa Sen. Amanda Ragan, D-Mason City, said Branstad’s opposition remains a significant hurdle.
Ragan is chairwoman of the Iowa Senate’s Health and Human Services Budget Committee.
“There has been interest by some legislative Democrats in establishing a state exchange in Iowa because it would provide better oversight of the insurance industry and increase marketplace competition by insurance providers,” Ragan said in an email to the Lee Des Moines Bureau. “However, Gov. Branstad reaffirmed his opposition to that idea for a state exchange in Iowa as recently as his weekly news conference. Democrats are willing partners to restart this debate about a state exchange.”
Ragan said the state should wait for the Supreme Court ruling before taking action. She also said the federal government could act to reverse any impact of a Supreme Court ruling that eliminates the federal subsidies. But that would seem unlikely given Republicans, most of whom oppose the health care law, will control both chambers of Congress when it convenes in January.
“Before the Supreme Court issues a ruling, it is premature to take any steps toward establishing a state exchange in Iowa,” Ragan said. “If the Supreme Court issues a ruling that eliminates subsidies for an estimated 25,000 Iowans who purchased health care insurance through the federal exchange, the first step would be for Congress to remedy the situation and maintain affordable health care for Iowans who truly need it.”
Iowa Insurance Division director Nick Gerhart said the state will continue to implement and regulate the law.
“At this point, all I think we can do is see how it all plays out and maybe plan for other contingencies down the road,” Gerhart said.