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Ripple Effects of Supreme Court Decision Could Reach Colorado

Ripple Effects of Supreme Court Decision Could Reach Colorado

As I was listening to law professor Melissa Hart during our panel on the King v. Burwell case last Thursday, I couldn’t help but think of last year’s season finale of my favorite NBC sitcom, Community.

In the episode, an evil school board member’s plot to close the community college has just been foiled, but he gloats to the dean that the school is still underfunded, under attack and in constant danger of closing.

The dean smiles.

“Around here, we call that a Wednesday.”

And so it is with the Affordable Care Act.

Hart, a professor of constitutional law at the University of Colorado, said no matter what happens with the King case, the Affordable Care Act (ACA) will never be free from lawsuits. 

“There will always be a next challenge to the Affordable Care Act, because there is a financed industry challenging the Affordable Care Act,” Hart said during CHI’s Brews and Views panel discussion at the Denver Beer Company a day after oral arguments in King v. Burwell.

The lawsuit argues that, under the ACA, federal subsidies to help buy health insurance are only available to qualified residents of states that have set up their own health insurance exchanges. If the court rules for the plaintiffs, residents of 34 states that use the federal marketplace would not be eligible for financial help. 

Colorado runs its own marketplace, Connect for Health Colorado, so the state is not directly affected by the King case. 

But we wanted to know how ripple effects could reach Colorado if the court rules in favor of the plaintiffs. So we asked our panel – Hart, health care attorney Gerry Niederman and benefits experts Leo Tokar.

Hart and Niederman talked about Justice Anthony Kennedy’s concerns that the King plaintiffs’ interpretation of the law would unconstitutionally coerce the states by forcing them to set up their own exchanges or lose subsidies for their residents. 

The court is expected to rule by June 30. If the King plaintiffs win, Hart expects a lawsuit by July 1 that would affect Colorado by claiming states were unconstitutionally coerced into creating their marketplaces.

Niederman agreed.

“Surely someone will try to take the coercion argument to the next level. I have no doubt about that,” he said.

And Tokar thinks the argument would be used by in-state opponents of Connect for Health Colorado, who have introduced legislation every year to repeal the state’s marketplace.

Opponents of the lawsuit are predicting severe damage in the insurance markets of states that have not set up their own exchange, because without subsidies, only the sickest people would continue their coverage.

Tokar was skeptical that the doomsday scenarios outlined by ACA supporters would really come to pass if the plaintiffs win. Insurance companies would have to be given time to adjust, because they have already priced their policies based on the premises of the ACA — that people are guaranteed insurance regardless of pre-existing conditions, that most Americans must obtain coverage, and that people who can’t afford coverage may be eligible for a subsidy.

Economic damage in other states would not spill over to Colorado directly, because each state regulates its own insurance market, and companies cannot raise prices in one state to recoup losses in another, Tokar said.

But Colorado could see some interesting consequences, and not all of them negative. Connect for Health Colorado charges some of the lowest fees of any state marketplace, so Tokar thinks it could be “franchised” to other states that currently use the federal marketplace. Such a move would make Connect for Health Colorado more financially sustainable, he said.

He also wondered if Colorado’s functioning insurance marketplace would attract new residents.

“Do people who need health care move to Colorado?” Tokar said. “That’s a little bit of an oddball scenario, but it could happen.”

All three panelists said the high court is notoriously hard to predict. But when pressed, all three thought the status quo would prevail, and subsidies would be allowed to stay.

Hart said very little attention has been given to the government’s primary argument, that the King plaintiffs’ case is based on a faulty reading of the law. She thinks justices could rule on that point in favor of the ACA subsidies. Niederman, though, doesn’t rule out a wild card.

“This could be decided on some basis that no one is thinking about right now,” he said. Want to read more about our panel? CHI’s Allie Morgan and several other people in the audience tweeted throughout the event under the hashtag #KinginCO.