The U.S. Supreme Court is deliberating on King v. Burwell to determine if the Affordable Care Act permits the issuance of subsidies to defray the cost of insurance purchased through exchanges run mostly or entirely by the federal government, rather than states. The solid majority of states — 37 — use federally run or hybrid exchanges.¹ In total, upward of 7.5 million persons could have their subsidies at risk.²

 The Court’s ruling is anticipated to come near the end of its current term in late June. As the Court ponders the question, Congress, the administration, governors and state legislators are developing potential response scenarios should the Court decision invalidate subsidies in states with federally run exchanges. Potential actions could include the following items:

Congress

• The most straightforward action Congress could take would be to amend the Affordable Care Act to stipulate that subsides are permitted in all exchanges. Given the politics of the ACA and Republican control of both chambers, this seems unlikely even if the White House pushes it aggressively.
• Congress could extend the subsidies for federally run Exchanges for a defined period, allowing persons in impacted states, as well as elected officials in these states, time to determine options without having to deal immediately with an influx of newly uninsured persons who can no longer afford their coverage. U.S. Sen. Ben Sasse of Nebraska articulated this COBRA-like concept in a recent Wall Street Journal op-ed. Additionally, there is precedent in which the Court has acted to delay implementation of a ruling that would significantly alter or disrupt current law, and the Court could include such a delay in its ruling.³
• Other Republicans, notably Energy & Commerce Chairman Fred Upton and Ways & Means Chairman Paul Ryan, are calling for an “off-ramp” where states that participate are freed of the ACA’s insurance market regulations under the theory that such action would permit greater access to more affordable (albeit likely more limited) insurance plans.

Administration

• Health and Human Services Secretary Sylvia Mathews Burwell has publicly asserted that the federal government does not have a backup plan should the Supreme Court decision invalidate the subsidies through the federal exchange.
• However, one option potentially available to HHS would be loosening the criteria necessary for a state to operate a state exchange to entice states with federally run exchanges to make the conversion. Such an action could allow states to technically “run” their exchanges while still using the complex eligibility and enrollment (E&E) system of the federal government.

States

• States that are impacted could enact legislation or an executive order to move toward a state exchange, a move some Republican-led states  are considering. However, governors of some other states are publicly saying they would not take any actions to fix the situation.

[1] See: http://kff.org/health-reform/state-indicator/state-health-insurance-marketplace-types/

[2] See: http://www.nytimes.com/interactive/2015/03/03/us/potential-impact-of-the-supreme-courts-decision-on-health-care-subsidies.html?_r=1

[3] See Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982)