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As Court Case Imperils Affordable Care Act, Some States Prepare Contingency Plans

State budgets would be thrown into tumult if the ACA ends because federal funds pay for most of the Medicaid expansion. Credit: Charlie Neuman/Zuma Press

Stephanie Armour | 10/21/19

A federal appeals court decision that could strike down the Affordable Care Act as soon as this month has rattled officials in several states who are pursuing legislation to preserve some coverage in the absence of any Trump administration contingency plan.

Lawmakers in states including Louisiana, Nevada, New Mexico and California have passed bills or are reviewing action aimed at dealing with the fallout if the ACA is overturned. Many of these lawmakers are also facing re-election campaigns this fall in some of the very states that brought the lawsuit.

Plans include giving subsidies to insurers that cover high-cost consumers, possible emergency legislative sessions to address sudden coverage gaps, and regulations that prevent people from being denied coverage even if the law is no longer in effect.

The state initiatives reflect growing angst over the possible ramifications of a decision that could ultimately end health coverage for more than 20 million people.

A three-judge panel of the Fifth U.S. Circuit Court of Appeals heard oral arguments in July in a lawsuit driven by 18 GOP-led states seeking to invalidate the law. The Trump administration has largely sided with the states.

The judges’ questions during the arguments suggested they could rule against upholding the ACA, legal experts said. A ruling would likely be stayed, and the case is expected to be taken up by the Supreme Court, pushing the timeline for a final decision into 2020 or beyond.

Health and Human Services Secretary Alex Azar said in an interview Friday that because the ruling is likely to be stayed, there is no reason for concern now.

“Our message is to keep calm and carry on,” he said.

He added that should the makeup of Congress change after next year’s elections, lawmakers could revisit an ACA replacement, although the Republican-controlled House and Senate couldn’t agree on a new health plan in the early months of the Trump administration.

“A lot of what we’d support would depend on the political climate at the time,” he said.

But some lawmakers risk being portrayed as jeopardizing coverage if they don’t push bills to enshrine parts of the ACA, especially its protections for people with so-called pre-existing conditions. Lawmakers are also acting now because of the time it can take to get legislation passed.

“If we’re going to be upending and amending it, it needs to be done through Congress,” said Democratic Colorado Gov. Jared Polis. “The lawsuit is just so much uncertainty. It could create great chaos in the system.”

Colorado is pursuing the creation of an insurance plan, similar to a so-called public option, that would provide insurance to people on the individual market. The state would set the rates, which could help lower premium costs if the ACA ends.

Louisiana, under legislation signed by Democratic Gov. John Bel Edwards, is seeking input through October on a replacement plan that would provide some coverage to people with pre-existing health conditions, said Frank Opelka, the state’s deputy commissioner for life, health and annuity.

The legislation directs the state’s insurance commissioner to set up a system known as a “high-risk pool,” where insurers get subsidies for covering people with expensive medical conditions who are locked out of health insurance.

Louisiana’s Republican attorney general, Jeff Landry, joined the lawsuit from GOP-led states seeking to invalidate the ACA. Both the governor and Mr. Landry are running this year for re-election.

The prospect of losing coverage could prove unpopular with the electorate. Much of the coverage gains under the ACA came from the law’s expansion of the Medicaid program, and more than 450,000 Louisiana residents covered under that expansion could lose their insurance. Many of the 90,000 people in Louisiana who have coverage through the ACA’s individual exchange risk losing subsidies that help offset their premiums.

In Nevada, Democratic Gov. Steve Sisolak is fielding applicants for a patient-protection commission, directed under a bill lawmakers passed last year, that will make recommendations for protecting coverage if the ACA is eliminated. Like Louisiana, the state has 90,000 people who get insurance on the state’s ACA exchange, and more than 210,000 residents in Nevada gained coverage through Medicaid expansion.

Democratic lawmakers in Texas, the state leading the lawsuit against the ACA, have weighed calling an emergency legislative session depending on when a decision comes down. The legislature passed a bill this year that would establish a temporary high-risk pool as a stopgap to provide some coverage if the ACA is overturned.

“States should certainly be thinking about contingency plans,” said Nicholas Bagley, a professor at the University of Michigan law school. He added that “coming up with reasonable contingency plans will take time.”

The state actions are putting pressure on President Trump because he has yet to produce a health plan despite repeated promises to do so. The administration has been working on plans should the courts knock down the ACA or large parts of it, according to two people familiar with the discussions.

“We’re prepared for every scenario,” a senior White House administration official said. “We have spent a lot of time and have prepared for various permutations.”

In Congress, Sen. Chris Murphy (D., Conn.) has been pressing Republicans to present a plan in case the law is shot down. The conservative House Republican Study Committee has been working on a health plan that is expected to be released soon.

Meanwhile, at least 11 states including Connecticut, Louisiana, Indiana, Maryland, Vermont and Washington have enacted laws that require insurers to provide coverage to people with pre-existing conditions or offer health plans that provide the same suite of benefits as those mandated by the ACA, according to a July report from Avalere, a health-care consulting firm.

State budgets would be thrown into turmoil if the ACA ends because federal funds pay for most of the Medicaid expansion, as well as subsidies for roughly nine million people who buy their own insurance on the health law’s exchanges. The federal government spent about $63 billion for Medicaid expansion in 2018, and states lack the funding to make up the difference.

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