21,000 Del. health plans in play with Obamacare case

The U.S. Supreme Court is about to take on a challenging case that could change a major tenant of Obamacare reform, throwing 8 million people, including 21,000 Delawareans, back into health insurance limbo.

Wednesday morning, the U.S. Supreme Court will hear opening arguments to King v. Burwell, a case that questions a statute in the Affordable Care Act that describes who is eligible for government subsidies that made Obamacare plans affordable for millions.

The plaintiffs filing against U.S Department of Health and Human Services Secretary Sylvia Burwell, say that subsidies offered to everyone who purchases a marketplace plan are illegal. If the subsidies were not available, they would not pay a penalty for failing to be insured because even the cheapest health plan would be too costly, according to the Associated Press. They object that health insurance should be mandated for all.

However, that means close to 21,000 Delawareans who purchased plans on the marketplace this year and rely on those subsidies could lose insurance or be forced to pay a high price, if the court finds that the subsidies should be more narrowly distributed.

Obamacare plans are offered through online health insurance marketplaces in all the states for people that don't get insurance through their jobs or the government per the ACA. States could provide an online marketplace similar to www.healthcare.gov on their own, with the federal government or relinquish control completely.

Challengers say that distinction is crucial and that the written language of the law allows subsidies — in the form of tax credits — only for people who get their insurance through an exchange "established by the state."

If the court finds that the administration's interpretation of the law overstepped its legal bounds by providing subsidies to eligible enrollees regardless of the type of marketplace they used, 8 million people would be affected.

Having worked in the health care field for 13 years, Jen Wetherby was familiar with Obamacare and the plans offered on the nation's health insurance marketplace.

She just never thought she'd actually have to choose one.

Wetherby, 30, was laid off from her job of seven years this past September and had been scrapping together cash for doctor's appointments ever since.

The Claymont resident said she signed up for a plan Feb. 13, two days before this year's official Obamacare enrollment deadline, and scored a $153 federal tax credit to bump her monthly premium down to $114.

"That's the whole point of having Obamacare so people don't have to pay that price," Wetherby said. She has hopes she will secure a job with health benefits soon, but her parents, who are also using Obamacare, couldn't afford their plan without the subsidy.

"They would be back to where they began," she said. "My father is disabled as is my mom."

But Delaware Health Secretary Rita Landgraf says that Delawareans, such as Wetherby's parents, may not be stuck if the court takes into account the state's unique position.

Twenty-seven states have marketplaces managed completely by the federal government. But Delaware is one of the seven states to have a partnership with the federal government which means the state uses www.healthcare.gov, but manages all other operations from consumer outreach to plan management through Choose Health Delaware, the state's marketing campaign.

More than 24,000 Delawareans picked a new plan or were automatically enrolled in a health plan on the marketplace through last Sunday, the final day of open enrollment.

The state made the right decision, Landgraf said, to engage in a partnership with the feds. Otherwise, it would have cost a big chunk of the state budget.

"Why should we be penalized because we actually advanced something that was fiscally sound and appropriate for all Delawareans," she said.

"I am concerned for the population because I think Delaware advanced this and Delawareans actually want this access to health insurance."

However, the state does not have a contingency plan in place if the court were to rule the subsidies should be allocated to those enrolled in state-based marketplaces. Landgraf said it is too early to predict what may come down the pipeline and how that would affect the health insurance market.

That type of approach worries Dr. Christopher Casscells, an orthopedic surgeon who reviews health policy for the Caesar Rodney Institute. He says he can see the entire health care system in Delaware, and around the country, unravel.

"It's a budgetary nightmare if we lose the IRS and federal subsidies over this," he said. He doesn't foresee there being enough state infrastructure for the health department to add more money to give people back their subsidies.

As a result, providers will have to "close our doors to anyone who has this tainted form of insurance," he said, referencing those with Obamacare plans. Physicians and other medical providers may have to make up the difference the subsidies supported and there is no way to know who receives subsidies and who doesn't, he explained, all the insurance cards look the same.

"There is a house of cards that happens or a domino effect," Casscells said.

Nick Moriello, president and chief executive officer of Health Insurance Associates brokerage firm in Newark, says he's heard talk that if the ruling does go negatively, people with subsidies would be able to keep them at least until the next open enrollment cycle, but he's not convinced it will be beneficial.

"I just see major disruption to the marketplace if the ruling does go that way. Even if we get an extension to the end of the year that's not a long term fix," Moriello said. "Having the state establish its own exchange in a six month turnaround is not realistic. I don't think we as a state can do that so quickly."

The Supreme Court decision could go 50-50, says John Culhane, law professor and co-director of the Family Health Law and Policy Institute at Widener University.

"There are all kinds of clues in the laws that suggests Congress had no idea that this could happen," Culhane said. If they wanted to eliminate subsidies for federally supported marketplaces, they wouldn't bury it in the law, he said.

"If you read the entire statute it's very obvious the subsidies were intended to apply to anyone. Otherwise the whole thing falls apart," Culhane explained. It's expected that people who don't have chronic problems will just drop their plan instead of paying a high price. However people may end up playing a game with their health if they choose to drop plans.

Culhane said chronic conditions such as cancer or heart disease will go untreated and undiagnosed at a higher rate if people do not have insurance.

"If healthy people are out of the system insurance rates will spiral up. It will be this death spiral," he said.

"What you are really going to have is a country when it comes to health insurance of haves and have nots."

This story contains information from the Associated Press

Jen Rini can be reached at (302) 324-2386 or jrini@delawareonline.com. Follow @JenRini on Twitter.