Delaware Prepares Back-Up Plan In Case SCOTUS Nixes Obamacare Subsidies

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June 3, 2015 5:41 pm
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Facing a possible Supreme Court ruling on Obamacare that could cost residents millions of dollars in subsidies to buy health insurance, Delaware has put in motion a plan that could protect the state from the effects of such a decision.

Rita Landgraf, Delaware’s health and social services director, confirmed to TPM Wednesday that the state has filed a “blueprint” to the federal government to take more responsibility for its Obamacare exchange to blunt the potential effects of a pending Supreme Court ruling in King v. Burwell.

Currently Delaware’s exchange is a state-federal hybrid-run marketplace, but this week Delaware submitted what Landgraf called a “plan for a plan” to move to a federally-supported state-based marketplace.

“I feel moving to a [federally] supported state-based market place is not that heavy of a lift for us,” Landgraf said. She emphasized that her department is continuing to do the financial due diligence to determine what the change would cost the state and consumers. She said Delaware will consider the move even if the Supreme Court rules to uphold the subsidies in King v. Burwell.

Landgraf said it remains unclear how an adverse Supreme Court ruling would affect a hybrid marketplace like Delaware’s. But Delaware could stand to lose more than $5 million in health insurance subsidies if the Supreme Court rules that the Affordable Care Act does not permit participants on federally-run exchanges to receive tax credits for their insurance premiums. Currently, some 21,000 Delaware residents receive the subsidies, or about 84 percent who have purchased plans on the marketplace, according to Landgraf.

Only 13 states and the District of the Columbia have set up state-run exchanges, and subsidy-recipients in the other 37 states — some 6.4 million people — could lose their tax credits if the Supreme Court agrees with the challengers’ argument in King v. Burwell.

Pennsylvania, another state that stands to lose its subsidies, is also pursuing a similar option, with Democratic Gov. Tom Wolf announcing Tuesday that the state had also submitted an application this week to the federal government to set up its own state-run exchange in place of the federally-run marketplace. Wolf could face opposition setting it up from the state’s Republican-controlled legislature. However, both chambers of Delaware’s state assembly are controlled by Democrats, making it more likely that they would approve the plan if Democratic Gov. Jack Markell sought to move forward with it.

“I do believe that the statehouse would agree that subsidies are critically important to their populous, the 21,000 Delawareans that they too will be concerned about,” Landgraf said.

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