If the Supreme Court overturns President Obama's health care reform law in June, Americans without health coverage may get some relief anyway - especially if they live in Rhode Island, Maryland or Oregon.
These states are at the head of the pack in implementing the Affordable Care Act (ACA), and they were working to expand health coverage well before the law was passed. If the ACA is thrown out by the high court, these states - and others supportive of the law's goals - will keep pursuing reforms.
"What I hear is, they still intend to proceed," says John Holahan, director of the Health Policy Research Center at The Urban Institute.
Under the Affordable Care Act (ACA), job one for the states is to establish a public insurance exchange where uninsured residents would shop for coverage. The good news is that 16 states and the District of Columbia already have passed legislation enabling implementation of the law, or have governors who have issued executive orders to move forward.
New York state became the latest last week when Governor Andrew Cuomo decided to bypass Republican lawmakers who were holding up the state's effort to build New York's state insurance exchange by issuing an executive order to proceed.
Another 20 states either have legislation pending or have received some federal grant money to move forward. The remaining 15 states have made little or no progress.
Two-thirds of the states are on track to have viable exchanges in place by 2013, according to Sam Gibbs, president of the Exchange Technology Group at eHealth Inc., which operates a national online insurance marketplace and is bidding to help build many of the new state-level exchanges.
Under the ACA, the federal government would launch and operate exchanges in states that don't build them on their own. But that could be difficult to achieve in states with political climates hostile to the ACA, since implementation requires close coordination with state government and insurance regulators.
The exchanges will be the entry portal for all uninsured individuals and families. Under ACA, they'll be eligible for a federal insurance subsidy in cases where family income is less than 400 percent of the federally defined poverty level - currently $92,000 for a family of four. For this group, the amount of subsidy is based on a sliding scale to hold costs as a share of income between 2 and 9.5 percent.
States also are required to offer a specialized exchange for small businesses that would enable employers to provide a subsidy for employee coverage. And lower-income families will be eligible for Medicaid under a dramatic federally-financed expansion of the program.
All told, the exchanges and Medicaid expansion will extend coverage to 23 million uninsured Americans by 2019, according to the Congressional Budget Office.
The slow progress on implementation could be setting the stage for a very frenetic scramble in 2013 - depending on how the Supreme Court rules in June and the outcome of the November elections. That's because the ACA requires that the Department of Health and Human Services certify the exchanges by January 2013; the exchanges must go live in October of that year so that consumers can start shopping for policies and enroll for coverage that would start in early 2014.
If the high court strikes down the law's requirement for individuals to have minimal health insurance -- the so called individual mandate -- but leaves the rest of the ACA intact, insurance companies likely would push Congress for a remedy sometime after the November elections. Their goal would be to ensure that enough healthy young people sign up for insurance to balance the ACA's requirement that carriers accept all applicants and don't charge excessively differential premiums based on age or health risk.
A Government Accountability Office study last year identified nine possible alternatives to the individual mandate; for example, setting strict open-enrollment windows with stiff financial penalties for failing to enroll. That approach works well for Medicare, which penalizes seniors with a stiff 10 percent annual lifetime Part B surcharge for every year of delayed enrollment.
Congressional action on a fix would depend on which political party controls Congress next year - but the recent track record isn't encouraging. "Since the two parties don't speak to one another, the odds of a federal fix aren't very good," says Holahan.
If Congress doesn't act, states that have made major investments in implementing the law could enact individual mandates on their own, or adopt other rules aimed at encouraging enrollment.
But if the entire law is struck down, even supportive states will have difficulty making progress, since the exchanges would be hobbled without the important federal subsidies for individual policies and Medicaid. For example, the Massachusetts plan passed by Gov. Mitt Romney has achieved nearly-universal coverage, but about half of the system's funding is provided by the federal government through Medicaid waivers.
How would consumers fare in red states? "There would be a lot of soul-searching at that point," says Alan Weil, executive director of the National Academy for State Health Policy. "Even the states that have opposed the health reform law have been concerned about their growing numbers of uninsured residents."
Ironically, the states that have resisted ACA reforms most strenuously are the same ones that stand to gain the largest improvement in coverage under the law. Urban Institute researchers found that these states have higher average uninsured rates due to stingier Medicaid coverage and lower percentages of employers offering insurance to their workers.
Under the ACA, these states - including Texas, Florida, Louisiana, Alaska, Arkansas, Oklahoma, South Carolina and Georgia - would see their percentage of residents without health insurance cut by half or more due primarily to expansions in Medicaid and premium subsidies.
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