Plans, States Prepare for Potential Loss of ACA Subsidies, AIS Newsletter Reports

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Industry observers predict in the June 15 issue of Atlantic Information Services’ Health Plan Week what could happen if the Supreme Court rejects Affordable Care Act subsidies in forthcoming King v. Burwell ruling.

With the Supreme Court expected to rule on King v. Burwell (Docket No. 14-114) in the coming weeks, states and insurers are already planning for a potential decision striking down tax subsidies for enrollees on federally facilitated exchanges (FFEs). The June 15 issue of Atlantic Information Services, Inc.’s (AIS) Health Plan Week (HPW) offers an overview of these preparations.

While insurers prepare for a yes or no vote, or some surprise mixed judgment, some states are taking action ahead of time, HPW finds. Both Pennsylvania and Delaware have announced plans to transform their federally facilitated exchanges (FFEs) into state-based entities.

Another idea gaining traction — the leading idea, according to Christopher Condeluci, a principal at CC Law & Policy — is for an FFE state to designate and HHS as its “exchange service provider.” “This way, the state can fit into the new designation that HHS has developed — a ‘federally-supported state-based exchange,’” he tells HPW. “Under this designation, HHS will recognize the exchange as one that is state-based, thereby allowing the premium subsidies to continue to flow.” However, this new designation is likely to be challenged in court, Condeluci adds, “where the challengers will suggest that HHS does not have the authority to designate a state as a state-based exchange by simply using and HHS to perform all of its exchange functions.”

Health plans, however, don’t possess the power of a state to do much about the situation, except to appeal for immediate guidance on what comes next, according to Thomas Scully, former CMS administrator during the George W. Bush administration and current senior counsel for the law firm Alston & Bird LLP. But, plans have until August to resubmit bids, Anne Phelps, a principal and U.S. health care regulatory leader at Deloitte, tells HPW, which allows for a thorough reexamination of rates, or the Obama administration could extend open enrollment.

Visit to read the article in its entirety, including more commentary from Scully, who identifies the situation in southern states as being especially problematic and politically dire.

About Health Plan Week
Published since 1991, the 8-page weekly newsletter Health Plan Week provides timely, objective business, financial and regulatory news of the health insurance industry. Coverage includes new benefit designs and underwriting practices, new products and marketing strategies, mergers and alliances, financial performance and results, Medicare and Medicaid opportunities, disease management, and the flood of reform-driven regulatory initiatives including medical loss ratios, exchanges, ACOs and myriad benefit design changes that are mandated. Visit for more information.

About Atlantic Information Services
Atlantic Information Services, Inc. (AIS) is a publishing and information company that has been serving the health care industry for more than 25 years. It develops highly targeted news, data and strategic information for managers in hospitals, health plans, medical group practices, pharmaceutical companies and other health care organizations. AIS products include print and electronic newsletters, websites, looseleafs, books, strategic reports, databases, webinars and conferences. Learn more at

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