The Supreme Court's decision to side with the Obama administration in the King v. Burwell case could spell the end of states attempting to establish their own exchanges and could even mean some state exchanges could give up control to the federal government.
Had the Obama administration lost, about 6.4 million Americans could have lost subsidies totaling $1.7 billion annually.
In the days leading up to the ruling, only three of the 37 states relying on HealthCare.gov as their enrollment platform, Arkansas, Delaware and Pennsylvania, submitted plans to the CMS to become state-based marketplaces. But with subsidies now safe in all states, it's unclear or unlikely that these or any other states will move forward with plans of establishing a state-based exchange.
“There is probably minimal incentive at this point to create an exchange from scratch,” said Sabrina Corlette, a lawyer and senior research fellow at Georgetown University's Center on Health Insurance Reforms.
Shortly after the Supreme Court made its decision Thursday, Pennsylvania Gov. Tom Wolf said the state would not continue to seek its own exchange.
“My administration will be notifying the federal government that we will be withdrawing our plan to set up a state-based health insurance marketplace in Pennsylvania,” Wolf said in a statement. “I am pleased to say that we will no longer need to rely on this plan.”
Wolf, a Democrat, likely would have faced opposition on a state-based exchange from his Republican-controlled Legislature.
“There is no need for Pennsylvania to set up a state-based exchange and spend state tax dollars unnecessarily when the federal exchange is going to be treated as equal,” said Jay Ostrich, a spokesman for state House Speaker Mike Turzai.
In Delaware, the state is still debating if it wants to switch from having a partnership exchange, in which it has oversight of plan rates and benefits, but HHS oversees enrollment and IT, or become totally independent.
The Supreme Court's decision “has brought our anxiety down in that it won't force us to choose to become a state-based exchange, but we still think its worth exploring which model is best for Delaware,” Rita Landgraf, the state's health and social services secretary, said during a press call Thursday. She said a decision will be made by the end of July.
Arkansas Gov. Asa Hutchinson announced that a state exchange was still under consideration.
The ruling may result in Hawaii and Vermont, two states that have struggled with IT issues with their exchanges, to rely on HealthCare.gov for enrollment, now that officials in the states know that subsidies will remain available for their residents in any scenario, according to Ceci Connolly, managing director of PricewaterhouseCoopers' Health Testing Institute.
While some states might have reveled in the idea of more control over policy and customization of their marketplaces, few expected to face the technical challenges of creating websites.
Still, it's possible that some states looking to have more control over plan offerings, and outreach around the marketplaces, could still want to transition to a model known as a federally supported state-based marketplace.
In this scenario, states are considered to have a state-based marketplace and are responsible for performing all marketplace functions, but essentially rent HealthCare.gov as an IT platform, according to Kevin Lucia, a research professor and project director at Georgetown University's Health Policy Institute.
New Mexico, Nevada and Oregon have such models.
“There's still a lot of value in having more control over your market,” Lucia said.