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By Leila Ugincius

When the federal health care reform legislation launched in March 2010, Etti Baranoff, Ph.D., associate professor of insurance and finance in the Virginia Commonwealth University School of Business, called the whole health care system a “choose-your-own-adventure kind of scenario.” Reform was the adventure chosen to help the economic condition of the health care system, which was in jeopardy, she said.

“I said the whole systemwas literally ‘choose your own adventure,’” Baranoff said. “What could be passed was passed. So when you do ‘choose your own adventure,’ sometimes you can run into things like this.”

“This” refers to the arguments presented to the Supreme Court this week on what Congress intended by the legislation. Should the federal health insurance exchange provide the same subsidies offered in state exchanges? Baranoff says it all comes down to four or five little words in the legislation pitting the letter of the law against the spirit of the law.

“It’s a very technical, complex issue because it is standing on about five words in the big case, where it says that exchanges by the states are going to get the subsidies, and it doesn’t include the federal exchanges,” she said. “As it turned out, only about 14 states did the … state exchanges and we have 34 states actually using the federal exchanges.”

Baranoff this week discussed the Supreme Court case and the impact the decision will have.

Why is this an issue?

The exchanges are usually much more for the individual insurance coverage. What the plaintiffs are doing in this case, they’re saying that subsidies that are being given to the policyholders are not really allowed for federal exchanges. Only for the state exchanges.

So right now, people are saying it is illegal or [they are] trying to get a ruling that those subsidies for federal exchanges cannot be given to people, which means that it will not take care of about 8 million people that are covered by those federal exchanges, and they are not going to have coverage or they will not be able to afford the coverage because right now they are really thinking that they are going to have the subsidies.

What happens until a ruling is made?

The ruling is supposed to come down only in June. … The insurance industry is right now trying to create the design and the rates for next year. And if the whole thing changes, besides not giving the subsidies to a lot of people that will become noninsured — and you know the main objective of Obamacare was to get everybody to be covered by health insurance — it will put these people out of the health insurance market. And then many of them that are actually healthier, those are the ones that will leave the pool, which will increase the rates for the rest.

What is the argument being presented to the Supreme Court?

When you want to actually implement [insurance], it’s imperative that the subsidies to the poorest are going to be given. Because of this wording in the law of hundreds and hundreds of pages … people are saying that what is implied by the legislation versus what is the legislation itself is what the justices are going to look at. And also there are other places in the whole legislation that relates to the subsidies by either state or federal law. It’s actually part of the federalism or what they call context matters. It has to do with context and it is developed in the bill that the states have the first right to do it, and if they don’t do it, the federal government is going to do it for them.

The federal government is going to set up such exchanges, so some people are saying maybe the words “such exchanges” mean that it’s not now federal exchanges, they are going to be setting for each state the exchange. So, I think the justices have a lot of work ahead of them.

What are the consequences of the court repealing the legislation?

On a very technical issue … you change the rates only once a year for insurance. You don’t change the rate in the middle of the year. So what they are really saying [is], “We know of no administrative actions that could and therefore we have no plans that would undo the massive damage to our health care system that would be caused by an adverse decision.”

It will really kind of undo a lot of the work. And people are saying, “We’re left to do some rates”… but there is no such thing as saying, “In case the court decide negatively, we are going to increase the rates.” A lot of people suddenly will become uninsured. It will be the undoing of health care reform.

In my mind, it’s too much already in operation. And then to undo something like this would create some chaos. It will be damaging. A lot of people would then be without coverage. And we know why the whole thing was done. We could not have 40 million people going without coverage.

I’m really … curious about it too. It appears that there is a lot of political motivations behind things, these kinds of court cases. And maybe the politics needs to be put aside for the benefits of the citizens. Or, if you have alternatives, bring alternatives, but I don’t hear about alternatives right now.

 

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