State-based insurance marketplaces hang in balance of Supreme Court health-care ruling

While partisan gridlock and logistical disputes have stalled preparations for the 2010 health-care law in about two dozen states, more than a dozen others have moved swiftly to set up the insurance marketplaces at the statute’s core.

So what will come of those efforts if the Supreme Court decides to overturn all or part of the law? Interviews with key officials in some of the states that are furthest along suggest the results could vary widely.

Gallery

Supreme Court takes center stage in health-care debate: The U.S. Supreme Court heard three days of arguments over the Patient Protection and Affordable Care Act in March.

Gallery

Behind the scenes: Passing health-care reform: Images from White House photographers.

Maryland leaders said they haven’t bothered trying to put together a contingency plan.

“We are committed to finding ways to help Marylanders lead healthier lives no matter the outcome,” said Lt. Gov. Anthony G. Brown (D), who is spearheading the state’s implementation work. “But there are too many potential outcomes of the Supreme Court case to speculate.”

If the court, which is expected to rule late next month, does not uphold the law, its options range from overturning the statute to striking one or both of the two provisions whose constitutionality have been directly contested: the law’s expansion of Medicaid and its “individual mandate” requiring virtually all Americans to obtain health insurance.

Even the most limited scenario — invalidation of only the individual mandate — could jeopardize the success of the state-based insurance marketplaces, known as “exchanges,” called for by the law, said Maryland’s secretary of health, Joshua Sharfstein.

Scheduled to open in 2014, they are intended to make insurance more affordable by offering a more transparent, competitive shopping experience for small businesses and individuals who are unable to get coverage through an employer. Many of these individuals will also be eligible for federal subsidies.

Because the law bars insurers from discriminating against people with pre­existing conditions and limits how much insurers can vary rates, analysts worry that if the court were to eliminate the individual mandate, people would wait to buy coverage until they are sick. This, in turn, would force insurers to either increase rates to unaffordable levels or pull out of the exchanges.

Enacting their own versions

One solution would be for states to enact their own versions of the individual mandate — a power no one denies states have the constitutional authority to wield and one that Massachusetts has already exercised.

“I certainly could imagine that making sense,” Sharfstein said. But he added: “I’m not going to be in the position of making a snap judgment.”

Sharfstein said it was also hard to tell how much support the idea could win in Maryland.

The state was first in the nation to hire a director for its exchange. And erecting the marketplace’s architecture has proved a relatively smooth process in a state where Democrats hold the governor’s office and dominate both branches of the General Assembly — and where even some Republicans have praised Sharfstein’s approach in legislative hearings.

Still, Sharfstein said, “I don’t think the consensus is automatic.”

California Assembly member Bill Monning (D) was equally hesitant to predict the appetite for a state-imposed individual mandate in the Golden State. The state Assembly adopted such a requirement as part of a larger health-care overhaul in 2007, only to see it founder in the state Senate, said Monning, who chairs the Assembly’s Committee on Health.