But if Monning was unsure which option Californians would prefer in the absence of a federal individual mandate, he had no doubt they would choose one of them.
“The underlying commitment is that California will move forward to implement health reform no matter what the position of the Supreme Court,” he said.
Meanwhile, Rhode Island Lt. Gov. Elizabeth Roberts isn’t sure her state would even need to take action if the court were to throw out the individual mandate.
Rhode Island already prohibits insurers from refusing to cover people with preexisting conditions and also curbs variation in rates, Roberts said. But though the cost of plans available for purchase by individuals is high in Rhode Island, Roberts argued that this is mostly the result of the same factors driving up prices nationwide.
“So a state-level mandate would not be my first step,” she said. “I would first see how successful we could be without it.”
Roberts said the law’s main benefit to Rhode Island will come from other provisions, such as the federal subsidies to help moderate-income workers buy plans, and the extra federal dollars to extend Medicaid to more low-income people.
Of course, those federal funds would disappear if the court were to overturn the law in its entirety.
“That’s what I call the nuclear option. I don’t even want to think about it,” said Ed Hernandez (D), who chairs the California state Senate’s Committee on Health.
“We might still want to move forward with our exchange. But the problem is without the federal subsidies, we’re going to have a much more difficult time providing health care for our most vulnerable populations.”
Peter Lee, executive director of California’s exchange, echoed that concern — pointing to a failed attempt by the state to create an exchange-like insurance pool for small businesses in 1992 without the subsidies for low-income consumers or market regulations in the federal health-care law.
By 2006, “it ended up falling apart,” said Lee, who was the pool’s final chief executive. “Exchanges must have those components to be game-changers.”
Loss of federal money
Also gone would be the federal funding the law provides to help states set up the exchanges, including money for technological systems to handle enrollment, and staff to vet insurance plans.
That could be a challenge for California — where the legislature has already adopted a law prohibiting the state from spending its own funds on the exchange and officials are grappling with a budget shortfall of at least $16.5 billion.
California has already received more than $41 million, but Lee said the state will probably need to apply for a final “level two” grant.
Maryland, which has been awarded more than $34 billion so far, will probably be submitting its application for level two funding by the end of next month. Could the state afford to proceed without that money?
“That’s not a question we can answer,” Sharfstein said. “We’d have to look at everything.”
By contrast, Rhode Island is one of two states — along with Washington — that have already received a level two grant, for a grand total of about $65 million, not including a $35.6 million “early innovator” grant it is sharing with four other states.
Roberts said she assumes that even if the law were overturned, states would not be required to give the funding back.
“We already have the resources to build our exchange, so we will go ahead and do that for our citizens,” she said.
While the loss of federal subsidies to help people buy insurance would be a “big problem,” Roberts said, “I still see a real value of the exchange for small businesses.”
“For them, a lot of this is about opening up options in the market, pushing insurers for innovative products such as a young-adult plan, and an exchange can do that even without the subsidies. . . . We’re saying to insurers, we’re going to set some standards and we’re looking for innovation in these areas, and if you want to sell insurance through us, here are the rules of the game.”