June 11, 2015

The Affordable Care Act's Next Challenge

This month, the U.S. Supreme Court is expected to rule on King v. Burwell, in which it will determine if the federally-run health insurance exchanges can continue offering tax credits and subsidies that make health insurance affordable to the 6.4 million limited-income Americans who participate in these exchanges. Without these subsidies, healthy people will likely drop out of the exchanges, making it doubtful that the federal exchanges can continue offering affordable insurance. The great attention on the King case, however, obscures a growing concern with the viability of the state-run exchanges.

Drawing on recent reports, state proceedings and his own recent experience overseeing the operations of the federally-run exchanges, Mike Adelberg, senior director at FaegreBD Consulting, examined the recent performance and trend lines of the state-run exchanges. His observations are offered in an op-ed published in Modern Healthcare on June 5, 2015. Adelberg suggests that the state-run exchanges, a few of which have failed already, face significant near-term funding challenges based on the relatively small scale of their single-state market. The smaller the state, the greater the funding challenge. Ultimately, the viability of the state-run exchanges, which are spending down their federal startup grants, may be dependent on more effective state-to-state partnering and permanent partnership with the federal government.

In the few days since it was published, Adelberg’s Modern Healthcare op-ed has spurred interview requests from Politico and The Hill. (Note: The complete Modern Healthcare piece is available with a free registration at modernhealthcare.com.)

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