Governor Dennis Daugaard has said there’s no way South Dakota could set up a state-run health insurance exchange in time to save the premium tax subsidies that the Supreme Court might take away in the upcoming King v. Burwell ruling on the Affordable Care Act. I was going to give Governor Daugaard a pass on that claim, even though I smelled him using that statement to cover his ongoing partisan fight to keep South Dakotans from fully enjoying the benefits of the Affordable Care Act.
But now I read that Delaware and Pennsylvania have created backup plans to SCOTUS-proof their residents’ premium tax subsidies. Both states received conditional approval yesterday from the Centers for Medicare and Medicaid Services to set up their own state-run health insurance exchanges.
Delaware has a hybrid state-federal health insurance exchange, so moving to a fully state-based exchange may not require as much heavy lifting for them to save premium tax subsidies for 21,000 Delawarians as it would for South Dakota to save subsidies for 16,800 residents. The Delaware change may just be labeling.
But Pennsylvania, where the ACA is helping 400,000 residents pay for health insurance, went fully with the federal exchange, just like South Dakota. How will they set up such a complicated system to save subsidies?
Pennsylvania would lease the Healthcare.gov computer platform to keep its well-functioning infrastructure in place rather than starting again from scratch. This will not only save money, but also streamline the transition. The state’s Insurance Department would then assume responsibility for oversight, selection, and certification of plans sold on the marketplace, which would meet the unique needs of our state [Antoinette Krauss, “Pennsylvania Needs Its Own Obamacare Exchange,” Philly.com, 2015.06.12].
Save money? But it’s going to cost something to run, right? Where do we get the money?
While the initial federal funding available to states to establish marketplaces is gone, an assessment on insurers remains in place — and it can be used to fund Pennsylvania’s marketplace, without enacting any new taxes. Currently, Pennsylvania insurers pay to participate in the federally facilitated marketplace, and these funds support the marketplaces in all state. With a state-based marketplace, assessments on Pennsylvania insurers would stay in Pennsylvania [Krauss, 2015.06.12].
So we could use the ACA’s computer system and funding mechanism, just like Pennsylvania. Why didn’t we think of that?
Pennsylvania’s insurance commissioner acknowledges that building this contingency plan isn’t easy: they’re doing in months what other states did in years. But they and Delaware are doing it, while Dennis Daugaard chants, “No We Can’t!” What explains this difference in can-do spirit?
Well, the governors of Delaware and Pennsylvania do happen to be Democrats.
So tell me again, Governor Daugaard: why can’t South Dakota do what Delaware and Pennsylvania are doing to keep health insurance affordable for their residents?