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Delaware, Pennsylvania Quickly Craft State Exchanges to Save ACA Subsidies

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.

SD-PA-DE-ACA2015Delaware 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 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,”, 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?


  1. Douglas Wiken 2015-06-16 13:17

    Daugaard is a piece of crap with a necktie. The state dumps millions into a development project near Sioux Falls in the name of economic progress when it is actually a huge subsidy to the already rich while he worries that Obama reforms might not work even though they would immediately dump millions into the SD economy.

    Daugaard raises ideological mythology to a new level and endangers the lives or threatens the health of thousands of South Dakotans. He is a threat to political sanity.

  2. Porter Lansing 2015-06-16 13:51

    How would Gov. Daugaard know how long it would be before the subsidies from the Nat’l Exchange would cease? SCOUS wouldn’t throw millions under the bus, immediately. It would be at least a couple years. My prediction is they will allow current recipients to continue with the subsidies and deny new members. *MEDICARE PART E ….. E is for everyone

  3. Roger Elgersma 2015-06-16 17:08

    Since the Republican leadership is against health care we need to take every complaint they say and assume it is propaganda against health care. They lose their logic when they get to that point. They say that they want to keep some very good parts like insuring those with preexisting conditions, but they show no sign of any proposal to keep it. They are just trying to sabatoge the whole thing. They are negative with no alternative.

  4. Richard Schriever 2015-06-16 18:06

    In the real business world (not the SD Republican’s imaginary one) companies buy, and even lease software and hardware from other entities all the time. Why would one need to reinvent the exchange wheels – when it is essentially available “off the shelf” from the Feds??? Heck, even corporate giants like Ford and GM buy foreign-made vehicles and stick some substitute name-plates on them and call them their own – through and through. Maybe if anyone in Pierre had any real-world business experience………….

  5. Richard Schriever 2015-06-16 18:21

    Doug Wiken – Medicaid expansion would dump substantially MORE into the state economy than the new development park ever will. Estimates of the direct and indirect benefits of Medicaid expansion I’ve seen range to 300 +/- Million/year.

  6. grudznick 2015-06-16 19:03

    Welfare beats business? Welfare is business. Until all business is welfare and then we’ll all be on the free dole with nobody to pay the way.

  7. Donald Pay 2015-06-16 20:16

    Donald Trump announced today for President on the Republican ticket. In his speech he referred to the costly federal website, and indicated he could get a website built for $3.00. The lowest rate I’ve seen for web design is $11.02 per hour. The highest is around $44.00 per hour. There you go, Governor Daugaard. Just reach out to your fellow Republican, The Donald. You have no excuse now, no exaggerated costs to consider. He’s a Republican, and he can do it for $3.00! And that works out to: less than 5 minutes to a maximum of 15 minutes. Get to it!!!

  8. grudznick 2015-06-16 20:28

    Bill, how much does your team charge for website design and would you offer up a bid if the Governor asked you to build an Obamacare website?

  9. caheidelberger Post author | 2015-06-16 21:17

    You know, Porter, I haven’t gotten a good answer on the time frame. I can imagine an adverse ruling forcing Treasury to stop issuing subsidy payments to insurers immediately, meaning folks with policies would have to pay up or drop as early as July. Folks who chose to wait until filing their taxes are already paying the full premium; they’d keep their policies, but then they wouldn’t get back the premium credit they were expecting when they file their 1040 for 2015 next winter. Does anyone have a firm answer to that question?

    NYT reminds me that even folks not on ACA exchange policies would see premiums go up: the folks who would be priced out of their ACA coverage would likely leave a smaller, older, sicker pool of policy hangers-on, meaning higher premiums for everybody else doing business with those insurers.

  10. leslie 2015-06-16 23:46

    thank u thank u thank u for this. and i hope daugaard hears the power of wikens’ statement!!

    pure hate coming from the republican party.

  11. Porter Lansing 2015-06-17 07:48

    @Mr. Heidelberger …. Perhaps, if (as ruled by SCOTUS) a state may opt out of setting up their own exchange; another state may invite any displaced participant in the National Exchange to join that state’s pool of insured. It would be at least three years for that law to be ruled upon, enough time for the dust to settle. As for Gov. Daugaard, I invoke my new Sodak State Motto… JUST WATCH!

  12. caheidelberger Post author | 2015-06-17 09:14

    Porter, regional exchanges would make sense, and they are allowed under ACA. Minnesota, help us!

  13. caheidelberger Post author | 2015-06-17 09:17

    Update: Republican governors can act, too! CMS also approved Arkansas’s plan to build a state exchange and avoid a King v. Burwell snafu. Republican Arkansas Governor Asa Hutchinson is carryign out a plan promoted by his Democratic predecessor.

  14. mike from iowa 2015-06-17 09:34

    Unfortunate that SoDak’s wingnut guv is bankrupt of ideas to improve people’s lives,excluding their nefarious attempts to control women’s reproductive organs. Seriously,Daugaard had no intention of insuring poor people and he ran the clock down to the final seconds and shows fake compassion that there wasn’t enough time to fix what he didn’t want fixed.

  15. Porter Lansing 2015-06-17 13:02

    @Mr. Heidelberger. Today I presented the idea for regional ACA centers to President Obama, Governor Hickenlooper, U.S. Senator Michael Benett, State Senator Morgan Carroll and put it up for feedback on my Facebook page. Liberals are pro-active while Conservatives “JUST WATCH”.

  16. Porter Lansing 2015-06-17 13:05

    PS… addressing the constitutionality of the subsidies from the Nat’l Exhange, the wording in question that would not authorize federal subsidies was written before the ruling that allowed states to opt out of creating their own exchanges. Because it was written before the ruling it should be judged to be moot. IMHO

  17. leslie 2015-06-17 14:05

    as i understand it, but for the present tempest in a teapot, by virtue of SCOTUS’s even taking up the case [which i believe was the work of new republican wunderkind atty Scott Pruitt, AG (R. OK) and his republican majority association of state Attys Gen’l, who were lobbied (as usual, and in-bed with…) by big money interests (here, i can’t remember, was it by a republican think tank, or Forbes…something like that?); anyway, i think you are probably correct porter, sir. good read.

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