With the deluge of changes in the functioning of the market and the new role of benefit marketplaces (aka private exchanges), most brokers feel they are stuck between a rock and a hard place. They know that they want to make the shift to exchanges, but are not yet certain how the move will benefit them. Moreover, brokers are concerned about differentiating themselves in an increasingly competitive private exchange market. Are you facing a similar challenge? We have an answer for you.

During our hCentive xChange conference, broker attendees participated in a roundtable discussion on how they collectively planned to achieve differentiation on the marketplace, and this is what we learned.

1)    Almost all brokers are harrowed by the benefit marketplace experience – For most brokers, moving to an exchange is disastrous. Almost all of their peers are suffering from early jitters of transition, but at the same time, they are very optimistic about the move to the platform. Most brokers felt that the change in marketplace is similar to the Medicare Part D ruckus, in the sense that it will get better with time.

2)    Individual Market will be more competitive compared to Group Market – Compared to the group market, the individual market will be more challenging and rewarding for brokers. More choice would mean more customers, and a larger chance for brokers to differentiate from their competition and tailor offerings that get them a bigger share of market.

3)    Benefit Marketplaces will be influenced by the performance of Public Exchanges – Over time, public exchanges will be laying the path for benefit marketplaces to tread upon. Currently, public exchanges have a higher share of enrollments, but benefit marketplaces are expected to take over by 2018. Public exchanges are the torchbearers for the market, and they are expected to ease the enrollment process for everyone and ensure that the risk pools are maintained in the private exchange market.



4)    Brokers will have a continuing role in shaping the private exchange market – Continuing in the footsteps of public exchanges, private exchanges will thrive and grab their share. In this environment, brokers will have a role to play, and contrary to the fear, will not fade away or become obsolete. In fact, brokers will have a bigger role to play, especially in educating their buyers and helping them make the perfect decision by sifting through available plans and finding ones that best meet their family’s needs. From a knowledge standpoint, a broker’s role in inimitable and irreplaceable.

 5)    Communication and Engagement will be key – As private exchanges prevail, brokers will have to rethink their strategy and phase it around communication and customer engagement. Follow ups and engagement tools will hold primary importance as customers will be expecting next-level interaction with their brokers.

6)    Adaption will be imperative to success in private exchange market – Almost all participating brokers agreed that adapting would be crucial if brokers do not want to be rendered useless in the private exchange market. Brokers don’t need to worry about cuts in their commission, but should rather focus on providing new lines of products and more choice to their customers. Communication and engagement will supplement their new offerings and changing stance toward customers.

The key to differentiation, as concluded in our breakout session, lies in mutating with the private exchange setup and supplementing broker offerings through value adding tools. In a final note, brokers have a great role to play in the future of private exchanges and to have a piece of that cake, evolution of their services and technology will be the answer.

The federal government became states’ technology vendor when it enticed four states to use HealthCare.gov by initially offering it for free, while underpricing HealthCare.gov compared to its actual costs for another 34 states.

Four states including Oregon and Nevada tried to stand up their own health insurance exchanges, hiring technology vendors that pushed for expensive custom builds with no proven track record for success. When those vendors failed to deliver functional exchange technology, the four states ditched their faulty software and began using HealthCare.gov – which at the time was offered to them free of charge. By offering HealthCare.gov to those states as a replacement technology solution, the federal government effectively became their technology vendor – enticing states to join with a two-year free trial period.

As the four states used HealthCare.gov at no cost, another 34 states paid federal technology use fees that were intentionally underpriced compared to HealthCare.gov’s actual costs. The federal government intends to continue underpricing HealthCare.gov in these 34 states through December 2017 – even though the Affordable Care Act required all exchanges to be self-sustaining by January 2015. As long as HealthCare.gov continues to be underpricing its services compared to their actual costs, states can’t benefit from private sector vendors who can compete favorably with HealthCare.gov to provide states better functionality and a pricing structure that encourages enrollment success. But this situation is changing in four states.

States faced with HealthCare.gov’s actual costs are given a fair opportunity to consider financially sustainable alternatives for their state marketplaces.

In November 2015, the federal government announced that HealthCare.gov intends to charge new federal technology use fees in Oregon, Nevada, New Mexico and Hawaii that are “reflective of [HealthCare.gov’s] actual costs.” Faced with the full costs of using the federal exchange, Oregon began a procurement for a more affordable state marketplace solution. Nevada is in the same situation and is considering a plan to replace HealthCare.gov with a proven technology vendor whose pricing structure is aligned with enrollments rather than health plan premiums.

Faced with HealthCare.gov’s actual costs, Oregon, Nevada and New Mexico reacted in similar ways by asking for a phase-in of the new federal technology fees and a fairer method for determining fees owed to allow for financial stability for the marketplace and carriers. Nevada asked that HealthCare.gov – because it is now collecting vendor fees – act more like a private technology company than a government agency. Nevada rightly expects HealthCare.gov to partner with states to ensure marketplaces have accurate and up-to-date enrollment information, and that it serve as a single source of truth for all of the marketplace’s health plan enrollments.


Everybody wins when HealthCare.gov is priced for all states at its full and accurate cost.

While the four states facing HealthCare.gov’s actual costs prepare to pay the new technology fees or avoid them by switching vendors, the outcome for the remaining 34 HealthCare.gov states is less certain. HealthCare.gov continues underpricing its technology fees in those states, and they can’t be certain how long this will continue under the next administration. Taking action now will allow all states to ensure their citizens can access affordable health coverage for years to come. Because HealthCare.gov must obtain permission from the White House’s budget office each year it wants to continue underpricing for its services in those 34 states, a new administration may be less amenable to continuing the budget shortfalls associated with HealthCare.gov – which amount to $621 million in 2016 alone.

The state exchange market has matured since those technology vendors failed to deliver functional and sustainable technology in Oregon, Nevada, New Mexico and Hawaii. Private sector alternatives to HealthCare.gov are available and can be a significant cost benefit to states. Moreover, these private vendors can work with a state to configure the exchange in ways that increase enrollments by recognizing that states each have unique needs and programs.

Now that Commercial-off-the-Shelf (COTS) products support the exchanges that are operating smoothly and effectively in states including Massachusetts and Arkansas, states should be allowed to benefit from private sector vendors such as hCentive competing with HealthCare.gov on a level playing field – in every state. Tell us what you think.

Read hCentive’s comments on the federal government’s plans to continue undercharging for HealthCare.gov in 34 states.

In the early stages of Obamacare, one thing was crystal clear to all health plans, stakeholders, and the government – it’s going to be really hard to have a brand new setup that reevaluates how Americans purchase and consume health insurance. The task ahead for everyone was nothing short of herculean, and not everyone was prepared for it. As a result, 2013, the year of the rollout of Obamacare, saw nationwide failures and delays in the federal as well as state health insurance marketplaces. While www.healthcare.gov struggled with lost enrollments and broken transactions, state marketplaces held out for a little longer.

In time, the federal marketplace rebounded by fixing its internal mechanics and becoming a solid entity, ultimately enrolling about 12 million by the end of recent open enrollment in Feb 2015. On the other hand, state marketplaces, which had a better start, had to bite the dust. 7 states have decided to shut their exchanges and default to the federally facilitated marketplace, primarily because they haven’t been able to operate their exchanges profitably.

So what went wrong with these states? Let’s start with Hawaii, which recently decided to drop its exchange and move to federal system. Hawaii bagged $205 million from HHS for establishing its own exchange, but was able to enroll only 37,000 people in its exchange till date. For being profitable, Hawaii had to enroll 70,000 people to sustain the exchange running costs. Since that did not happen, Hawaii squandered its federal grant in running the exchange, but failed to make it work. Now, due to its latest decision of moving to the federal exchange, it will incur a bill of another $30 million – which will be covered by the taxpayers.

For Hawaii, there were two primary culprits which led to its demise – poor estimation and a failing system. Hawaii’s exchange was established by CGI group, and like its other exchanges, CGI received a whole lot of flak for a poor system that just did not help in enrolling the people. The other reason behind Hawaii’s failure plagued other states as well – poor estimation and miscalculation of prospective enrollees. HHS and states made some poor estimations while calculating how many people would enroll through these exchanges, and this calculation figured in allocation and distribution of federal funds for running the exchanges.

While miscalculations and poor estimations definitely laid the foundation for failure, the major blame lied with contractors who failed in their task in each of these states. Oregon, for instance, received $305 million in federal grants for its Cover Oregon exchange. Oregon had Oracle running the show for their exchange, but their spectacular failure and repeated failed attempts to fix the Cover Oregon exchange made the state lose all of its money in the exchange. Like Hawaii, Vermont too received a generous funding of $200 million for running its exchange. Vermont Health Connect was managed by CGI as well, and we know what fate all CGI run exchanges went through. Maryland also wasted about $183 million in federal funds, while New Mexico’s exchange floundered $122 million on its exchange.

The case of Nevada and Massachusetts was a little different. Nevada had $100 million in grants, and it chose Xerox to establish Nevada Health Link. The Nevada Health Link performed poorly throughout, and within 8-9 months of operation, the board decided to drop Xerox as its provider in May 2014. Massachusetts, which accepted $176 million from HHS, chose CGI to design and run its exchange. Following the failure of CGI across all its exchanges, Massachusetts decided to redesign its exchange instead of defaulting to the federal exchange.

After nearly 2 years and $1.3 billion of wasted money, the picture is clear for these 7 and all other remaining states – there needs to be a closer scrutiny of choices while choosing contractors for exchanges. With King vs. Burwell outcome, a lot of states might think of having their own exchange to keep their subsidies intact. When that happens, these costly mistakes and lessons will serve as a guidepost for other states. The answer will lie in a solution that does not repeat these mistakes and a provider that has a promising track record in running state exchanges.

11 million enrollments and a successful second open enrollment later, the Obama administration should be happy. Enrollment numbers are higher than initial projections, and the signs of a working health reform are omnipresent in the system. Health insurance carriers are adapting to the new marketplace scenario, and are offering better plans at better prices to marketplace shoppers. In addition, citizens are embracing the health insurance marketplace. Collectively, both the providers and shoppers are maturing with the system, and all of this is fueling the success of the ACA.

Out of the shoppers this year, about 4.2 million are returning customers who have revisited the improved marketplace to check their existing plan, weigh available benefits, and upgrade their plans for better benefits. A noteworthy aspect of these shopping trends is the underlying shopper aggression for utilizing market competition to find better health plans with cheaper premiums. Let’s take a look at the behavior of returning and new shoppers, and how they interacted with the marketplace to find the plan that fits their requirements.

The first segment of people is returning customers who automatically reenrolled with their previous plan. Roughly 2 million people chose to stay with their existing plan, and none of them revisited the exchange to weigh available options. Of the remaining shoppers in the 4.2 million returning customers, a little more than half went for new insurance plan this year, while the other segment continued with their existing plan. Nearly 1.2 million people enrolled with a different plan in the second enrollment. While this might not seem like a big number in comparison to the enrolled 11 million, past health insurance industry trends say that this is a pretty big number.

According to CMS, a lot of insured are actively and aggressively seeking better insurance options, and this high number of active consumers is surprising for the health insurance industry. At a preliminary stage, there are two possible reasons why revisiting shoppers looked for new health insurance. The primary reason is cost. Owing to entry of new insurers in the market and adjustment of last year’s premium prices on the basis of available data, a lot of insurance plans offered cheaper health insurance with nearly similar coverage. Another factor that boosted plan switching on cost basis was the subsidy averaging, which considers the cheapest plan available in a consumer’s area while issuing premium tax credits to consumers. So, people who had the option to retain their older plan were likely to be subject to a higher cost as a cheaper plan was available in the region, and the subsidies were to be calculated accordingly. Naturally, a lot of people decided to switch.

The second probable reason for shopping is coverage quality. To retain profitability and market edge, a lot of insurance plans have limited their physician networks. A lot of plans have also included high out of pocket costs. It is possible that a lot of people changed their plans because they wanted access to a wider network or limited burden of deductibles, co-payments and the works. Add the remaining number of 4 million plus people who were using the exchanges for the first time, and you will have considerable shopper movement across the marketplace.

While it is still early to stay exactly what factors contributed to this aggressive shopping surge on the health insurance marketplace, one thing is certain – as the insurers and shoppers mature in the ACA model, a lot of streamlining will automatically happen in terms of coverage options, competitive pricing, and physician networks. Both these forces are still moving to a state of equilibrium, and in the next couple of years, the nature of shoppers will change to reflect that stability. For now, health insurance shoppers are working to make sense of the marketplace and aggressively switching health plans for arriving at their desired combination of price, coverage, and network.

Like it or not, King v. Burwell is moving ahead, and the U.S. Supreme Court heard arguments from both  sides on earlier this month. A lot of attention has been devoted to the case, with each side presenting its case. So much attention for six words – the ACA is comprised of 381,517 words and, if you count the additional regulations the word count jumps to 11,588,500. So this is a real life example of the power of words.

As per the plaintiffs in King v. Burwell, the language of the ACA only allows those states that have their own exchange to provide premium tax credits to citizens shopping through the exchange. For 37 states who are using the FFM, the law does not state anything about the insurance subsidies, and as a corollary, the ACA is illegally providing insurance subsidies to those shopping through the Federal Marketplace. If the Supreme Court rules in favor of the plaintiffs, all these people will lose their insurance subsidies unless their state builds an exchange and has it live by November 1, 2015.

It’s even more ironic when you consider the size and impact these subsidies have on people and what would happen if all these subsidies were taken away, all because of six little words that make up the ‘controversial’ language of the law. Millions of people stand to lose their subsidies in near two third states, all because of six words. Since all of this is based on the pretext of words, what do linguists have to say on the matter? Do the plaintiffs have a strong case or are they simply making a mountain out of a molehill?

Linguists might be the most interesting to participate in the debate and unravel the linguistic applications of those six words that have launched this controversy. As per the language in the law, linguists think that the Obama administration has the upper hand in the case because of some simple rules of the English language.

As per the language of the controversial text, the law presumes that each state will have its own exchange. If a citizen shops through that state exchange, the state is legally allowed to issue premium tax credits on the basis of conditions laid out in the ACA. If, however, the state does not have an established exchange marketplace, the law does not explicitly state anything about the premium tax credits, it only talks about the case where the state does have an exchange. In simpler words, the federal government is neither mandated nor prohibited from providing premium tax credits to the state’s citizens. It is a matter of choice, and the administration can go any way about it. However, if the administration is providing tax credits in one state, it is obligated to offer the same in all states as per equal protection for all.

For understanding this, another linguist put forward a popular example of definite description problem to explain the situation. The problem states “the present King of France is not bald,” but this statement is ambiguous because the presumption of the statement, that there is a King of France, is not true as France is a Republic. Hence, the statement holds no value. Similarly, in King v. Burwell, the statement presumes that the state has an established exchange, and if that is not true, the subsidy clause is meaningless. The language of the law itself holds no restriction on the subsidies. On the other hand, if the lawmakers explicitly wanted to restrict the scope of subsidies to only those states who have their own exchange, they could have used ‘only when’ to limit the subsidies to those who shopped through the state exchange. Since the lawmakers did not do that, the federal government can choose to give subsidies or not, without any restriction. Naturally, no one can force the federal government to discriminate between two states over subsidies, and under equal protection, they need to provide subsidies for all.

It will be interesting to see how this plays out. All eyes are already looking toward June/July timeframe when the court is expected to issue its decision. Until then, I expect these aforementioned six words to be continuously debated.

In the first part of this post, we explored the planning level gaps that ultimately led to the collapse of Vermont’s proposed health system. However, more than any of these planning level issues, the financials were always the pain point of the Vermont administration. Back when the administration was playing with the idea of having a single payer system, they only had the vague idea that the huge $2 billion cost will be covered by an increase in taxes and other connected funding. However, when they actually sat down to make the calculations, the plan worked out to be a failure. Compounding that with the resistance shown by hospitals, insurers and employers, the single payer system was doomed. Let’s take a look at the top financial issues, which broke Vermont administration’s resolve.

1. The administration went ahead without discerning the inflow of money: When the plan for the single payer system was underway, the administration had one thing clear – they were looking at a huge expense, because they were covering more people than Obamacare and were giving better health benefits, both of which were going to cost them a whole lot of money. However, at the beginning, the administration was confident of moving ahead without being fully sure about where the money will come from when they need it. The uncertainty behind cost of this single payer system became an important point of contention in the Vermont elections as well, but fortunately, Peter Shumlin, the long standing proponent of the single payer system, won the election and continued his term. This inconceivable oversight on finances was one of the prime reasons behind the failure of the plan.

2. Vermont needed a 160 percent tax increase to meet the financial liability of the single payer system: According to available estimates, the Vermont administration expects to collect $1.7 billion in tax revenue. For Green Mountain Care, the name given to Vermont’s single payer system, the state needs to raise an additional $2.6 billion in taxes, which comes out to be roughly 151 percent. Similarly by 2019, the state expects to collect about $1.8 billion in taxes, but needs to raise $2.9 billion through taxes for the single payer system. That’s 160 percent of sheer tax increase. Naturally, for each of the ideas suggested for raising this money, the administration witnessed a strong pushback from the segment, subduing the administration into accepting their terms. For instance, when the small businesses were informed of the 11.5 percent payroll tax, they pushed back, ultimately having the administration provide them a grace period for organizations with up to 100 workers, thereby losing $500 million in funding. Another reason for financial failure was that the state tried to replicate a manner of federal subsidies in its system, and for financing those subsidies, put incessant pressure through payroll and tax revenues.

3. Even with all this, a single payer system was out of Vermont’s reach: The federal government spends the most on health insurance, through Medicare, Military Healthcare, subsidized employer sponsored health insurance, and a large chunk of Medicaid sponsorship. Vermont’s plan to replace all of that was too big for the state’s capability, even with that small a population. The only way to make Vermont’s plan work was through waivers on Medicaid, Medicare, and Obamacare. Further, a primary advantage of having a single payer system is reduced paperwork for hospitals and insurers because of a single insurer to reconcile with. However, with the option of buying private health insurance from New Hampshire, the advantage of having a single system is not much to talk about. Further, Vermont has only 3 insurers, BCBS, Cigna, and MVP, and having a single system won’t make much difference in administrative cost savings anyway.

Although this failure of a state-based single payer system is a major setback in having a nationwide single payer system, it does make a few things clear about Obamacare. The failed effort highlights what Obamacare has done right in the last year and a half, including the cost balancing and smart maneuvering of the tricky healthcare domain. At this point, Obamacare is working. Even if a single payer system is not in the American future for at least the next half decade, I think we can make do with all that Obamacare is doing right.

After nearly four years of pouring heart and soul intensive effort trying to establish into an ambitious plan that would setup a statewide single payer health system in Vermont, Governor Peter Shumlin recently announced that the plan to implement the system by 2017 would be abandoned. the scrapping of Vermont’s plan to implement the system by 2017. The Governor cited that the change would bring huge economic pressure on the state, and the disruption could be too much for small businesses and working families.

Although this single payer system plan was limited to Vermont, it holds a clear implication for the entire country, that single payer system will not be feasible for the country in the near future, and that Obamacare is still the best way to balance the nation’s imbalanced healthcare system and rising healthcare spending. So, what was the reason for the early demise of the plan that had so many hopes riding on it? Let’s find out.

1. Vermont tried to give the residents too much, too soon: Under the single payer plan, Vermont wanted to provide the best of benefits to its residents. Under the current Obamacare system, that translates into the Platinum coverage health plans, where insurance companies bear as much as 90 percent of the insurance liability while the consumer covers the remaining 10 percent through copays and deductibles. However, the total liability in Vermont’s private plan came out to be roughly 94 percent, which was higher than the best, and most expensive, , costliest Obamacare health plans. Naturally, this was too much for the administration to handle, as it was driving the costs up for everyone. Vermont tried to play with the liability by reducing it to 80 percent, but was ultimately unable to settle with the drop in benefits under this reduced liability plan. Between too high cost and too low benefits, Vermont ultimately decided to drop the whole idea.

2. The idea was bottlenecked by hospitals and insurers: Under this new private plan, Vermont wanted to give better benefits at lowest possible costs, which meant elevating taxes and lowering reimbursements to doctors, hospitals and insurers. Had this come to pass, doctors and hospitals would have had to accept privately insured patients at Medicare reimbursement rates. For the entire privately insured population of Vermont, this cut would have meant 16 percent reduction in reimbursements. Naturally, the hospitals and insurers aligned against the single payer system, leading to a collapse of the system. Considering the expensive healthcare industry of America, any such attempt to enforce single payer system is bound to see resistance from these powerful elements of the healthcare industry. Insurers do not want to lose all their business because the government is taking over healthcare, a phenomenon that is going to precipitate whenever a nationwide stab at single payer system is taken.

3. Some other cost savings failed to materialize: A primary source of income for Vermont’s single payer system were was the distributed cost savings they expected to nurture over the course of time. However, almost all of their planned attempts failed spectacularly. For instance, Vermont expected to gather a $267 million under the Obamacare waiver for setting up a competent healthcare system in the state, but after revisions, they managed to project a funding of only $106 million from the center. That’s a whole $161 million short. Another shortfall was on the Medicare funding they expected to receive. Vermont expected about $637 million in funding over Medicare, but the final number was only $487 million. The state also expected reduced tax revenues over the 2017 timeframe, of the order of $75 million. So, $161m, $150m, and $75m, making a total of $386 million, were snatched away from Vermont through mere projections. Considering the total liability of $2 billion, this was a roughly 20 percent loss even before the plan was put into motion.

The above aspects only deal with the planning end of Vermont’s attempt at single payer health system. There still is the subject of finance, which ultimately proved to be the final nail in the coffin of the Vermont single payer health system. In the next part of this post, we will explore the financial challenges that ultimately cemented the disintegration of Vermont’s attempts. Stay tuned!

On November 7, when the United States Supreme Court decided that it will hear the King v. Burwell case, the nation collectively gasped at the ramifications this hearing will bring to the reformed health market. [Side note: The Court will hear arguments on March 4, 2015] According to the King v. Burwell case, the Affordable Care Act’s language does not allow federal tax credits to be provided to people who bought health insurance from the federally facilitated marketplace. The 4.5 million people who bought insurance in 34 states, which utilized the federal exchange for their insurance needs are at the risk of losing the tax credits that connect these people to affordable health insurance.  However, that is not the only problem connected with this Supreme Court hearing.

Assuming that the United States Supreme Court decides that the federal exchange is not eligible to provide subsidies to people with insurance in those 34 states, what happens next? Logically, considering the amount of subsidies available to the states and people, most states will make a rush to have their health insurance exchange up and running before the Supreme Court ruling comes into effect. The general consensus is that the Court ruling will be announced in June/July timeframe. To support this movement from all these states, the HHS might allow some relaxation in rules about the establishment of the exchanges. By the time the Supreme Court passes this ruling, the states will still be a little late for meeting the 6.5 month conditional approval requirement before state exchange launch. Agreed, the HHS might relax these deadlines a bit, but it would still mean a lot of overhead for these states.

While considering that, let’s not forget that some of these states could not get their health insurance exchange up and running in the years they had before the rollout of ACA. Another more probable case would be states beginning their health exchange establishment plans, which could take somewhere around 6 months. What happens in these 6 months? Complete chaos. When the subsidies are dropped, some of the people with health insurance might not be able to pay their health insurance premiums. Due to nonpayment of premiums, most of them will stand to lose their health insurance in 30 days at the most. The health insurance plans will lose these customers and the subsequent market share. The people who retain their health insurance post this would be the ones who most need the health insurance. Naturally, with sicker, unhealthier people in the pools, health plans will run the risk of higher losses and lower profitability in the market. In an already competitive market, not every health plan will be able to bear the brunt of this onslaught, and some of them might succumb, leading to a destabilization of the insurance market. It will be likely the lose of subsidies will not immediate as that will render the market unstable.

Other than these, there is another parallel thread running along. It’s not yet certain whether a state with an outer shell that utilizes the functionality of healthcare.gov internally qualifies as a state established exchange, and the HHS plans to make use of this. In 7 states, the HHS is planning to recognize the partnership exchanges, exchanges which are managed by the State but run jointly with the federal government, as state-based exchanges that are eligible for providing tax credits to enrollees. However this partnership would only makes really help the 7 states, the remaining 27 states are still nonplussed about how to proceed.

And then there is the case of ‘state innovation waivers’. Under these waivers, if a state offers similar, affordable coverage under an alternate plan, they are allowed to circumvent a few primary ACA requirements, such as having an exchange or offering premium tax credits, without losing the federal funding they are eligible for under the ACA. However, the concept of waivers does not kick in before 2017, and until then, the residents of these states will be in a coverage gap without any premium tax credits for residents, assuming that the challengers win the case.

Ultimately, amid all these threads and ideas, the Obama administration, the health plans, and the state authorities are in a state of clamor without any certainty of their future. In case the challengers in King v. Burwell win, it could mean a whole lot of consequential changes for Obamacare that could ultimately rob it of its potency.  It is definitely going to be interesting to watch!

When Florida indicated it was in agreement with Obamacare on expanding Medicaid for its residents at the beginning of 2013, low income Floridians heaved a sigh of relief. This expansion under the Affordable Care Act was to be their shot at better, affordable health care in a state where high unemployment and poverty rates were very high. However, by the end of 2014, Florida is still not ready with the Medicaid expansion after nearly two years of siding with the program

Through a decision was made by Governor Rick Scott and the state accepted federal funds by agreeing to expand Medicaid for low income Floridians, the state has not gone through with the actions, leaving the federal funding out of reach of the taxpayers. Ultimately, Florida decided not to expand Medicaid, leaving its people stranded in the Obamacare coverage gap.

Now, since Florida has no plans to expand Medicaid, low income adults of the state are earning too little to qualify for premium tax credits under the Affordable Care Act. In states that expanded Medicaid the situation of these young adults would have been much better. For example, in California, a low earning young individual with an annual income of $12,000 would only be required to pay $20 per month for health insurance premiums. If the annual income is less than $11,000, the health insurance coverage is free of cost. In these where Medicaid is expanding, both the cost cutting facets of ACA are being put to use. People are either earning enough to qualify for premium tax credits that cut down their health insurance premiums to nominal price, or earning so little that they fall under the net of expanded Medicaid.

Without the Medicaid expansion in Florida, nearly 1 million people do not have access to better health coverage. Out of these 1 million, a little more than 33 percent are young adults with insufficient annual earnings. As many as 25 percent of young Floridians in the age group of 18 to 34 live in poverty, and for a state without Medicaid, the situation is naturally bad. Rising education costs and falling employment rates are some other troubles that are hounding this age group, ultimately causing them to be unfit and being the second most common age group that uses the emergency room, after the seniors.

With young, uninsured Floridians struggling with employment, income, and health insurance, the state administration definitely needs find a solution. Fortunately, the state administration admits that the coverage gap is a pain for Floridians and the state is ready to make some amends to close this gap as soon as possible. The state might actually take a leaf from Arkansas’ book and deliver a better solution. Instead of using the help of public programs, the state might use the available federal funding to pay for private health insurance that can cover some of these low-income young individuals. These private plans could provide these individuals with much needed coverage without turning into a liability on public programs, a facet that could satisfy conservatives and liberals both.

In any case, Florida’s leadership needs to move quickly. After the recent elections, the new legislative session will see a renewed debate on the health coverage gap, and if Governor Rick Scott prepares in advance, he could save a lot of time and energy of the session by providing them with a viable plan that can satisfy both the parties. Without an extended, contentious debate, the leadership can affect a closure of the health coverage gap for these young, uninsured individuals who are struggling to make ends meet.

It was just announced that on March 4, 2015, the United States Supreme Court will hear augments regarding a controversial piece of text in the Patient Protection and Affordable Care Act that could remove the availability of subsidies in states which decided to go with a federally facilitated marketplace.

The case is based on a selective piece of text in the Act highlighting the availability of insurance subsidies in only those states which established their own state exchanges. In case the United States Supreme Court rules in favor of the challengers, as many as 4 million people could lose health insurance subsidies across 37 states which opted for the federal marketplace.

In response to this, the Obama administration has made it clear that it was never their intention to limit the health insurance subsidies to only those who were shopping through state exchanges. The CBO, too, established that the tax credits will be available nationwide, and inculcated this cost while estimating the overall impact ACA will have on the federal budget. The appellants, on the other hand, are fixated on a four-word phrase ‘established by the state’ for exchanges that allow subsidies in the form of tax credits to people buying a health plan off that exchange. As the Court hears the case and prepares to pass a verdict, some states are already working to circumvent this situation and, thus, keep their subsidies intact.

States like Delaware and Illinois are already leading the way with a complete response plan. The state of Delaware plans to implement a technical workaround that will prevent them from losing their insurance subsidies. Illinois, on the other hand, is trying for a legislative fix that would connect them to the subsidies.

Delaware’s Workaround

Out of all other states, Delaware’s case is pretty interesting. Back in 2010, Delaware decided that its small size would hinder its ability to build a state exchange. Delaware did side with the federal insurance exchange, but state officials are confident that they will not lose the subsidies as they are in control of a ‘Delaware version’ of the federal insurance exchange, which is almost like having a contractor managing the state run health insurance exchange. If the court agrees with this definition of the state-based marketplace, Delaware will be in a favorable position and will be allowed to retain its subsidies.

If this option works out for Delaware, it will set a precedent for other states to follow suit. However, having this legislative change in their favor will be a tough nut to crack, and Delaware might not be able to make this technical workaround.

State Partnerships with Federal Insurance Marketplace

Aligned with the definition of state insurance marketplaces, some other states have a ray of hope that will allow them to retain the subsidies. Six states, other than Delaware, are in control of some aspects of the federal insurance marketplace for their state, such as controlling the available health plans. In such situations, the states can be said to be in a partnership with the federally run marketplace, and hence might help them retain the subsidies through a legislative fix that recognizes these partnerships as state managed marketplaces. Illinois is one such state.

However, the problem with this legislative fix is that out of these six states, Illinois, Iowa, Michigan, and Arkansas will have Republican governors next term, and they are highly likely to shoot down this partnership theory. To avoid that, these states will need to make their move under the current administration.

Road Ahead

The road ahead is wrought with challenges, as even the fixes at hand have a low probability of working out. In case the United States Supreme Court removes the availability of these subsidies, states will be left with only the option of creating a state-based marketplace. States like Virginia, Pennsylvania and Mississippi are disgruntled over the fact that they are about to lose subsidies, while Delaware and Illinois are contending that their partnership with the federal marketplace should be enough for qualifying them for subsidies. The best possible outcome of the whole case would be a resounding rebuttal of Appellants arguments and retention of Obamacare subsidies across the federal exchange participant states.