Nov. 14--A legal challenge to the Affordable Care Act and two imminent deadlines are putting pressure on Illinois to act to set up a state-based health insurance exchange or risk losing subsidies that help thousands of residents pay their premiums.
A pending U.S. Supreme Court case will take up the question of whether the subsidies are legal in more than three dozen states, including Illinois, that use a federal insurance portal connecting consumers with health plans. By establishing its own exchange, Illinois could shore up the subsidies and insulate the state from the high court's decision.
State administrators plan to submit an application by Friday, the deadline to apply for federal funds to help set up a state-based exchange, said Mike Claffey, a spokesman for Get Covered Illinois, which oversees enrollment in the state. This is the last year the federal government is offering financial assistance to states to set up their own exchanges.
A second deadline looms next week in Springfield. To get the federal help, the Illinois General Assembly has to agree to fund the exchange's future operations. The assembly, which has voted down the proposal before, meets only once more this year -- for a five-day veto session that starts Wednesday.
In addition to protecting the subsidies, a state-based exchange could improve the experience for consumers and allow the state to better monitor how the marketplace is working, advocates say.
Gov. Pat Quinn urged the General Assembly to create a state-based exchange during a public appearance Thursday at Presence Sts. Mary and Elizabeth Medical Center on the North Side.
"I think it would be a good idea for the House to get that passed as soon as possible. ... Illinois should have its own exchange," Quinn said.
A 2011 report commissioned by the state legislature estimated the cost of building an exchange at $92 million.
Some states spent hundreds of millions to launch exchanges last year. But Illinois could pay less by buying developed technology from successful state-based marketplaces, said Jillian Phillips, director of policy and government relations at the Campaign for Better Health Care, a group that advocates for accessible health care.
The state analysis estimated the annual costs of operating the state-based exchange at between $57 million and $89 million per year, depending on how many people use it.
Fourteen states and the District of Columbia launched their own exchanges last year with federal grants ranging from $42 million for Minnesota to about $829 million for California. Some exchanges, such as those run by California and Kentucky, were deemed successful, while those run by Oregon and Nevada have struggled to get off the ground, forcing the two states to revert to the federal exchange.
The threat to the subsidies is based on a legal dispute over what some have called a drafting error in the Affordable Care Act, commonly known as Obamacare. The challenge, which the high court agreed last week to hear, is based on a provision that appears to restrict the subsidies to policies bought on an "exchange established by the state." Supporters have said the law was never meant to prohibit subsidies for residents of states that rely on the federal portal.
"I think it makes it a little more critical to try to pass a state exchange," said Rep. Robyn Gabel, an Evanston Democrat who is working to ready legislation for introduction during the veto session. "We don't know how that case is going to get decided."
A bill to establish an exchange in Illinois passed the state Senate in 2013, but the legislation never reached the House floor.
Legislators and interested groups are tweaking the proposal and plan to start moving a revised bill through the process next week, Gabel said.
In Illinois, the subsidies have lowered individual monthly premiums by an average of $202, leaving the average monthly payment around $114, according to a federal report. About 168,000 of the 217,000 Illinois residents who signed up for Obamacare during its first open enrollment period a year ago qualified for the subsidies.
Rep. Patti Bellock, a Hinsdale Republican, said she doubts the proposal will have enough support to reach the House floor. She said she opposes the proposal because of the cost of maintaining an exchange.
"In the situation we're in right now, with the budget being so bad, we thought, 'Why are we going to take on any more expense?'" Bellock said.
If the Supreme Court decides against the subsidies, it would be up to the federal government to find a solution for all the states affected, she said.
"I think this isn't just an Illinois problem," Bellock said. "I would think that this would be a federal problem."
Bellock's concerns were echoed by the Illinois Policy Institute, a free-market group that has been critical of the federal health law. "This is really a cost that Illinois just can't afford to take on, especially given our current budget situation," said Naomi Lopez Bauman, director of health policy for the institute.
Gabel's proposal would tax insurers to fund the exchange.
The 2011 report suggested a range of options to pay the annual costs, from taxing consumers to taxing insurers to drawing on general state funds. Lopez Bauman raised a concern that if the state were to tax insurers, the costs would be passed on to consumers in the form of higher premiums.
"Either way you look at it, taxpayers will be footing the bill for this into perpetuity," she said.
Phillips, of the Campaign for Better Health Care, who spent last year helping consumers navigate the exchanges and select plans, said a state-run exchange would give Illinois more power to implement "pro-consumer regulations." Options could include limiting rates and the number of plans on an exchange, Phillips said. In 2015, for example, Illinois is offering 410 plans, up from 165 last year.
"You could say there has to be a meaningful difference between plans," she said. "When consumers have hundreds of plans, that's overwhelming."
Basic things like design, too, could be better, Phillips said. The state would also have access to enrollment data in real time, instead of waiting on the federal government to release figures.
"Why deny consumers in Illinois the help that they need?" Phillips said. "Why deny them the kind of website they really need to make informed, sound decisions? This is one of the most important decisions they will make."
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