END OF 2018 OPEN ENROLLMENT PERIOD (42 states)

Time: D H M S

*Could* HC.gov states actually set up a FULL exchange in time for January 2016 after all??

If the Supreme Court does rule in favor of the government, then all of this will be moot (until the next BS, frivolous legal challenge to the law, of course). Healthcare.Gov will presumably be full-steam ahead, the tax credits will flow to all 50 states (+DC), and all will be (relatively) well. In fact, I wouldn't be at all surprised to see some of the smaller states such as Rhode Island, Vermont and Hawaii scrap their own exchanges and move to HC.gov the way Nevada and Oregon did (although in the case of RI, VT & HI, it would be more about funding issues than technical problems).

However, I've laid out a number of potential workaround/solutions in the event that the SCOTUS does rule for the plaintiffs...the massive catch being that all of them would require some amount of cooperation on the part of a) Conservatives on the Supreme Court; b) Republicans in Congress and/or c) Republicans in the 34 states in question.

Today, Dan Mangan of CNBC has written an excellent story with some additional possibilities:

  • The IRS keeps the subsidies flowing for an extra 6 months even if the Supreme Court doesn't issue a 6-month stay:

Don Susswein, a principal in the national tax practice of the consulting firm McGladrey, said that the IRS has a long-standing practice of giving grace periods to people affected by court rulings that say an IRS rule or regulation is illegal.

"It is entirely normal practice," said Susswein, while acknowledging the current case "isn't a normal situation."

...In response to a Supreme Court ruling invalidating the Obamacare subsidies, "they could change the regulation to disallow the credits, but provide that the change would only apply to payments pursuant to contracts entered into after a particular date," Susswein said. "I would think they would do that."

  • The Supreme Court issues a stay, meaning the IRS doesn't have to butt heads with them over doing so:

I actually suggested this possibility a month or so ago, not even knowing whether that's feasible in a Supreme Court case. I was told by several sources that yes, the Court can issue stays if they wish to, but it's extremely rare and unlikely. That's why it came as a huge shock the other day when...

...Supreme Court Justice Samuel Alito, during oral arguments in the case on Wednesday, suggested that the subsidies would expire "after the current tax year" if the court ruled against them, and not right after the ruling.

"I think it's almost a given that something of this sort will happen if the Supreme Court sides with the plaintiffs," said Sanjay Singh, CEO of hCentive, a Virginia-based health insurance technology company that builds insurance exchange platforms. "If you're thinking about this ruling being immediately the demise of the ACA, I would not expect that."

Now, even if a 6-month stay (or a 6-month IRS extension, amounting to the same thing) were to happen, that still wouldn't resolve the larger issue. All it would do would be to buy Congress and/or the States an extra 6 months of time to actually do something in time for 2016.

  • "The Denny's Grand Slam" solution: This was my idea back in July. All it would take to "establish" an exchange would be for the states to register a domain name, set up a simple splashpage and redirect to HC.gov to actually enroll. It would take literally 10 minutes and $9.95/year for any state to do so:
    • Enrollee >> State-owned Splashpage >> HC.gov

This idea was actually taken seriously by some people in the know for awhile, although I was later informed that it's a wee bit more complicated than that.

  • Then again, an even easier solution would be for the Republican-held Congress to stop being royal jackasses and take 5 minutes out of their day to scribble "...or the federal government" (in crayon if necessary) onto the end of the sentence in question.

Anyway, more exotic workarounds suggested in the past have included:

  • "The State Exchange Two-Step": Some insurance companies offer "multi-state" policies, and the ACA wording may allow people in, say, Mississippi, to visit HC.gov, be redirected to the Covered California state exchange, which would in turn kick them back over to HC.gov again...except that they would be doing so "via" the CA exchange, allowed for under the byzantine legal provisions allowed for in the law. This sounds even more absurd than my "Grand Slam" solution, but may be legally easier to get authorized:
    • Enrollee >> HC.gov >> State Based Exchange w/Multistate add-on >> HC.gov
  • "The State-Proxy Tango": Freilich Jones, a Harvard law student, discovered that the wording of the ACA may very well allow HC.gov to subcontract their operations (legally, not techically) to a "nonprofit entity" created by one of the states...which would then, in turn, sub-subcontract right back over to HC.gov again...but for all 34 states (or 37 if you include NV, OR & NM). All this would take would be for a single one of the states which already support the law (ie, Connecticut, New York, whatever) to agree to set up an in-name-only shell entity to act as a pass-thru:
    • Enrollee >> ​HC.gov >> Blue State Entity >> HC.gov

Again, all of the above, assuming they were legally eligible, would be pretty easy to set up; 6 months should be plenty of time, assuming the states are on board.

However, if a state wanted to set up their own full exchange--the technical infrastructure as well as all the other requirements (board of directors, bylaws, etc etc), it's been my understanding that in addition to the political willingness to do so and the money ($40 - $60 million per state or so), it would also take far longer than 6 months:

According to consulting firm Leavitt Partners (via the Center for American Progress), it would take up to 18 months for a state to set up their own "full" exchange (website/platform et al). Using the "HC.gov piggyback" method which I'd imagine most states would go for (again, assuming it's allowed), it might take less time--perhaps 6 months or so from the point that such legislation is passed and signed.

And that's the problem. Again, as the CAP notes:

A ruling in June would be only months before open enrollment for 2016 begins in October, leaving little time for states to act.

Of the states that would lose tax credits, only eight have legislative sessions that extend beyond June. Because states need to have the legal authority to set up a marketplace—and because most governors do not have the statutory authority to act on their own—state legislatures would need to act.

In other words, even if the various state legislatures and/or Governors wanted to go ahead and slap something together, almost all of them would have to do so BEFORE the Supreme Court ruling.

That is, they'd have to start RIGHT NOW...and even then it would be awfully tough timing.

And that brings me back to Mangan's story, which included this eye-opening tidbit:

Twenty-three states currently served by HealthCare.gov filed briefs supporting the legality of the subsidies, Singh [CEO of hCentive] noted, which could suggest they would be more likely to open their own exchange.

Singh said that if the Supreme Court announced in June that the subsidies were going away for 2016, it would be technologically possible for states to set up their own online insurance marketplaces in time for the next open enrollment season, which begins Nov. 1.

HCentive's own Obamacare exchange technology, which last year was adopted by Massachusetts to replace its own failed exchange, can be used "out of the box" if a state's elected officials move to set up their own exchange, Singh said.

"We can guarantee them open enrollment for 2016," he said.

Well, now. Obviously, as the CEO of a company which would love to sign up as many as 34 state-level clients in a single year, Mr. Singh may be overstating their capabilities.

On the other hand, Massachusetts did manage to scrap their old, botched exchange platform and make the move over to hCentive's system in only about 6-8 months, and it seems to have worked out pretty darned well for them.

The same is true of Maryland: They scrapped their system and replaced it with the solution set up by Deloitte Consulting for Connecticut in the same timeframe, and it was a huge success.

Granted, every state has a different existing health technology/record-keeping infrastructure, and either hCentive or Deloitte's platform will likely be a lot harder to integrate with some states than others...but this news, plus a potential IRS/SCOTUS extension (even if only for 6 months) definitely makes "setting up their own exchange in record time" a lot more viable than it seemed until now.

Of course, there's still the pesky matter of financing...and especially of getting those state legislators/governors off their keisters STARTING RIGHT NOW instead of twiddling their thumbs until June...

In short: As I've noted before, time is definitely NOT on the HC.gov states' side...but an extra 6 months, PLUS getting their ducks in a row starting NOW (ie, March, not June), PLUS the political will, PLUS finding some sort of funding mechanism MAY make this a possibility after all.

All of which is to say, it's still probably a pipe dream, of course.