West Virginia Attorney General Patrick Morrisey has asked the U.S. Supreme Court to take away the federal subsidies that about 30,000 West Virginians receive to buy health coverage on the insurance exchange set up by the Affordable Care Act.
But Gov. Earl Ray Tomblin, who made the decisions about that exchange in West Virginia, says Morrisey has the facts wrong regarding how it was set up.
Morrisey, in a brief to the court filed with five other Republican state attorneys general, says that when state officials, like Tomblin, chose to let the federal government help set up their insurance exchanges, they knew they could be forgoing millions of dollars in subsidies for state residents. That’s not true, Tomblin says, and documents and reports from the time support his case.
On Wednesday, the Supreme Court will hear arguments in King v. Burwell, a lawsuit that argues that subsidies to help people buy private insurance under President Obama’s health-care law should be available only to citizens who live in states that established their own health insurance exchange.
The lawsuit hinges on one sentence of the 955-page law. That provision, in section 36B, limits subsidies to people who purchased insurance “through an exchange established by the State.” In states that do not establish an exchange, the law tells the federal government to set up exchanges instead (37 states use at least a partially federal exchange). The lawsuit argues that, because those exchanges were not “established by the State,” people in those states should not get subsidized insurance.
The federal government (the Burwell in King v. Burwell is U.S. Health and Human Services Secretary Sylvia Mathews Burwell, a native of Hinton) argues that the lawsuit narrowly focuses on just one sentence. The government argues that the sentence must be read in the context of the full law, and that the rest of the law makes it clear that subsidies are available to anyone who qualifies, whether they buy insurance on a state or a federal exchange.
West Virginia did not establish its own exchange. It chose to partner with the federal government to establish an exchange, and West Virginians use the federal website HealthCare.gov to buy insurance under the ACA.
In December, Morrisey and the other attorneys general, wrote an amicus, or “friend of the court,” brief to the Supreme Court, arguing in favor of the lawsuit — that subsidies (which come in the form of tax credits) should not be available in their states and others that did not establish their own exchange.
They argue, in part, that states knew they were giving up millions of dollars in potential federal tax credits for their citizens.
“Congress’s conditioning of the tax credits came as no surprise to the States,” Morrisey and the other attorneys general wrote. “In making their Exchange-establishing decisions, the States were well aware that the plain text of Section 36B conditioned the availability of tax credits on States establishing exchanges.”
In West Virginia, Morrisey did not make the decision to use a federal-partnership exchange, Tomblin did. Morrisey was not involved; he was not even in office in 2012, when Tomblin made the decision. And Tomblin says he thought subsidies would be available to West Virginians, even without a state-established exchange.
“When the state opted to join the federal exchange, the decision was made based on the understanding that credits would be available,” Tomblin spokeswoman Shayna Varner said last week. “Governor Tomblin was not consulted before the attorney general filed his amicus brief, and the brief does not reflect the state’s understanding of the law when the decision to join the federal exchange was initially made.”
Morrisey’s office did not respond to multiple phone and email requests for comment.
Documents back Tomblin
Documents from the time confirm Tomblin’s account.
Throughout 2012, various stakeholders met to discuss establishing West Virginia’s exchange. In a May 2012 meeting, someone asked if individuals would get tax credits if the state used a federal exchange.
“Yes,” an official with the state Office of the Insurance Commissioner answered, according to the meeting’s minutes. “The proposed regulations issued by the Treasury, and the related proposed regulations issued by the Department of Health and Human Services, are clear on this point and supported by statute.”
Local news reports from the autumn of 2012, when Tomblin was considering which exchange to use, also confirm his account. No story from that time appears to have ever suggested that using the federal exchange would imperil tax credits for West Virginians.
What governors across the country like Tomblin thought the law was back in 2012 could influence the Supreme Court’s decision.
Morrisey’s brief argues that the federal government often makes funding for a program contingent on whether a state elects to participate in that program — a concept known as cooperative federalism — and the ACA is no different.
But Virginia’s attorney general, along with attorneys general from 21 other states, filed an opposing brief saying that, in cooperative-federalism programs, “states are entitled to clear notice about the conditions to which they have agreed.”
This, the brief argues, did not happen because none of the governors making decisions about which exchange to use knew that millions of dollars in subsidies could be on the line.
Despite the legal minutiae, the stakes are high.
Tax credits under the ACA are available to middle-class Americans who don’t have employer-provided insurance — people with enough income that they don’t qualify for Medicaid but not enough that insurance is deemed “affordable” without the subsidies. Nationwide, there are about 7.5 million people receiving federal subsidies in states that use HealthCare.gov. Those people would see their premiums rise by an average of 256 percent if the lawsuit succeeds, according to a recent study by the Kaiser Family Foundation.
In West Virginia, more than 33,000 people have signed up for private health insurance on the exchange, according to the DHHS. Of those, 85 percent qualified for subsidies, according to the DHHS. The average monthly subsidy, per person, is $314, according to the DHHS. Do the math, and West Virginians buying health insurance stand to lose roughly $106 million in federal subsidies in 2015 if the lawsuit is successful.
It’s unclear what would happen if the court rules that subsidies are not available in West Virginia. Health insurance likely would become unaffordable for thousands of West Virginians. In that case, it’s likely that only the unhealthiest people would continue to buy insurance, which would drive up premiums even more for those still in the exchange, said Perry Bryant, director of West Virginians for Affordable Health Care.
“It’s not a rosy picture without those subsidies,” Bryant said.
Varner noted that much would depend on the specific language of the court’s ruling and said “it would be hard to say for sure what those collective impacts might be.”
A bill in the state House of Delegates that would require legislative approval for West Virginia to switch to a state-based exchange would, if passed, complicate the matter further.
The Obama administration wrote a letter to Congress last week saying that striking down the subsidies would cause “massive damage” and the administration has no backup plan if the court rules against it.
“We don’t have an administrative action that we think can undo the damage,” Burwell told a House subcommittee last Thursday.
Congressional Republicans, who have been calling for the law’s repeal for years, also have not coalesced behind a plan should the Supreme Court strike down the subsidies to 7.5 million people.
But last week, Morrisey wrote on his Twitter account that his office is “working on [a] pathway forward if [the] Court strikes down illegal subsidy decision.” His office did not respond when asked for information on that pathway.