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Patients Pay Price For State's Half-Hearted Embrace of Obamacare

The Henry J. Kaiser Family Foundation, KFF State Health
State online insurance exchanges

News Analysis - It’s no secret that many Illinois Democrats have been reluctant to throw their full support behind President Barack Obama’s signature health care law. And Republicans at the state level are not going to get behind a law that their party counterparts in the U.S. House have voted dozens of times to repeal. As a result, those seeking insurance in the state have been handed a mixed bag of policy.

Illinois lawmakers did approve a massive Medicaid expansion that was a key part of the Patient Protection and Affordable Care Act. The law expanded coverage to individuals who earn up to 138 percent of the federal poverty line, which is $15,860 for single adults and $21,408 for couples. It also makes Medicaid benefits available to childless adults in Illinois “In the home state of President Obama, we believe access to quality health care is a fundamental right, and we proudly embrace the Affordable Care Act,” then-Gov. Pat Quinn said when he signed the Medicaid expansion in 2013.

However, Illinois politicians did not embrace another important component of Obamacare: the online insurance marketplace. Now, because the state does not have its own insurance exchange, a U.S. Supreme Court opinion could strip federal subsidies — which make coverage cheaper for more than two-thirds of Illinois residents who bought it under Obamacare. The opinion is expected to come down before the end of the month. This is the second time since the law passed that its future rests with the Supreme Court.

UPDATE6/25/2015: The U.S. Supreme Court ruled on the King V. Burwell case. Click here to find out what the court's opinion means for Illinois.


After the Patient Protection and Affordable Care Act became law in 2010, legislative hearings were held to address how the state might establish its own exchange. Insurance companies wanted to have a say in the governance of the marketplace, and they wanted customers to foot the bill after initial federal funding had been spent. Advocates thought that the insurance industry should be a silent partner in the exchange — by allowing a representative on the governance board but not giving him or her voting power — and dip into profits to cover the costs. Health care reformers said that allowing insurance industry reps on the governing board was a clear conflict of interest because they would also be making money off of the exchange. They likened it to letting the fox guard the henhouse. Industry lobbyists argued that the exchange would need the oversight and technical knowledge that only insurance experts could provide. They compared it to banning an aerospace engineer from serving on the board of Boeing. 


Instead of addressing these competing opinions and finding a solution, Democrats in the House opted not to vote on a bill. It’s hard to ignore that leaders — from both parties — of the House committee negotiating the issue were also receiving substantial campaign cash from the insurance and health care industries. The fact that, at the time, the law faced a different court challenge, which many had wrongly predicted would not go in its favor, did not help matters, either. 


House Speaker Michael Madigan’s spokesman, Steve Brown, told Illinois Issues last year that there was not enough support to pass a bill. Brown noted that the issue is a political minefield in part because of real problems with the law and its execution and in part because of the zero-sum game political climate surrounding the topic. “Obviously the issue is fraught with controversy for sometimes informed reasons and sometimes uniformed reasons.”


Quinn pushed the issue of the exchange a few times, but he did not use his bully pulpit to advocate for it in the way he has with other issues, such as a pension overhaul and gun control measures. There was a time when it was difficult to get his staff to go on the record about the topic, or to get some lawmakers on the House Insurance Committee to return phone calls. 


So Illinois went with a state and federal partnership. The state created a website, getcoveredillinois.com, that it could market. But visitors are ultimately directed to the federal website, healthcare.gov, to buy insurance. Unless you have been willfully ignoring current events, you know how the launch of the federal website went. Illinoisans who visited the state’s webpage to insurance shop were greeted with error messages, often after they had already entered much of their information. They were unable to look up rates or see if they were eligible for federal subsidies. All this made it nearly impossible, in the early days of the exchange, for online consumers to assess whether the exchange was the right option for them — an experience that is beyond frustrating when trying to ensure that you and your family will have coverage if you get sick. 


Some states, including Kentucky, were able to build exchanges that worked. Their websites did not function perfectly, but they could add servers and make tweaks to address bugs. States that had not created their own marketplaces had to sit and wait for the feds to sort it out, and then push hard to get people signed up before deadlines once the website was functional. To their credit, those spearheading efforts in Illinois were able to do that.


That’s not to say that all the state marketplaces were success stories. Hardly. Many websites were just as bad as the federal exchange. Four states—Hawaii, Nevada, New Mexico and Oregon—tried to make their own marketplaces and failed. But by passing on creating its own exchange, Illinois is completely at the mercy of the federal website’s performance. And now, the future insurance coverage of more than 200,000 Illinoisans will be decided by the U.S. Supreme Court.




The King V. Burwell case boils down to one line in the Affordable Care Act, which says that subsidies are available “through an exchange established by the state.” Those mounting the challenge argue that doling out subsidies in states without marketplaces violates the law. After the bitter partisan battles over Obamacare, lawmakers and governors in 34 states, including Illinois, opted not to create exchanges. In 27 of those states, residents can purchase insurance through the federal exchange. Illinois is among seven states with websites that piggyback on the federal marketplace. The lawsuit does not cover the four states with failed exchanges, but the justices could decide to pull subsidies from them, too.




In Illinois, more than 230,000 people would lose out on an average of $49 million in subsidies each month, and they would not be the only ones affected.  If subsidies go away, many healthy people would likely drop their coverage, which could cause premiums to spike for all the nearly 300,000 people who hold policies purchased under the law. The individual federal mandate to buy insurance would still apply. But there is a caveat that if insurance is too pricey when compared to your income, you don’t have to comply.  Pundits and policy wonks alike have predicted that eliminating subsides in more than half the states could sink the Affordable Care Act altogether.




Illinoisans who rely on subsidies to make their insurance affordable have been able to keep them as this legal battle played out. But if things don’t go the president’s way in court, they could find themselves in a tight spot in just a matter of months. And many of them could be taken by surprise. A poll released by The Kaiser Family Foundation in March found that just over half of respondents had heard nothing about King V. Burwell.




If the court sides with the plaintiffs, Congress may intervene after the ruling and make some tweaks to the law. It is even possible that the justices would call upon Congress to act. The only clear state-level option, if lawmakers wanted to restore subsidies, would be to create a marketplace. The Illinois Hospital Association has been floating the idea of the state leasing some of the federal website’s functions in order to quickly create its own exchange. But if Illinois opts to build its own exchange now, it will be too late to take advantage of some federal grants that were once available to help cover the costs, making the debate over who pays for the website even thornier. 




This column first appeared in the September 2014 Illinois Issues. It has been updated to address the King V. Burwell U.S. Supreme Court case. 

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