More Than 250,000 Arizonans Could Lose Obamacare if Ducey Signs Proposal

Within a week, Governor Doug Ducey is expected to say yay or nay to a proposal that would block the state from cooperating with the Affordable Care Act.

Among other things, House Bill 2643 would prohibit Arizona from building a state-run healthcare exchange -- a move that some say could prove problematic in light of a case under consideration at the Supreme Court.

King v. Burwell challenges whether the federal government legally can offer subsidies through national exchanges in 34 states, including Arizona, that declined to create local marketplaces. The plaintiffs argue that the ACA stipulates such subsidies be calculated based on the cost of a health plan enrolled in through a marketplace "established by the state." A decision is scheduled in June.

Four Virginians filed the suit because they did not want to purchase health insurance. The ACA requires most Americans to get coverage or pay a fine, but certain people are exempt, including those whose annual insurance premiums exceed 8 percent of their income. Without financial assistance, the plaintiffs would have fallen into this category. With the federal government's help, however, their premiums were below the 8 percent threshold.

If the court sides with the plaintiffs, an estimated 264,054 Arizonans could lose their health-insurance subsidies, according to an analysis conducted by the Henry J. Kaiser Family Foundation. On average, the U.S. Department of Health and Human Services reports, the tax credits reduce costs for Arizonans by 55 percent.

Some worry the loss of subsidies could set off a "death spiral."

Under the ACA, insurers have to cover everyone regardless of pre-existing conditions, and they can't charge sick people more, says Dr. Daniel Derksen, a professor at the University of Arizona's Mel & Enid Zuckerman College of Public Health.

"If these subsidies go away, most people won't be able to afford insurance," Derksen says. "There won't be enough people signing up to distribute the risk so insurers are going to have to charge more."

In states with federally facilitated marketplaces, according to a RAND Corporation analysis, slashing subsidies could result in a 70 percent drop in Obamacare enrollment and a 47 percent jump in insurance premiums.

HB 2643 would exacerbate the situation, Derksen says, because it not only blocks the state from setting up a state-run exchange but also prohibits Arizona employees from helping residents enroll in a federally operated exchange. For example, if someone does not qualify for Medicaid but could find low-cost health insurance through the ACA, under HB 2643, the state could not inform them of their options.

"For me, trying to translate this into a rational, coherent thought process would be impossible," Derksen says. "This would cost us dearly as a state."

HB 2643's architect, Representative Justin Olson, tells New Times that he is aware of the number of people who stand to lose health-insurance coverage.

"We don't legislate in a vacuum; we are aware of the court case," he says. "But regardless of whether it's out there, we think this is the right thing to do."

Olson (R-Mesa) argues that Arizona should not use state resources to enforce and implement a federal law.

"We were elected to be stewards for the people of Arizona, and the people of Arizona do not support Obamacare," Olson says. "My goal is to make sure that we are not using Arizona tax dollars to support it."

Less than a quarter of voters who live in areas without state-run healthcare exchanges, including Arizona, say they would hold states accountable if they lose their health insurance as a result of King v. Burwell, according to a recent survey from the Foundation for Government Accountability.

Should the Supreme Court deem federal subsidies illegal, just 22 percent say they believe states would need to set up healthcare exchanges to fix the problem, the conservative think tank reports. Sixty-three percent suggest the federal government instead amend the Affordable Care Act.

The most common reason people cite for opposing local marketplaces is that states would be responsible for ongoing operating costs.

"If the federal government is going to enact a law, then the federal government needs to enforce that law," Olson says. "We're not going to do it."

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Elizabeth Stuart
Contact: Elizabeth Stuart