Citing uncertain costs to the state, Delaware officials have withdrawn their application to transition to a state-based marketplace for the 2016 insurance year.
“The trade-off is Delaware would have total authority in every aspect. But the cost-benefit ratio cannot be ignored,” said Rita Landgraf, state Department of Health Secretary, after announcing the decision Thursday.
“My concern is we have a model that works for us for this time,” she said. “For us then to go beyond that model without knowing those cost factors, I think, would be a disservice to the state.”
A Supreme Court challenge to the Affordable Care Act had a handful of states, including Delaware, considering switching from the federal marketplace to a state-supported one. At issue in King v. Burwell was whether the millions of people in states with federally run marketplaces were eligible for subsidies to help buy coverage.
The idea was if the court ruled against the subsidies, Delaware could preserve those discounts for individuals anyway by changing over to a state-supported marketplace that would still use the federal healthcare.gov IT system but give the state more oversight and responsibility in running the marketplace and the associated consumer assistance services.
At least three-quarters of Delawareans with marketplace coverage — about 20,000 residents — rely on financial subsidies to afford coverage according to the state.
The federal government gave Delaware and Pennsylvania preliminary approval to make the change, but when the court ruled in favor of the government, essentially throwing out the challenge, Pennsylvania immediately withdrew its plan to change.
Delaware, on the other hand, considered moving forward with the switch anyway.
“Some of what intrigued us in exploring becoming a supported-state marketplace was for Delaware, more or less, to have that level of authority,” said Landgraf, in referring to the ability to oversee insurance rates, plan management and consumer assistance.
Less clear was how much it would cost the state to continue using the healthcare.gov IT system under such a model. Right now, 3.5 percent of every policy sold on the marketplace goes back directly to the marketplace to help fund it.
In a state supported marketplace model, Delaware would collect those assessment fees instead.
“Delaware would have faced uncertain costs to continue to use the healthcare.gov platform,” said Landgraf. “We never got the finalization of would those costs look different.”
Right now the state reviews insurance rates, but the federal government has the final say over them in the marketplace. While having more authority over plans has appealed to the state, Landgraf thinks the current setup still benefits enrollees.
“For the consumer, it may be right now going into the third enrollment in their best interest to have not only their local department of insurance review but also that federal CMS review,” said Landgraf.