U.S. Supreme Court Ruling On Obamacare Could Have Major Impact On Connecticut

With a key U.S. Supreme Court ruling looming Thursday, Gov. Dannel P. Malloy says Connecticut could lose $100 million if President Obama’s sweeping healthcare reform law is struck down.

Malloy says he is concerned that as many as 500,000 individuals could potentially lose optimal coverage in Connecticut if the court strikes down the new law that has become known as Obamacare.

The 500,000 includes individuals on Medicaid, those who would receive subsidies through businesses, and those who could have signed up for insurance when the full law was projected to become effective in 2014.

“About 500,000 people in the state … will not have the kind of coverage, at the optimal price, that they would otherwise have. So that’s big,’’ Malloy told reporters this week at the state Capitol. “It does have major implications. We’ve been mindful of this. We have been looking at our options.’’

Politicians and healthcare advocates have watched the court closely, and many of them have made predictions about what might happen in the ruling scheduled to be released Thursday. At one extreme, the court could strike down the entire law that was passed by Congress. At the other extreme, it could uphold the entire law. Many insiders believe that the most likely outcome is that the court will strike down the individual mandate that would require Americans to buy health insurance.

Asked to predict what might happen, Malloy said, “The most controversial is the mandate that people be covered. That’s probably at the most risk. That’s what you look for. I don’t expect a total knockout, but if you knock out the mandate, you’re going a long ways to knocking out the savings. … I think that’s the danger point.’’

“Could they uphold the whole thing? Yes,’’ he said. “Could they strike the whole thing? Yes.’’

Malloy, a Democrat, has supported the law during the lengthy process to get it passed. Critics have argued that the federal government is essentially imposing a tax because those who refuse to purchse health insurance would be forced to pay a penalty.

“Certainly people’s unwillingness to call something a tax has become a major issue in America,’’ Malloy said. “If this is a case where verbiage or semantics will actually be used by wrongheaded judges to strike what is, after all, a very good law that would bring 500,000 people in Connecticut into coverage, that would be a sad day in the United States.’’

He added, “I think they would be making a very grave mistake. Interestingly enough, I don’t think any one of the justices will lose their insurance.’’

U.S. Senator Richard Blumenthal, who served as a law clerk for the high court and later argued four cases in front of the court as Connecticut’s attorney general, said the questions asked by the judges during the oral arguments should not be seen as indicative of the way that they will rule.

“Anybody speculating from the questions that were asked or the comments made is simply guessing. Nothing more,’’ Blumenthal said Wednesday in a telephone interview. “Sometimes they are thinking out loud. Sometimes they are playing devil’s advocate.’’

Blumenthal will be watching the ruling closely and said that he would battle in the U.S. Senate to keep the core reforms of the law, including allowing children up to the age of 26 to remain on their parents’ insurance policy. In Connecticut, an additional 23,000 young people now have coverage on their parents’ policy because they meet the new age requirement.

“My job will be to fight to uphold the reforms, particularly any efforts to turn the clock back and abandon rules that stop insurance company abuses, such as I fought when I was attorney general,’’ Blumenthal said. “The key question will be what remains if the individual mandate is struck down. I will battle against any effort to repeal or degrade guarantees in the law that young adults have coverage on their parents’ policies up to the age of 26, that insurers are barred from dropping coverage if people get sick. … These core reforms must be upheld because they cut costs in the long run.’’

Malloy’s budget chief, Ben Barnes, said the state submitted an application to the federal government on Wednesday for $107 million to establish a health insurance exchange that is 100 percent federally funded. If the law is struck down, that money would be at risk.

“That health insurance exchange, if successful and we believe it will be, will reduce the level of uninsured Connecticut residents, if not to zero, then much, much closer to zero,’’ Barnes told Capitol Watch in an interview on Wednesday.

He noted that calculating a precise number of uninsured in Connecticut is difficult because some of them are undocumented immigrants who don’t show up in official tallies.

Another impact in Connecticut will revolve around the insurance companies that are either headquartered in the Greater Hartford region or have large operations with thousands of workers.

“United Healthcare has lots and lots of activity here, as does Aetna,’’ said Barnes, who works in Hartford. “The mandate would require that everyone purchase health insurance. That’s a good thing if you’re in the business of selling healthcare coverage. This might be a bargain that works for them. It changes their business significantly. Hopefully, that means they’ll make more money. The insurance industry is clearly going to be impacted.’’

Regardless of the court ruling, Barnes said that the state will do its best to continue the tradition of innovative health plans like Charter Oak and HUSKY in an attempt to cover as many individuals as possible.

“I am confident that Connecticut will be pro-active in dealing with whatever new environment we have after [Thursday], just as we have been,’’ Barnes said. “I’m confident that Connecticut will ultimately do what is right for our residents.’’

Ellen Andrews, the executive director of the Connecticut Health Policy Project, said Malloy’s prediction of an impact of $100 million on the state could turn out to be conservative. Overall, 140,000 people in the state will receive monthly subsidies to help pay for their premiums who do not get them now.

Based on statistics from the Rand Corporation, the state would spend 10 percent less than it would have if the entire law took effect, meaning that the state would spend $2.7 billion less over 10 years than it would have spent otherwise, she said.

“I can’t believe they’ll knock down the whole thing,’’ said Andrews, who has been studying healthcare fulltime for 19 years in various jobs. “That would be pretty devastating. It was a massive piece of legislation that went through a massive amount of vetting. To throw out the baby with the bath water, I can’t believe they’re going to do that. I could see them making a case that the individual mandate is unconstitutional, but the rest of it is constitutional.’’

Andrews said that 10 percent of Connecticut drivers don’t have automobile insurance, while 11 percent of the overall population does not have health insurance. In addition, the average person’s hospital bill is increased by 14 percent to 17 percent in order to pay for other patients who don’t have insurance, she said.

Despite the numerous complaints about Obamacare, Andrews said that important parts of the law need to be preserved.

“It’s not like the Affordable Care Act is perfect,’’ she said. “It was a compromise. But it’s better than what we have now.’’