Maine Bill Would Preserve Health Exchange Subsidies

Maine State Representative Linda Sanborn has introduced a bill to safeguard the tax credits that are used by 89% of Mainers who get their health care coverage through the health insurance marketplace.

The fate of premium subsidies for individuals who get their health care coverage through federally run exchanges in their states is being considered by the U.S. Supreme Court. The language of the Patient Protection and Affordable Care Act (ACA) says tax subsidies may be paid for insurance purchased on an exchange “established by the state.” Two different courts’ rules on the legality of subsidies for federally run exchanges—one says the clear language of the ACA provides that only those in state-run exchanges may receive premium subsidies, the other says the intent of Congress was that any exchange would allow for the federal government to provide subsidies. The Supreme Court has agreed to decide the issue.

Sanborn’s bill establishes a state-run exchange for Maine if the federal government notifies the state that the tax credits will be unavailable through its federally facilitated marketplace. According to Sanborn, the Maine State Chamber of Commerce supports the bill.

“It’s likely that the Supreme Court case won’t be resolved before the legislature adjourns. It’s critical that we act now to prevent chaos and have a plan in place for consumers,” Sanborn said in a statement about her bill.

The Supreme Court case—and Sanborn’s bill—has implications for employers. For one thing, employer penalties for not offering affordable coverage to employees are triggered when one employee goes to an exchange for coverage and receives a subsidy. For the 36 states, including D.C., where the exchanges are federally run, federal tax subsidies would stop, and employers would not be subject to a penalty.