Topping the news, last week's King v. Burwell ruling preserved subsidies for the 6.7 million people receiving them through the federal marketplace. For Manatt’s detailed analysis of the decision and its implications, read our post-decision brief and register for our free webinar, “What’s Next for Marketplaces: Trends in a Post-King World,” which will be held tomorrow, July 1st.

In other news, President Obama pledged renewed efforts to work with states to expand Medicaid; the House and Senate Appropriations Committees passed budgets with significant cuts to healthcare and ACA implementation; Washington State legislators averted a government shutdown; and Michigan prepared to amend its Medicaid expansion program.

KING V. BURWELL RULING & REACTIONS:

Supreme Court Upholds Subsidies in King v. Burwell

Catching SCOTUS-watchers by surprise in an early announcement, the Supreme Court ruled, in a 6-3 decision, that individuals who enroll in health insurance through the Federally-facilitated Marketplace (FFM) may continue to receive federal tax subsidies to help pay for their coverage. The decision in King v. Burwell preserves health security for the 6.4 million people whose premium tax credits were at risk, and the stability of the individual health insurance market in the 34 FFM states threatened by the prospect of a "death spiral" of higher rates and smaller and sicker enrollment. The case hinged on competing theories of statutory interpretation. While the Court could have delivered a partial victory to the government by deferring to the agency’s interpretation of the statute (under the oft-cited Chevron precedent), it instead went the extra step of finding that the statute must be read to make tax subsidies available in FFM states. Hence, future administrations will be bound to the Court’s interpretation of the statute, and cannot eliminate subsidies without Congressional action.

Ruling Prompts New Push for Medicaid Expansion

In his statement immediately following the King v. Burwell decision, President Obama went on record with his next pressing ACA priority: “I'm going to work as hard as I can to convince more governors and state legislatures to take advantage of the law, put politics aside, and expand Medicaid and cover their citizens.” The President will visit Tennessee on Wednesday, reports The Tennessean, where Governor Haslam (R) has been unable to expand Medicaid, despite numerous efforts, due to opposition in the legislature. Governor Haslam has expressed uncertainty on how the ruling will impact expansion in Tennessee, reports the Times Free Press, but some legislative Democrats have urged the governor to call State lawmakers back for a special session. In the days following the ruling, governors of Missouri and Virginia also renewed their calls to support Medicaid expansion in connection with the King v. Burwell outcome.

FEDERAL NEWS:

House and Senate Propose Funding Cuts to HHS, Targeting ACA Implementation

Both the House and Senate Appropriations Committees have advanced funding bills for the Departments of Health and Human Services, Education, and Labor that propose a reduction in current funding by approximately $3.6 billion, totaling $14 billion less than what President Obama requested in his 2016 Fiscal Year budget, according to The Hill. The Senate bill seeks to reverse key provisions of the Affordable Care Act through blocking funding for the Risk Corridor program and discretionary funding for state Marketplaces. The House bill cuts the salaries of federal employees who enforce the law and ends all funding to the Agency on Healthcare Research and Quality. On the other hand, the House and Senate bills both increase funding for the National Institutes of Health by $1.1 billion and $2 billion, respectively. The bills must be reconciled before being sent to the President for his signature.

Uninsured Rate Declined Substantially in 2014, According to CDC

A new report issued by the Centers for Disease Control and Prevention found that in 2014, 11.5% of the population (36 million individuals) was uninsured, a historic low. In particular, the report noted dramatic decreases in uninsurance rates between 2013 and 2014 for people of all ages, but most markedly for adults aged 19-25, whose insurance rates decreased from 26.5% to 20.0%.

STATE HEALTH REFORM NEWS:

Michigan: Health Department Prepares Medicaid Expansion Waiver for Submission

The Michigan Department of Health and Human Services is seeking CMS approval to modify its current Medicaid expansion program, known as Healthy Michigan, as required by original authorizing legislation. Under the terms of the new waiver, which is currently open to public comment before submission to CMS, those with incomes between 100% and 133% of the federal poverty level who have been enrolled in Healthy Michigan for 48 cumulative months would be required to either purchase private insurance through the federal marketplace (with premium and cost-sharing assistance) or remain in Healthy Michigan but pay up to 7% of their incomes in cost-sharing. Michigan currently requires enrollees in this income range to contribute up to 2% of their incomes in cost-sharing. CMS must approve the waiver, which proposes a level of cost-sharing not previously approved, by December 2015 for Healthy Michigan to continue past April 2016.

Washington: Legislature Sends Budget to Governor, Avoiding State Government Shutdown

After contentious budget negotiations that had State officials preparing for a government shutdown, Washington legislators agreed on a two-year, $38.2 billion budget with funding for the State's Health Benefit Exchange set at $110 million. Prior to the agreement, the House had called for $124 million in Exchange funding while the Senate proposed only $85.9 million, a level which the Exchange’s leadership stated would represent a serious challenge to the Exchange's financial sustainability. The budget compromise is expected to be signed by the Governor.

STATE HEALTH STAFFING NEWS:

Utah: Health Department Executive Director Is Stepping Down

David Patton, Executive Director of the Utah Department of Health (DOH) for the past four years, announced his resignation, effective July 31, to pursue work in the private sector. Following the announcement, Governor Gary Herbert (R) praised Dr. Patton's leadership and dedication in guiding the DOH through significant challenges, including healthcare reform efforts to extend coverage to vulnerable Utahns. The Herbert Administration is launching a nationwide search for his replacement.