If the U.S. Supreme Court rules for the plaintiff later this month in the case of King v. Burwell, 7.5 million Americans stand to lose their Obamacare tax credits. Such a ruling would make it illegal to sell subsidized Patient Protection and Affordable Care Act (ACA) coverage on the federal healthcare.gov insurance exchange website that runs on an Amazon EC2 cluster. But it will still be legal (read: ACA-compliant) to sell subsidized Obamacare insurance on a state run exchange using the same SaaS exchange application on a separate EC2 cluster.
When the healthcare.gov website debuted two years ago, it was rife with bugs and system problems as was highly publicized at the time. When former U.S. CTO Todd Park was appointed by President Obama to oversee the fix, the site was also redesigned to run on Amazon EC2 clusters as a SaaS application that could be customized and operated by states as independent state exchanges. This enables states that want to keep Obamacare to offer subsidized insurance by moving from the federal exchange to a state-run exchange, like Oregon did with Cover Oregon.
Healthcare.gov is illegal, argue lawyers for Obamacare's opponents. Their argument against the Affordable Care Act splits hairs about the law's construction. The underlying legislation designates federal subsidies to be paid through tax credits to the buyers of health insurance purchased on state-operated exchanges. The ACA is silent about the eligibility for subsidies of purchases on the federally operated exchange healthcare.gov. The plaintiffs argue that the subsidies can't be given to buyers using the federal exchange healthcare.gov, and only can be given to the buyers using the state exchanges such as Cover Oregon.
A cloud computing alternative
Only 17 states currently operate insurance exchanges. People in the other 34 states will be left without ACA health insurance subsidies if the court rules in King's favor. According to an article by Larry Levitt of the Kaiser Family Foundation, eligibility for health insurance subsidies would continue in 17 states in the event of the Court decides in favor of King. In the other 34 states, 7.5 million consumers would lose tax subsidies, tripling the cost of their premiums. But the states that lost the subsidies will continue to subsidize the ACA in the 17 eligible states with their federal tax payments.
Any of the 37 states wanting to keep the ACA subsidies for its residents that use the federal healthcare.gov site have a cloud computing alternative. And after all the drama, it's almost anticlimactic. A state can get a health exchange that complies with the ACA in the same way that many businesses buy IT services...as software as a service (SaaS).
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