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Cloud tech can make a Supreme Court decision against Obamacare irrelevant

Steven Max Patterson | June 11, 2015
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 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.

Similar to how sales management can be purchased from or payroll from, states can buy a health insurance exchange as a service. Because of the redesign of as a SaaS exchange, Arizona, New Mexico and Oregon — according to Aaron Albright spokesman for the Dept. of Health & Human Services — have launched state exchanges using a separate, personalized instance of running on EC2 clusters that is both ACA compliant and will survive a decision in favor of King. Albright could not confirm at the time of publication how many states were seeking to use the SaaS to run their exchanges.

Quick, easy...and cheap(er)?

States can use the SaaS insurance exchange to become operational quickly. States just getting started building an exchange right now have already lost federal subsidies to offset startup costs, but an SaaS exchange offers a low monthly operating expense compared to the large capital cost of building a custom state exchange. Rather than a big up-front capital investment in hardware and software, they simply pay to use a shared cloud computing service.

States can't just push a button and switch from to the SaaS version of though. There's a bureaucratic, not a technical hurdle: State exchanges are established with a Governor's executive order or state legislation. States also need to set up administrative functions to approve health plans sold on the state exchange, in addition to performing outreach, providing application assistance, typically in the form of consumer call center.

It took New Mexico about seven months to launch a state exchange using the SaaS partner exchange version of Oregon took six months. In the event that the Supreme Court ends subsidized healthcare through the federal exchange, states certainly can't respond overnight. But it seems reasonable that any state that wants to keep the subsidies could be operational in less than half a year.

There are states that won't approve state exchanges and governors who have vowed to veto legislation to create exchanges. If the Court rules in favor of King, the states that lose subsidies will subsidize the other 17 state exchanges with federal tax dollars. In response some may opt-in to the partner exchanges.

Sometime this month, the Supreme Court will decide whether or not federal subsidies for health insurance purchased on the exchange are legal. Circumventing a decision for ACA opponents by running the same software, on the same data, on a separate EC2 cluster under a state's vanity URL will redefine what it means to split hairs.


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