WASHINGTON, April 16 – Today the Competitive Enterprise Institute (CEI) released a report by finance expert Scot Vorse that shows many states knew as early as 2011 that they might not receive tax credits if they opted out of establishing a state-based health insurance exchange. Whether nonparticipating states had adequate knowledge that they were putting their Obamacare subsidies at risk is a critical question in CEI’s Supreme Court case, King v. Burwell.
Vorse obtained emails related to a January 2012 letter sent by seven states to the U.S. Department of Health and Human Services (HHS). While Obamacare supporters have dismissed this letter as a “spoof,” these state emails show the letter was a carefully crafted and coordinated effort by the states to get detailed information about the exchanges from HHS.

“Notably, the states explicitly asked HHS to explain what authority it had to administer tax credits on federally established exchanges,” Vorse writes.

The letter was signed by insurance and health officials from Kentucky, Maine, New Mexico, North Dakota, Tennessee, Utah and Virginia. In addition, the emails indicate several other states supported the letter. Even though HHS never responded, five of the state signatories chose not to set up state-based insurance exchanges. Virginia’s signature is especially noteworthy, because it contradicts the Supreme Court amicus brief that Virginia later signed in support of the government’s position in King.