Illinois' state-run health exchange on hold

SPRINGFIELD - Illinois lawmakers left nearly $300 million in federal money on the table by not moving to approve a state-run health insurance marketplace by the end of their fall veto session, and any remaining hopes to set up such an exchange are dimming.

Some House Democrats say they want to work with Gov.-elect Bruce Rauner's administration on establishing an exchange in the new year, but it's questionable if he would support such a program the way outgoing Democratic Gov. Pat Quinn has.

Democratic state Rep. Robyn Gabel, a main proponent of setting up a state-run marketplace, said Friday she plans to halt her push until the U.S. Supreme Court rules whether health insurance subsidies are legal in states like Illinois that use the federal website to connect residents with insurance offered through President Barack Obama's health care law. A ruling is expected next summer.

After likely missing the end-of-the-year deadline, Illinois will encounter several new hurdles in the coming months. It loses the chance to qualify for $270 million in federal funding to set up an online marketplace, leaving questions about where the state would find funds to pay to set up an exchange in the future.

Approving a state-based exchange would also have protected Illinois' subsidies from the Supreme Court decision. Because lawmakers failed to establish one, at least 167,000 Illinois residents are at risk of losing the subsidies they currently receive. Up to 1 million Illinois residents are eligible for subsidies, state health care spokesman Mike Claffey said.

Gabel's bill, which would have funded the exchange's annual operating costs by taxing insurers, was opposed by Aetna and other insurers. She was unable to gather enough votes to establish an exchange during the legislature's fall veto session that concluded this week.

"We just ran out of enough time to get the votes," Gabel said.

Democratic House Speaker Michael Madigan had pushed for bipartisan support because the system would require a new government agency to run it. Republicans largely opposed the legislation, noting that Rauner asked them to wait on substantive issues until he was sworn into office.

Rauner told The Associated Press earlier this year that if elected he would "take a hard look at how things are being run" and the best way to improve value for taxpayers. A spokesman for Rauner said Friday that the exchange was "a substantive issue that was appropriate to not rush through the veto or lame duck session."

Gabel said the cost of setting up a state exchange would be less than they used to be, since Illinois might be able to purchase a model used one of the 14 other states that have set up their own exchanges.

"My hope is that if the Supreme Court rules that people would have to buy insurance on state-run exchanges to be eligible for tax credits and subsidies, then more funds will become available to set up a state exchange," she said.