HHS conditionally approves insurance exchanges in Pa., Del.

The Obama administration on Monday gave Pennsylvania and Delaware a head start in the scramble to save residents from losing health insurance coverage, the possible result of a U.S. Supreme Court ruling expected this month.

The action - conditional approval to establish state-based insurance marketplaces - moves forward both states' efforts to preserve health insurance subsidies for their citizens.

Pennsylvania Insurance Commissioner Teresa Miller described it as a "contingency plan" with the potential to help more than 300,000 residents who had bought subsidized insurance. The plan was "put together to protect these consumers," Miller said earlier in the day.

The plan is in response to the biggest legal threat to Obamacare since the Supreme Court court upheld its constitutionality three years ago.

The court case turns on whether the federal tax credits that serve as premium subsidies can be used for insurance policies purchased through "marketplaces" set up by the federal government or only for those created by the states. Just 13 states plus the District of Columbia currently run their own marketplaces.

If the court rules against the administration, residents of the other 37 states, including New Jersey, could lose the subsidies that reduced premiums by an average of $272 a month nationwide. Analysts expect millions of people would be unable to afford coverage and drop it. The result could cause chaos for consumers, insurers, and providers.

The Affordable Care Act has become such a partisan issue that Congress might have difficulty coming up with a fix, should the court rule against the Obama administration. Most of the states that could be affected are led by Republicans who wanted no part of the law.

Pennsylvania is the only state that replaced a Republican governor with a Democrat last year, and Gov. Wolf decided that a state-based marketplace would be the best way to proceed, officials said.

Delaware has been under Democratic control but is such a small state that rather than run its own exchange, it opted for a "partnership" with the federal government that would likely not qualify for subsidies if the Supreme Court were to rule against preserving them for states without their own exchanges.

Both states met the June 1 deadline to submit applications for exchanges this year. The Department of Health and Human Services had until Monday to respond. HHS Secretary Sylvia M. Burwell sent letters to the governors of each state granting conditional approval, which is just one step in a lengthy process.

Among other things, legislative approval will likely be required. Republicans in Harrisburg have kept their distance from the proposal, saying there was no reason to act until the Supreme Court ruled.

Though huge federal grants were given to set up state exchanges early on, that money no longer is available.

Wolf administration officials have said they expect to be able to rely on the existing federal technology. Funding would come from the same assessment on insurance plans that currently goes to the federal exchange.

"I'm pretty optimistic even though I'm preparing for the worst," Miller said. "Pennsylvania is going to be in a great position to transition quickly."

215-854-2617@DonSapatkin