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Pennsylvania prepares to set up state health exchange

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The Pennsylvania Department of Insurance has formally filed an application with federal officials to set up a state health insurance exchange if the U.S. Supreme Court strikes down IRS rules that authorize federal premium subsidies to lower-income uninsured individuals obtaining coverage in the federal exchange.

“I am continuing to take steps, as part of my contingency plan, in order to protect 382,000 Pennsylvanians from potentially losing subsidies that help them afford health care coverage,” Gov. Tom Wolf said in a statement.

Pennsylvania's formal notification to the U.S. Department of Health and Human Services does not require Pennsylvania to set up an exchange, but gives the state the option to do so in the event the high court overturns the IRS rules. A Supreme Court decision is expected by the end of this month.

“This is simply another step in an effort to leave the door open so the state has the option in the event of an adverse Supreme Court ruling,” according to a statement issued Tuesday by the office of Gov. Wolf, who is a Democrat.

Pennsylvania is one of 37 states that could be affected if the Supreme Court agrees with plaintiffs challenging the IRS rules. The plaintiffs contend that the Patient Protection and Affordable Care Act limits premium subsidies to those obtaining coverage in state exchanges.

Nationally, 6.4 million people would lose subsidies collectively worth $1.7 billion per month if the Supreme Court strikes down the IRS rules, according to a Kaiser Family Foundation analysis released earlier this week.

Pennsylvania residents receiving coverage through the federal exchange would lose more than $79 million a month in federal premium subsidies if the IRS rules are overturned, the Kaiser analysis added.