What Latest Health-Law Case Means for Insurance Markets

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Uncertainty of Plans, Prices for 2019 - Longer Term - New Winners & Losers

Consumers and insurers face new uncertainty with the Justice Department's assertion this week that key provisions of the Affordable Care Act are invalid.

In a brief (see Justice Department below) filed on 6-7-18, the Justice Department asked a federal court to unwind the health law's protections for individuals (see below) with existing medical conditions, such as diabetes or asthma. The ACA law prohibits insurers from refusing to sell coverage to people with pre-existing conditions or from charging them more than healthy consumers.

Facts:

The brief was filed in a lawsuit brought by attorneys general - may take months to wind through courts

It is unclear what the outcome will be

Changes would create winners as well as losers

Insurers face new variables as they are deciding where to sell coverage and at what rates in 2019

Health insurers warned of disruption to the market. "Removing those provisions will result in renewed uncertainty in the individual market, create a patchwork of requirements in the states, cause rates to go even higher for older Americans and sicker patients, and make it challenging to introduce products and rates for 2019," America's Health Insurance Plans, a trade group, said in a statement.

Ways Case Could Affect Health-Insurance Markets:

Options next year: 

In the short term, some health-insurance markets could see fewer options if companies react to renewed uncertainty by leaving the marketplace.The marketplace experienced similar tumult about a year ago, as insurers were setting rates for the coming year amid questions about whether on subsidy issues.In some cases, state insurance regulators worked hard to ensure that markets would remain viable. Roughly one-quarter of consumers in the individual insurance markets have only one company selling coverage and now, data says that company exits could leave consumers with no options, even though last year new entrants emerged.

Rates next year: 

Many insurers are already seeking double-digit premium increases for 2019. ACA premiums are expected to rise 15% next year, on average, largely because of new tax laws last year removed the health law's penalty for the uninsured.Now, ACA supporters state this allows healthier people to opt out. Meanwhile, authorities say that insurers may seek further increases as a way to buffer their operations against the latest uncertainty over the health law.Either way, consumers eligible for ACA subsidies will see that financial assistance rises with premiums, but not all shoppers in the marketplace qualify for subsidies.

Lower premiums for some people: 

If the courts invalidate the requirements on covering people with pre-existing conditions, healthy consumers likely would see cheaper insurance and their premiums would no longer be an average market rate that ensures those with pre-existing conditions pay the same premiums but could reflect the likelihood that healthy consumers would require less-expensive care.Young, healthy buyers have already seen their options increased by other moves taken by the administration to allowing plans offering limited coverage for a lower price.

Expensive or hard-to-get coverage for some people: 

People with pre-existing conditions could find they may no longer get coverage, should insurers return to practices followed before the health law of charging more to such consumers or refusing to insure them.That would vary by state, as some states have their own laws seeking to protect consumers with pre-existing conditions. The Kaiser Family Foundation estimates about 27% of non-elderly adults have pre-existing conditions.

Source: WSJ 

Justice Department Won't Defend ACA Act in Lawsuit Brought by States

Filing Creates Uncertainty for Insurers Now Setting 2019 Rates

The Justice Department's decision not to defend major provisions in the Affordable Care Act was approved the administration.It isn't defending major provisions in the ACA requested a federal court to strike down key elements of the law, which could affect the stability of the individual insurance market.

The department, in a brief it filed Thursday in a lawsuit brought by 20 state attorneys general, asks the court to halt ACA protections that attempted to repeal the health law.

Provisions Include:

Bans on insurers denying coverage and charging higher rates to people with pre-existing health conditions

Roll back limits on how much insurers can charge people based on gender and age

The decision to change involves a legal, political and policy gamble by the administration, and could rattle the insurance markets and affect the advancing political scene.

The current Attorney General declared in writing that the Justice Department would not defend the constitutionality of provisions in the existing ACA, which in a landmark 2012 opinion, passed a health law requiring that Americans have health insurance, was constitutional because the penalty for not having coverage was handled by the IRS which fell within Congress's taxation powers.

But this penalty for not having insurance was repealed last year. Arguing in the lawsuit that the ACA and its mandate is unconstitutional, the administration has repealed that tax-based penalty. The Justice Department agreed with that stance in its brief in asking the court to halt certain provisions of the ACA.

That case focuses on the individual mandate, which is the ACA's requirement that most people have health coverage or pay a penalty. Late last year the new administration ended the penalty starting in 2019, but the requirement to have insurance technically remains. It is unenforceable without a penalty, however.

The Justice Department brief declares that certain ACA provisions, such as banning insurers from denying coverage to people with pre-existing conditions, are invalid as of Jan. 1, 2019, and that the mandate-penalty be struck down as unconstitutional.

The move is likely to rattle insurers who are now setting rates for 2019 based on the belief that they must abide by the ACA consumer-protection requirements. Some legal and health experts said the administration's decision could destabilize markets.

Note: 

The Justice Department didn't say other aspects of the ACA, such as its expansion of Medicaid and its exchanges, should be halted.

For insurers, the new stance changes nothing immediately, but raises the likelihood of yet another year of far-reaching uncertainty in the ACA markets. As with other significant legal changes and threats to the ACA over the years, the court proceeding will leave insurers and, particularly, state insurance regulators in the hot seat, unsure how to proceed with decisions on pricing and plan designs.

Insurers are currently filing their rates and plans for the 2019 ACA marketplaces, based on the current rules, which require them to sell plans to all applicants and ban them from tying premiums to consumers' health conditions. State regulators have begun reviewing the proposed rates, which are set to be completed over the next few months.

The Quandary:

Insurers and state regulators will have to consider the possibility that insurers will be allowed to go back to pricing plans based on health conditions, a change that would in many ways turn back the clock to how individual coverage was sold before the ACA. It would strike down the central assumptions undergirding the filings the insurers are currently making.

Source: WSJ

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Thursday, 13 December 2018