Analysts said a decision to strike down the entire law would be positive, despite the potential loss of newly insured customers under the law's mandate that nearly everyone have health insurance or pay a fine.
“While this business growth opportunity has been touted as positive for the sector, we believe the lack of a meaningful penalty, pricing restrictions and the guaranteed issue provisions (i.e., no underwriting) associated with this new business poses significant financial risk for insurers,” Moody's said.
Finally, should the court uphold most of the law, but strike down the individual mandate, guaranteed issue and community rating provisions, the outcome could negatively affect insurers. The industry would still face medical-loss ratios, reductions to Medicare Advantage and new taxes and assessments, the report said.
Analysts also acknowledged the potential for further changes as a result of the upcoming elections.
“The bottom line is that it is difficult to assess the impact to specific companies until we have a clearer view of the regulatory landscape after the Supreme Court announces its decision,” the rating agency said.