Actuaries are pressing HHS to allow health insurers to revise their rates for 2016 coverage if the U.S. Supreme Court invalidates the Affordable Care Act's premium subsidies in federal exchanges.
Without leeway to adjust premiums in plans sold in those marketplaces, they warn, the solvency of some insurers “could be threatened.”
Rate filings for 2016 federal exchange plans are due May 15. But the King v. Burwell case, being argued this week, likely won't be decided until June. That means insurers will be submitting final 2016 premiums based on the subsidies being available, even though they might be gone next year.
Many experts say without subsidies, millions of Americans who have exchange plan coverage in as many as 37 states served by HealthCare.gov would drop coverage because they no longer could afford it. Insurers then would have to raise rates because only sicker people would keep their plans. The “death-spiral” effects might well extend to the individual market outside the exchanges and even to the small-group market.
Because of this threat, the health practice council of the American Academy of Actuaries sent a letter last week to HHS Secretary Sylvia Mathews Burwell asking HHS to consider two options if the plaintiffs win the case. First, the group wants HHS to allow insurers to submit two sets of rates. One set would reflect “pricing assumptions that would be appropriate” if the court allows the subsidies to stand. The other set would be in case the subsidies end in roughly three dozen states.
The second option would allow insurers to revise submitted rates if the premium tax credits are struck down.
Burwell recently told Congress her agency has no backup plan if the plaintiffs prevail in the King case.
Cori Uccello, a senior health fellow at the American Academy of Actuaries, said her group's letter sought to raise awareness that insurers would be in an immediate financial bind for 2016 because their locked-in rates would not be adjustable. “Insurers can't just automatically increase premiums to reflect the new risk pool,” she said. “This is just trying to highlight a solvency risk.”
If HHS does not allow insurers to revise their 2016 rates, Uccello said it's unclear if they would pull out of the marketplaces altogether. But “it's something that plans would have to consider,” she added.