The U.S. Supreme Court's decision to uphold the Affordable Care Act's premium subsidies in all states was a huge relief to health insurers, potentially encouraging them to step up their participation in the individual exchange market. Now attention turns to tension between insurers and regulators over moves to raise premiums for 2016.
Insurers say the ruling in King v. Burwell means millions more Americans, including younger and healthier people, will sign up for exchange plans in future years, making that business more viable. That depends, of course, on the fate of the ACA following the 2016 elections. And insurers will continue to scrutinize the demographics and medical utilization of the exchange population to make their rate calculations.
Last week, insurers and regulators expressed satisfaction that the high court had preserved the subsidies and avoided a meltdown in the entire individual insurance market in states using the federal exchange. It's estimated that 18 million Americans have coverage through the individual market. Of that total, 6.4 million receive coverage through the federal exchange.
“The decision allows regulators, consumers and the industry a level of certainty that supports stability for insurance markets in our states,” said Monica Lindeen, president of the National Association of Insurance Commissioners and the head of Montana's insurance department.
Experts had warned that eliminating the subsidies would have led to a death spiral in the individual market because coverage would have become unaffordable for many of those losing premium assistance. Healthier people would have dropped their plans, while sicker people would have scrambled to keep theirs. Insurers would have sought giant rate increases or dropped out of the individual market.
“If the subsidies had not been upheld, substantial numbers of our patients would have had to give up their coverage,” said Dr. J. Mario Molina, CEO of Molina Healthcare, a publicly traded insurance company with 266,000 exchange plan members in nine states. Most are in Florida, which uses the federal exchange.
The loss of the subsidies would have hurt some insurers more than others. Provider-owned and regional plans and not-for-profit co-op plans created by the ACA cover many low-income people who have premium subsidies.