Health insurers that sell their products on Healthcare.gov had to submit their 2016 premiums by May 15, but what happens if the U.S. Supreme Court decides next month to eliminate federal subsidies for as many as 10 million consumers in 37 states and carriers are unable to cover claims based on those rates?
The dilemma was recently raised by Aetna Inc. CFO Shawn Guertin, who noted that the nations third-largest U.S. health insurers proposed rates assume such assistance will survive the hotly contested King v. Burwell legal battle. But if the high court strikes subsidies and theyre not restored by a new law or administrative rule, then he suggested that there would be a need to revisit those rates.
Most of the regulators clearly understand that, Guertin told Reuters following Aetnas recent quarterly earnings report.
Aetnas individual-exchange business is expected to edge up slightly in 2015 to about 6% of revenue from about 5% last year. About 90% of 950,000 individuals who have signed up for Aetna plans offered through public exchanges receive subsidized coverage.
However, any financial difficulty health insurers face if the federal subsidies for Healthcare.gov customers are nixed is expected to be minor. Im sure that would disrupt their strategic outlook and their business operations and theyd have to rethink it, but its not financially very material, Leerink Partners analyst Ana Gupte told Reuters.
Meanwhile, the American Academy of Actuaries has urged the Department of Health and Human Services to help mitigate any fallout from such a scenario, including skyrocketing premiums and adverse selection.
Also see: Senate probes ACA tax credit problems
While health insurers are prohibited from changing premium rates in the middle of a year, the Academy says regulators could still allow them to issue two different sets of contingent premium rates that consider subsidies remaining or disappearing. Its also possible that they might be allowed to revise and resubmit their rates if theres a ruling against subsidies, according to a report published by FierceHealthPayer.
Bruce Shutan is a Los Angeles-based freelance writer.
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