Possible fixes for post-King v. Burwell disruptions are outlined by actuary organization

According to an issue brief issued recently by the American Academy of Actuaries (the Academy), policymakers are advised to follow market reform principles for ensuring a sustainable health system should the U.S. Supreme Court hand down a decision in King v. Burwell that would prohibit premium subsidies in states with federally facilitated marketplaces (FFMs).

The Academy has analyzed the following four policy proposals that would address the elimination of premium subsidies, along with expected results:

  • A temporary extension of premium subsidies, which would probably only prevent an inevitable disruption in the health care system. Furthermore, the Academy points out that subsidies would only be available to those who are already receiving them. Those who become newly eligible for subsidies would not benefit from a temporary extension;
  • Weakening or eliminating the individual mandate, which, absent equally strong incentives for low-risk individuals to obtain coverage, could threaten the viability of the health insurance market;
  • Allowances for insurance to be sold across state lines. Recent federal proposals, says the Academy, would allow insurance licensed in one state to be sold in another. While this could result in adverse selection, the Academy also thinks that it could increase competition; and
  • Permitting association health plans (AHPs), created by the banding together of small businesses. This also comes with adverse selection concerns, especially, according to the Academy, if an AHP can choose a single state, perhaps with looser restrictions, as its “applicable authority.”

According to Catherine Murphy-Barron, vice president of the Academy’s Health Practice Council, “Eliminating subsidies in [federally-facilitated marketplace] states would have enormous consequences for insurance enrollment, premiums, and the viability of health insurance markets. Policymakers should understand the implications of any policy proposal intending to address the disruption caused by the potential loss of subsidies. Of central concern, a viable health insurance system must attract a broad cross section of risks and operate as a level playing field.”

For more information, visit http://www.actuary.org/files/HPC_Imp_Prop_Changes_ACA_KvB_052715.pdf.

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