New Confusion on ACA and Healthcare Reform - Insurance Thought Leadership

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August 8, 2014

New Confusion on ACA and Healthcare Reform

Summary:

Customers are making choices, and insurers are in the middle of getting rates approved. The time for Congress to act is now.

Photo Courtesy of Nancy Pelosi

Recent events have added a layer of confusion for healthcare reform that needs to be resolved now.

The already confusing Affordable Care Act, with its massive regulations, reached a new tipping point as two separate federal appeals courts made contradictory rulings regarding federal subsidies for lower-income enrollees.  One ruled that a strict interpretation of the law limited subsidies to those states running their own exchanges, while the other indicated that the law would also apply in those states using only the federal exchange.

The conflicting rulings raise a very important issue for the many hundreds of thousands of people who have made insurance decisions in the affected states, relying on what they have been told. Individuals in one of the specified lower- income categories were told they would receive subsidies from the federal government. They reviewed their options and made specific choices based on the information they received and, without some clarification by the courts or Congress, are having the proverbial rug ripped from under their feet. Will there be a subsidy or not?

Insurance companies and health plans are in the middle of getting rates approved under the assumption that certain people will be there to sign up for the rates. If the underlying population group radically changes, rates will not reflect who is signing up. The lack of a subsidy will drive up the cost to each individual, making insurance unaffordable. This is unacceptable no matter what side of the aisle you’re on.

Someone has to step in quickly and resolve this issue. If there was ever a time to act in Washington, DC, this is the time. Either there are subsidies for all Americans, no matter what state they live in, or there should be no subsidies for any. This is a broad entitlement issue, not a political issue. 

Many of the states that didn’t establish state-run exchanges (and, thus, may lose access to subsidies) are “red” states, so any financial blow will fall disproportionately on conservatives. Democrats, meanwhile, want the president’s signature legislation to succeed. So, both sides have a significant reason for prompt resolution. 

Let’s get to it.

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About the Author

David Axene started Axene Health Partners in 2003 after a successful career at Ernst & Young and Milliman & Robertson. He is an internationally recognized health consultant and is recognized as a strategist and thought leader in the insurance industry.

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