The U.S. Supreme Court freed health insurance industry players who want to get a few days off in July from having to cancel their vacations to try to restructure the U.S. commercial health insurance market, for the second time in five years.
The court’s 6-3 ruling in King v. Burwell (Case Number 14-114) means that public exchange managers, private exchange managers, health insurers, regulators, agents, brokers, providers, patients and other parties can continue paddling their kayaks down the health policy river created by the Patient Protection and Affordable Care Act of 2010 (PPACA).
Read: PPACA: A History
The court held that the PPACA public exchanges established by the U.S. Department of Health and Human Services (HHS), rather than by the states, can continue to offer the PPACA premium subsidy tax credit, even though the court acknowledged that the text of PPACA does not clearly say whether the HHS exchanges can offer the subsidy.
The decision will keep a sudden withdrawal of premium subsidy support from throwing off the actuarial assumptions health insurers used to set individual health rates for 2015, and are now using to set rates for 2016.
But the PPACA exchange system still faces many other charted and uncharted obstacles. For a look at some of the obstacles that could still overturn the kayaks, read on.
1. Small Business Health Options Program (SHOP) exchanges
Even officials at HHS sound somewhat skeptical about the future of the PPACA exchange system’s small-group division.
Lawmakers in Minnesota, a state generally viewed as one that supports its state-based exchange, provided funding for the exchange but is requiring the exchange to seek HHS permission to let small businesses in the state qualify for the PPACA small-group coverage tax credit using off-exchange coverage.
The same PPACA underwriting and product standardization requirements that, in theory, should help the SHOP exchange system sell group coverage through Web-based shopping systems are helping managers of private exchange systems do more and attract more employers and insurers.
2. Operational funding
PPACA requires a public exchange to find ways to support itself, without help from federal tax money, after one year of operation. The exchange can get that money by imposing fees on users, drawing on tax money from its state, or using just about any other legal mechanism that the state will allow.
Some states with state-based exchanges have decided that, however much they like the idea of offering a state-based exchange, they hate paying for running an exchange, or they are unable to handle the technical and management demands involved with running a successful exchange.
Several states, including Hawaii and Oregon, have given up on running their own exchange enrollment and administration systems and have asked HHS to take over providing exchange services for their residents.
3. Consumer and provider acceptance
Health policy groups have published survey data showing that many consumers like having exchange coverage and report having a good level of access to care.
Hospital companies have put significant political muscle into backing PPACA.
But many agents and brokers say they have anecdotal evidence that users of the exchanges and exchange plans continue to face many glitches.
The exchanges with Yelp entries often have low ratings. Covered California, for example, has 213 Yelp reviews and a one-star rating on a five-star rating system.
The most recent post at press time came from a user who said she lives in Torrance, Calif.
She said her parents applied for coverage in January and have received no help with straightening out the application problems. “Literally, there’s NO ONE who can help from their end,” the user says.
4. Plan menu stability
A unit of HHS is preparing to tell health insurers what they will get for individual plan members who had huge bills in 2014 from the PPACA reinsurance program.
Insurers are supposed to use that money to file reports for another program, the risk corridors lifeboat program, which is supposed to use money from health insurers that did well in 2014 to help insurers that did poorly that year.
Knowing what the 2014 reinsurance and risk corridors programs accounting will be for 2014 would have been helpful for 2014 and was critical for 2015 and 2016. But insurers had no information at all about how those programs worked when they filed their 2015 rates, and they had no information about program accounting in May, when they were supposed to file their 2016 rates.
Assurant Inc. (NYSE:AIZ) has already announced that it plans to take its health insurance companies out of the public exchange market in 2016 and shut them down.
Oregon regulators are so worried about rate adequacy in their market that they have ordered six carriers to charge more for coverage than they had originally proposed.
5. PPACA Section 1332 state innovation waivers
PPACA itself contains a provision that could contain the seeds of exchange system destruction in some states: the Section 1332 Waiver for State Innovation provision.
The provision lets states get permission from HHS to change commercial health insurance market rules and exchange programs.
States face tight restrictions on that ability. They can’t propose changes that would reduce the enrollees’ benefits, allow for medical underwriting or increase federal spending.
But states may be able to use the waiver system to, for example, shift to letting consumers use national health insurance sales sites, rather than the PPACA public exchange system, to get premium tax credit money.