Obamacare supporters and much of the health-care industry is alarmed at the Trump administration’s announcement that it wouldn’t defend requirements that health insurers sell policies to people with medical problems without charging them more.
But some health insurers could benefit from striking down the guaranteed issue and community rating provisions of the Affordable Care Act, if the courts agreed with the Department of Justice and 20 states that are challenging the constitutionality of the law.
The ACA guarantees issuance of coverage in the individual and group market to everyone, regardless of medical conditions, and it prohibits discriminatory premium rates for people with pre-existing conditions, conditions known as guaranteed issue and community rating.
UnitedHealth Group Inc., the largest health insurer in the U.S. and one of the top sellers of short-term health plans that don’t comply with the ACA, “in particular would probably do well because they are significant in the short-term plan space, and therefore they have the medically underwritten products that they could at least use in those states that go back to a pre-ACA regulatory structure,” BMO Capital Markets health-care analyst Matthew Borsch told me.
UnitedHealth didn’t respond to my request for a comment on the issue.
Borsch doesn’t think it likely that the plaintiffs will prevail in the case. The Supreme Court in a landmark 2012 ruling found the law’s provision requiring people to buy health insurance or pay a penalty was constitutional under Congress’ taxing authority, and since then it has become harder to overturn the law as more people have gotten coverage under it.
But if the courts did overturn guaranteed issue and community rating provisions, states would still have authority to regulate in those areas, Borsch said. As an example, California, a liberal state that didn’t have the requirements in its individual market prior to the ACA, would likely adopt them, he said.
Dave Dillon, vice president and principal in the Dallas office of actuarial consulting firm Lewis & Ellis Inc., told me that some health insurers may take advantage of being able to underwrite enrollees if guaranteed issue and community rating provisions are struck down.
“If these provisions go away, the ACA markets would be more like the pre-ACA market,” said Dillon, a fellow with the Society of Actuaries. Younger people would benefit from the resulting lower premiums, he said.
But, Dillon said, some carriers “might still want to have a larger population because of the premium subsidies.” Under the ACA, people with incomes between 100 percent and 400 percent of the poverty level qualify for subsidies to help pay premiums.
Read my article here.
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