Potential Consequences of King V. Burwell
More than 472,000 Pennsylvanians have enrolled in health insurance plans through the federally-facilitated Health Insurance Marketplace—80 percent of whom are relying on an average monthly premium tax credit of $226 to afford their health coverage—and would be impacted by an adverse decision.
More than 51 percent of enrollees are depending on tax credits to obtain coverage for $100 or less during 2015. Additionally, individuals buying health insurance for their families on the individual market would see disruptions and cost increases.
- Individuals and families could lose their coverage because they no longer are able to afford their premium payments or their plan is terminated
- Pennsylvanians could be forced to switch plans because their coverage has been disrupted or is too expensive
- All individuals who purchase health insurance through the marketplace or on the individual market could see premium increases of 35 to 50 percent
- Families could have to make undesirable decisions in prioritizing their health care needs
- Disruptions in continuous coverage and the continuity of care could result in bad health outcomes
If individuals lose access to affordable health insurance, Pennsylvania health care providers will see an increase in uncompensated care. During fiscal year 2013 alone, Pennsylvania’s hospitals provided more than $1 billion in uncompensated care.
With the expectation that the uninsured rate will continue to decline, Pennsylvania hospitals are anticipating $86 million in cuts to Medicare disproportionate share hospital (DSH) payments for 2015, and a total of $1.6 billion from 2015–2024, as well as cuts to Medicaid DSH payments from federal fiscal year 2018 through 2025.
- Hospitals will dedicate additional charity care resources to assist individuals who can’t afford to maintain their coverage if premium tax credits are denied
- Hospitals will absorb the cost of caring for individuals during the intervening period when they no longer can afford their insurance premiums and ultimately lose their insurance because of non-payment
- Bad debt expenses will increase as Pennsylvanian’s struggle with the affordability of their coverage and health care expenses, and in particular for individuals who are only able to afford premiums but unable to pay deductibles or copays for services
Enormous disruption in the insurance market will impact insurers and their covered lives. The marketplace in Pennsylvania includes 15 insurance issuers, and provides an option for consumers to choose from an average of 50 health plans per county.
- Insurers could be forced to seek to terminate plans completely
- Rating disruptions will destabilize actuarial assumptions and increase costs
- New market dynamics—reduced covered lives and pool of future enrollees—will not support the required insurance protections of guaranteed issue, community rating, and risk adjustment
- The enormous potential for adverse selection will disrupt the insurance pool
- Savings generated through continuous coverage and the continuity of care will not be accrued
- Insurers could be forced to seek large rate increases during 2016, which will further impact and distort the insurance market
Statement of Principles
Expand Access to Care
- Reduce the number of uninsured Pennsylvanians
- Ensure all Pennsylvanians have access to affordable health insurance coverage
- Support low- and moderate-income families in securing comprehensive coverage and affordable care
- Promote continuous coverage and the continuity of care to achieve the best possible health outcomes and reduce health care costs
Fair and competitive market for health insurance that affords access to a robust health delivery system
- Offer competitive products to individuals and small businesses that have had difficulty accessing affordable health insurance coverage
- Provide a choice of plans offering different benefit levels at competitive rates and actual access to adequate networks of health care providers
- Allow health care providers—hospitals, physicians, and other providers—to freely negotiate with insurers to ensure competitive reimbursement rates
- Support new delivery of care models
Health Insurance Marketplace Features
- Provide a source of information for consumers that allows meaningful comparison of plans
- Facilitate enrollment in the appropriate health insurance plan
- Sustainable structure that promotes and supports continuous coverage and continuity of care
In the context of a U.S. Supreme Court ruling against providing tax credits to low-income families in states utilizing a federally facilitated marketplace, we would support Congressional action to correct the language so the support would be available to the working Pennsylvanians who need it in order to afford adequate insurance coverage.
None of the current policy discussions fulfill the principles above in addressing the ranks of the uninsured to the same extent as the structure provided by the Affordable Care Act.