Tracking the Uncertainty of the 2016 ACA Health Insurance Rates

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Health insurers have begun submitting their proposals for approval of next year’s health insurance rates. For hundreds of Affordable Care Act (ACA) plans, the proposed rates are up by more than 10 percent with insurers seeking increases of upwards of 49 percent for some products. Insurers have cited to increases in drug costs and the receipt of more accurate data on their insureds in support of the proposed rates. Between now and October 2015, when the final rates are published, federal and state regulators will review the proposed rates. The influence of the state and federal regulators in this area varies by jurisdiction with some states having the ability to approve or reject proposed rates while others, including the federal government, lack any formal power and may only use publicity or other similar means to influence rates.

If the higher rates are adopted, the question is whether they will have a significant impact on insureds. Many insureds under ACA plans receive subsidies to help pay the plan premiums. However, whether these subsidies continue for those on the federal exchange will turn on how the Supreme Court rules in King v. Burwell. Petitioners in that case argue that the language of the ACA limits those subsidies to state-based exchanges and are not applicable in the federal exchange. However, fewer than 20 states (including the District of Columbia) have their own exchange. As such, the vast majority of those covered under the ACA are in the federal exchange and could lose those subsidies if the court agrees with the petitioner. The decision in this case is due by the end of June 2015 and Goldberg Segalla will continue to monitor developments in this area.

In anticipation of the Burwell decision, and a possible ruling limiting the subsidies to state-based exchanges, the governor of Pennsylvania, Governor Tom Wolf, announced on Tuesday, June 2, 2015 that Pennsylvania has applied to the Federal Government to set up its own state-based exchange. This effort was taken to ensure that residents of the state can continue to receive the subsidies regardless of the Supreme Court’s ruling.