ACA uncertainty sends Tennessee official to DC to testify

The future of health insurance premiums on the federally run marketplace is rife with uncertainty, and Tennessee's insurance commissioner is headed to Washington, D.C., to talk about it.

Insurers are beginning to get a view into how people who buy insurance on the exchange use insurance, but a U.S. Supreme Court case set to be decided in the coming days could throw the nascent system into disarray.

The plaintiffs in King vs. Burwell contend that language in the Affordable Care Act means tax credits, which make health insurance affordable for millions, are available only on state-run exchanges. That means that without action from the U.S. Congress or state governments, tax credits could no longer be available in more than two-thirds of the country where state-run exchanges don't exist, including Tennessee.

"It's going to be kind of messy if it goes the way of King," said Paul Keckley, managing director and leader of Navigant Center for Healthcare Research and Policy Analysis.

Julie Mix McPeak, commissioner of the Tennessee Department of Commerce and Insurance, will testify Wednesday about the Affordable Care Act and health insurance premiums before the House Committee on Ways and Means Subcommittee on Oversight.

McPeak will be joined by Al Redmer Jr., commissioner of the Maryland Insurance Administration, and Mike Kreidler, Washington State Insurance Commissioner, as well as Seth Chandler, insurance law professor at the University of Houston. The hearing will be at 9 a.m.

Insurance rates on the federal marketplace are just getting to a point where there is enough data to forecast the costs of the insured. Insurers initially wrote policies without knowing who would sign up and how much care they would need.

Filings from health insurers point to higher premiums for 2016 — no matter the outcome of the King vs. Burwell case in the U.S. Supreme Court.

People enrolled on the federally run exchange racked up more claims and costs than expected. Community Health Alliance had a net loss of $22 million at the end of 2014; BlueCross BlueShield of Tennessee had a $141 million loss.

In Tennessee insurers have filed for rate increases on nearly all of the plans offered on the federally run exchange. The average percent rate increases in the state range from 0.9 to 36.3 percent.

The increases on Silver plans — the medium plan level often used as a benchmark for ACA coverage — for 2016 is 10 to 12 percent nationally, according to Keckley.

But the ruling from the judiciary branch could send rates higher.

'We don't need more uncertainty'

King vs. Burwell is a challenge to the government's interpretation of four words in the Affordable Care Act. Right now, tax credits, which make health insurance affordable for more than 155,000 Tennesseans and 6.4 million Americans, are available on both federally and state-run exchanges.

Premiums are determined by the risk associated with all those insured. If fewer people are able to afford insurance because the tax credit goes away, then the reduced number of people remaining in the insurance pool will have to pay larger premiums.

"I think if the court rules against King, that trend (higher rates) will stay in place. If they rule for King, I think that's the baseline. Then you add another 5 to 10 percent depending on what state you're in," Keckley said.

Health insurers have been modeling various scenarios depending on the Supreme Court outcome for months, said Keckley, adding his team has fielded questions from actuaries.

Tennessee is one of 34 states that opted to let the federal government run an exchange and is vulnerable to reverberations from the ruling.

The insurers offering plans in Tennessee "foresee major market disruption without Congressional action should the court rule against the administration," according to a statement from the state's commerce and insurance department.

The Tennessee Department of Commerce and Insurance has an August deadline to approve rates for 2016, so a ruling against the government leaves ample time for insurers to file amendments for additional rate increases.

"Several carriers have suggested the need for massive rate increases for 2016, if the Supreme Court rules against the administration and Congress does not take action," according to the TDCI statement.

The U.S. Congress and Tennessee Gov. Bill Haslam's administration will be under pressure from people who receive tax credits, as well doctors and hospitals, if tax credits are thrown into jeopardy.

"There's a big question: 'Will they create more uncertainty?' I hope they don't. We don't need more uncertainty. If they do, hopefully there would be bipartisan efforts to bring stability," Jerry Burgess, CEO of Community Health Alliance, told The Tennesseanin May. "My way of thinking is there are several hundred thousands of people and it's our and the elected officials' job to keep it sustainable and affordable."