Industry files brief on issue of severability; Insurance market reforms and coverage requirement cannot be separated.

AHIP and BCBSA today filed an amicus brief in the U.S. Supreme Court stating that certain insurance market reforms in the Affordable Care Act (ACA) are inextricably linked to the law’s personal coverage requirement and have to be severed from the ACA if the Court finds the coverage requirement unconstitutional.

The brief supports reversal of the 11th Circuit Court of Appeals’ severability judgment which struck down the personal coverage requirement but maintained all of the insurance market reforms that were enacted as companions to the coverage requirement.

The AHIP-BCBSA brief is limited to the issue of severability in the event the Court finds the coverage requirement to be unconstitutional. AHIP’s and BCBSA’s extensive, first-hand, and on-the-ground experience with health insurance markets, as well as their direct experience with earlier failed state efforts to implement certain insurance market reforms without a personal coverage requirement, allow them to bring a uniquely informed voice to this Court on this issue.

The brief addresses only the insurance-market reform provisions with which AHIP and BCBSA have direct experience at the state level. Based on that expertise, the brief states that, at a minimum, the following ACA insurance-market reforms cannot function as Congress intended without the coverage requirement and therefore must be severed if the coverage requirement is found to be unconstitutional:

  • A guarantee issue provision that requires health plans to offer health care coverage to any individual that applies for it;
  • A prohibition on excluding pre-existing medical conditions from coverage or imposing a waiting period before coverage is effective;
  • A prohibition on the establishment of coverage eligibility rules that are based on health status related factors; and
  • The required use of an adjusted community rating system that prevents health plans from setting premium prices based on an individual applicant’s medical history and that sharply limits variations in rates based on age, rating areas, or tobacco usage.

The brief does not address the constitutionality of the coverage requirement, or any other constitutional, procedural or severability questions that are outside of AHIP’s and BCBSA’s unique expertise in the health insurance markets.

The brief is intended to serve as a resource to deepen the Court’s understanding of the real-world economic implications for consumers of delinking major provisions of the law that were widely understood to be companion solutions as the nation debated health care reform.

The brief cites compelling evidence from a number of states that have enacted guarantee issue and community rating in the absence of a personal coverage requirement, to show that such an approach results in higher premiums, coverage disruptions, and loss of choice for consumers.

A report by Milliman, Inc. examining eight states that enacted various forms of guarantee issue (GI) and community rating (CR) in the 1990’s, including Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, New York, Vermont, and Washington found that “Although results varied widely among the eight states, in general we found that, measured in terms of market size, level of premiums, and availability of insurance options, individual insurance markets deteriorated after the introduction of GI and CR reforms.”

The report further noted that “Enrollment in individual insurance also tended to decrease, and premium rates tended to increase, sometimes dramatically. We also did not observe any significant decrease in the number of uninsured persons following the enactment of these market reforms.”

A wide range of experts has consistently agreed that enacting guarantee issue and community rating has severe unintended consequences unless they are paired with a strong commitment to achieve universal coverage through an effective and enforced personal coverage requirement.

Additional Resources:

Do Individual Mandates Matter? Timely Analysis of Immediate Health Policy Issues 2 (by Linda Blumberg & John Holahan)

The High Concentration of U.S. Health Care Expenditures, Research in Action, Issue 19, Agency for Healthcare Research and Quality Publication No. 06-0060 (by Mark Stanton)

Health Care Costs: A Primer (by Kaiser Family Foundation)

Individual Mandate: A Background Report (by Lucien Wulsin Jr. & Adam Dougherty)

The Case for Mandating Health Insurance (New York Times by Uwe E. Reinhardt)

Reform Options for Maine’s Individual Health Insurance Market: An Analysis Prepared for the Bureau of Insurance 5 (by B. Gorman)

Maine Bureau of Insurance, White Paper:  Maine’s Individual Health Insurance Market 4 (by the Maine Bureau of Insurance)

On the Road to Universal Coverage:  Impact of Reform In Massachusetts At One Year, Health Affairs, w270 (by S.K. Long)

Massachusetts Health Reform Implementation: Major Progress and Future Challenges, Health Affairs (by John E. McDonough)

Indiana Program Shows Health Reform Without Individual Mandate Is Costly (HealthLeaders Media by Les Masterson)

This entry was posted in ACA, AHIP, AHIP Studies and Reports, Issue Alert and tagged , , . Bookmark the permalink.

Comments are closed.