As health insurance exchange enrollment enters Round Two, a cloud of uncertainty is once again forming over the Affordable Care Act. Earlier this month, the U.S. Supreme Court agreed to hear King vs. Burwell, the latest in a string of legal challenges aimed at the controversial law. At issue this time is whether the federal government can distribute tax credits to middle- and lower-income consumers in states with federally facilitated health insurance exchanges, making coverage purchased through those exchanges more affordable.
I won't attempt to explain the legalities of the case here, other than to say this: Unlike the last SCOTUS challenge examining the ACA's individual mandate and requirements around Medicaid expansion, King vs. Burwell hangs on a technicality, not a constitutionality. Some healthcare pundits and Washington politicos have pointed to this fact as reason the case, even if struck down by the Supreme Court, will likely not dismantle the ACA. So, why worry?
A roomful of healthcare executives in Nashville, Tenn., however, are worried. Nashville is home to some of the nation's largest for-profit healthcare companies, including hospital heavyweights HCA and Community Health Systems, as well as more than 250 other companies whose fortunes hang in the ACA balance. It's been an uncertain balance going on five years now, making it difficult for companies to put together long-term business plans.
Last week, Nashville healthcare leaders gathered at a Nashville Health Care Council luncheon to ponder the evolving post-ACA landscape. And while most agree that the law is too far out of the gate to be struck down by the Supreme Court or repealed by a Republican-in-waiting Congress, they worry the specter of uncertainty created by such developments could scare off profits. And while the ACA is public policy, it can't survive without private-sector support.
Take BlueCross BlueShield of Tennessee, which captured 88 percent of Tennessee's exchange enrollment many of whom were older and sicker than the insurer had predicted for 2014. With claims outweighing premiums, BCBS of Tennessee is one of many Blue plans nationwide raising their exchange premiums for 2015. Even then, it's largely a guessing game, said Jim Srite, senior vice president and chief actuary for BCBS of Tennessee. Srite pointed out that he'll be working to set 2016 rates in June 2015, even though full results from 2014 won't be available until August.
For reasons like this, Srite says he won't factor in a SCOTUS ruling on tax credits in exchange plan rates. Either the credits will be upheld or the federal government will come up with some sort of workaround, he says. Charles Kahn, president and CEO of the Federation of American Hospitals, isn't so certain. Kahn represents investor-owned hospitals, which are spending billions of dollars to realign their business models around quality measures prescribed by the ACA quality measures that providers aren't yet convinced actually demonstrate value. And while Kahn firmly believes the ACA is here to stay, he says the Supreme Court's decision to hear King vs. Burwell put the law on as much of a bubble as earlier challenges around the individual mandate and Medicaid expansion.
Furthermore, the Court is expected to hand down a ruling on insurance tax credits, next June around the same time that a Republican-controlled Congress likely will be in the midst of federal budget reconciliations. Even if the Supreme Court rules that tax credits in states with federally facilitated health insurance exchanges are legal, the credits could become easy targets for budget cuts. That extends uncertainty over the ACA even further, into the 2016 exchange enrollment period. While insurers were willing to take a loss during the first year of exchange enrollment, those losses can't be sustained over Years Two and Three.
Benjamin Franklin famously said that nothing in this world is certain, except death and taxes. While a SCOTUS ruling against issuing tax credits in states with federally run exchanges likely will not spell the death of the ACA, the uncertainty it breeds doesn't bode well for the ACA's commercial success.
Follow April Wortham Collins on Twitter at @aprilworthamDRG