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AHIP To Supreme Court: Severability Critical

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Health insurance providers are reminding the Supreme Court that it would be impossible for them to provide unlimited coverage to consumers if the mandate for everyone to buy insurance—a key component to the Patient Protection and Affordable Care Act (PPACA)—is struck down.

A new brief jointly published by America’s Health Insurance Plans and the Blue Cross Blue Shield Association, says that certain insurance market reforms contained in PPACA “are inextricably linked” to the contentious “individual mandate” included in the larger reform package law that everyone must buy at least a minimal level of personal health insurance.

If the mandate is declared unconstitutional, the brief says, the Court must also move to exempt healthcare providers from meeting these coverage provisions of the law, the brief says.

These include such provisions as one that that requires health plans to offer health care coverage to any individual that applies for it; and a prohibition on excluding pre-existing medical conditions from coverage or imposing a waiting period before coverage is effective.

The brief says that other provisions in the law that must be struck down if the court holds the individual mandate unconstitutional include 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 (which sharply limits variations in rates based on age, rating areas, or tobacco usage).

AHIP and BCBSA submitted the brief in the case of National Federation of Independent Businesses, et al.,v. Kathleen Sebelius. The numbers of the three cases are 11-393, 11-398, and 11-400.

The three cases deal with efforts by opponents of PPACA who have challenged the law on several issues, but the critical one is whether an individual can be required to buy health insurance.

The brief supports reversal of the decision of the 11th Circuit Court of Appeals, based in Atlanta. This decision struck down the personal coverage requirement but maintained all of the insurance market reforms that were enacted as companions to the coverage requirement.

The brief said the two groups bring “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.

The brief said these experiences allow AHIP and BCBSA “to bring a uniquely informed voice to this Court on this issue.”

The brief said the writers are providing “compelling evidence” from a number of states that have enacted guarantee issue and community rating in the absence of a personal coverage requirement.

That experience shows “that such an approach results in higher premiums, coverage disruptions, and loss of choice for consumers.”

The brief cites a report by Milliman, Inc., which examined eight states that enacted various forms of guarantee issue and community rating mandates in the 1990s.

These include Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, New York, Vermont, and Washington. The Milliman study 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 brief says.

The Milliman 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,” the brief said.

The brief also contended that a “wide range” of experts have “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.”