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Will King vs. Burwell kill the 2016 individual health market?

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A 2016 major medical plan filing timeline notice from Florida shows how U.S. Supreme Court deliberations on King vs. Burwell (Case Number 14-114) could paralyze the individual markets in some states next year.

The court heard oral arguments about the case, which relates to whether Patient Protection and Affordable Care Act (PPACA) public exchanges established by the U.S. Department of Health and Human Services (HHS) can offer PPACA premium tax credits, March 4. The court often waits until late June to issue rulings on complicated, controversial cases.

Because about three-quarters of exchange plan enrollees are using PPACA tax credits to pay for coverage, and the exchanges now dominate many states’ individual major medical markets, a ruling against the HHS exchange tax credits could cause individual exchange plan enrollment to plummet, and increase the percentage of enrollees who have serious health problems.

Decreased access to subsidized individual coverage could also throw off actuarial projections for off-exchange plans, and even for small group plans, if loss of access to affordable individual coverage increases the percentage of workers at small employers who take up employer-sponsored coverage.

Justice Samuel Alito suggested during oral arguments that the court could stay the effects of a ruling against the HHS exchange tax credits until the end of the year, but insurers are already trying to put the finishing touches on rates for 2016.

HHS itself requires carriers in states in which CMS handles rate reviews to submit rate and form filings for 2016 individual and small-group coverage to the Centers for Medicare & Medicaid Services (CMS), an arm of HHS, by May 15, 2015.

“This federal deadline is applicable for products sold both on and off the exchange,” officials in the Florida Office of Insurance Regulation say.

Florida does have what CMS classifies as an effective rate review program. It’s not clear whether the May 15 filing deadline applies in Florida, but Florida must complete reviews of any filings that include a private exchange plan, or qualified health plan (QHP), by Aug. 25, 2015, which could be just seven or eight weeks after the Supreme Court rules on King vs. Burwell. Officials have until Oct. 9, 2015, to sign off on filings that do not include a QHP.

Because of a change in Florida law, Florida regulators must perform a full rate review for all PPACA-compliant products. Last year, regulators could review rates for PPACA-compliant products on an information-only basis, officials say.

The conflict between the rate filing system and the typical Supreme Court deliberation process means that a health insurer may have to set 2016 rates with little or no access to important information about how the individual market, and, possibly, the small-group market, will work in 2016.

Meanwhile, it’s still not clear whether insurers will have seen how CMS operates the PPACA “three R’s” risk-management programs — a temporary reinsurance program, a risk corridors underwriting margin buffer program, and a permanent risk-adjustment program — in action by the time the court issues its ruling and rate filings are due.