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On the Third Hand: Sky

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It’s fair to say that I’m excitable. I’ve seen about 999 of the last two recessions coming.

Lately, what’s made me nervous (aside from the economy, the drought in California, and discovering that other people are waiting in line behind me to rinse their own coffee cups in the office sink) are the general lack of free public data on the 2014 claim experience and the idea that the uncertainty surrounding the King vs. Burwell U.S. Supreme Court case could kill off the individual health insurance market in 2016, by making pricing 2016 products correctly impossible.

Today, I had a calming conversation with Steve Zaharuk, a senior vice president at Moody’s Investors Service.

Of course, people who have the money to pay to look in the insurance company financial filing databases (example: senior vice presidents at Moody’s) have seen plenty of health insurance experience data for the first three quarters of 2014. He’s also starting to see full-year data.

He hasn’t looked at data for many of the smaller companies, and even he has a hard time distinguishing the performance of public exchange plans from other types of coverage, or the performance of individual policies subject to the Patient Protection and Affordable Care Act (PPACA) and blocks of grandmothered and grandfathered business.

He suspects that some smaller carriers will report ugly earnings.

But, for the most part, the 2014 individual health insurance results seem to be strong enough, and the big carriers diverse enough, that it looks as if the health insurance industry as a whole will take a catastrophic hit, Zaharuk said. 

On the one hand, in theory, he says, if the Supreme Court ruled against the ability of the Obama administration to offer exchange plan subsidies through the public exchanges established by the U.S. Department of Health and Human Services (HHS), and insurers had to comply with all of the PPACA underwriting restrictions, and the Supreme Court decision took effect immediately, or even in 2016, and no one made any adjustments in the other PPACA rules, such as 2016 rate filing deadlines, the King vs. Burwell decisions could wipe out some states’ individual health insurance markets.

On the other hand, Zaharuk believes that, in the real world, the top executives and lobbyists in the insurance industry are confident that policymakers in Washington recognize the problem and will find ways to buffer insurance companies against the effects of a ruling against availability of the tax credit through the HHS-run exchanges, both in the remainder of 2015 and in 2016.

Whatever happens with the King vs. Burwell case, “either way, we’ll still have insurance,” Zaharuk says.

On the third hand: It would be comforting if the Supreme Court, members of Congress, and Obama administration officials could come together and openly agree to give the individual health insurance market a soft landing at least through the end of 2016.

It seems as if, whatever policymakers across the political spectrum want to do about improving the U.S. health finance system, playing chicken with the health coverage of the working poor is not first step.


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