TPG’s Healthcare Review: June, 2015
“King v. Burwell”
Welcome to the Second Quarter edition of TPG’s Healthcare Review, a forum to keep our current clients, prospective clients, and candidates apprised of the ever-changing landscape of healthcare in a post-reform world. Now that the Employer Mandate of the Patient Protection and Affordable Care Act of 2010 (PPACA) is in place, we will publish this newsletter on a quarterly basis. We thank you for your interest, and welcome your comments and questions throughout the year.
The biggest news of the second quarter was today’s (6/25/15) ruling by the Supreme Court to uphold the nationwide tax subsidies paid to individuals through the federal website, Healthcare.gov. The focus of the King vs. Burwell case was on PPACA’s requirement that the subsidies for individuals would be available through healthcare exchanges “established by the states.” Since the implementation of the law on January 1, 2014, subsidies were available through both state run exchanges as well as the federal exchange.
The Justices said in a 6-3 ruling that the subsidies that 8.7 million people currently receive to make insurance affordable do not depend on where they live. Recent polling suggested that most Americans did not want to see the subsidies halted as a result of “a technicality.” It was anticipated that a ruling against the subsidies would have gutted the healthcare law and would have forced a review of the most significant piece of domestic legislation of the Obama era.
“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” Chief Justice Roberts wrote in the majority opinion. Nationally, 10.2 million people have signed up for health insurance under the Obama health overhaul. That includes the 8.7 million people who are receiving an average subsidy of $272 a month to help pay their insurance premiums. Of those receiving subsidies, 6.4 million people were at risk of losing that aid because they live in states that did not set up their own health insurance exchanges.
There are additional court challenges which focus on various aspects of the healthcare law, however most felt that this case was opponents’ best shot at reopening the law for revision. With 2016 as an election year, opponents will certainly shift their strategy to the selection of our next President.
The secondary focus revolving around PPACA in the second quarter of 2015 was the concern of rate increases for health insurance plans for next year. During the first two years of the implementation of the healthcare law, insurance premiums for health plans sold through the exchanges have remained relatively flat. During the second quarter, many insurance companies have filed double digit rate increase requests with the respective state insurance commissions.
As of the end of June, rate increase requests have been filed in 36 states and include increase requests in ranges from 10 percent to as high as 60 percent. United Healthcare has requested an increase of 18 percent on their plans in Florida while Blue Cross and Blue Shield have requested an increase of 26 percent in North Carolina.
These insurers may not actually receive the large increases they have requested as regulators in each state will attempt to negotiate lower rates with the carriers, but experts agree that you can expect to see increases in excess of ten percent in many areas of the country.
Now that the insurance industry is getting solid data as to who actually enrolled in the ACA healthcare plans, they have discovered that the individuals have turned out to be older and less healthy than originally anticipated. Medical costs, especially prescription drug prices, continue to rise and combined with increased usage, insurers have requested the rate increases to keep their coverage costs aligned. More to come …
In our September newsletter, we will focus on the plans which impact our marketplace, including the TPG Healthcare Plan for 2016. Many of our clients have saved significant dollars by choosing the TPG “pay as you go” option. This program allowed the clients that chose the option to only pay for the actual insurance coverage purchased for employees rather than an across the board mark-up increase. Participation rates have been averaging around 20% of eligible employees, so costs have been less than expected. Please call us or check our website at tpgworks.com if you have any questions or would like to learn more about our program.
At The Performance Group, we will do our best to keep you informed of any changes in PPACA which could impact your business/employment. Please have a safe and happy Independence Day holiday and the rest of the summer. Thank you for your continued interest in the TPG Healthcare Review.
Thomas E. Readdy
President
The Performance Group
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