The Supreme Court’s decision to preserve the Affordable Care Act will likely have a ripple effect by increasing opportunities for insurers to enter the law’s exchanges, several experts said.
But now attention will turn to whether Congress will make permanent enhanced tax credits that are set to expire after 2022.
The court’s 7-2 decision Thursday to strike down a lawsuit from more than a dozen red states removed a specter of instability that has been hanging over the exchanges for the past several years.
“This does provide blue skies ahead for the exchanges,” said Massey Whorley, a principal at the consulting firm Avalere Health, in an interview with Fierce Healthcare. “The Supreme Court ruling yesterday provided a lengthy runway for the exchanges and the ACA writ large to be implemented and carried out to its fullest extent by the Biden administration.”
Plans are currently thinking about their rates for the 2022 coverage year and deciding whether to jump into the exchanges.
“The Supreme Court yesterday gave the green light for any plans thinking of entering in 2022,” Whorley said.
The ACA exchanges have been enjoying more participation in recent years after several companies exited due to financial losses in 2015 and 2016. The losses stemmed from insurers pricing plans too low and a sicker-than-expected population signing up for insurance.
But those companies are starting to find their way back as premiums for the exchanges have stabilized. An analysis from the Kaiser Family Foundation found that 30 insurers joined the individual market for the 2021 plan year and another 61 insurers expanded their footprint.
One of those companies is Aetna, which said during its most recent earnings call that it will reenter the exchanges in 2022 in eight states. The company told Fierce Healthcare Thursday that it looks forward to “bringing innovative solutions and more options to the marketplace.”
Aetna’s decision has been in the works for some time as it is hoping to leverage the distribution it can get from the CVS pharmacies, said Stefon Kahandaliyanage, assistant vice president and an analyst for Moody’s, in an interview with Fierce Healthcare.
Combining its distribution reach alongside a steady ACA could help provide a tailwind for the company, he added.
The end of the lawsuit likely will ensure that rates on the exchanges will remain stable for the next couple of years, according to a statement from Dave Dillon, a fellow of the Society of Actuaries.
The upcoming 2022 coverage year rates will likely go up or down by 5%, “taking into account normal annual medical inflation,” Dillon said.
Other factors for the rates will be the pent-up demand for healthcare services stemming from the COVID-19 pandemic and enhanced subsidies passed as part of the American Rescue Plan Act that will expire after 2022.
Those enhanced tax subsidies will be the next area to focus on regarding the ACA as the Biden administration and Democrats battle to make the boost permanent. President Biden’s massive infrastructure proposal included making the tax credit increase permanent, but it remains unclear if it will make the final package passed by Congress.
But experts say that politically there could be a lot of pressure on lawmakers to extend the subsidy boost and avoid a cliff that would raise premiums in 2023.
“It is a very winning political issue to enhance subsidies and increase membership, especially now that the ACA has been implemented for seven years now,” said Dean Ungar, vice president and senior credit officer for Moody’s.