House v. Burwell ruling: What it means for insurers, providers

A judge's ruling for the plaintiffs in House v. Burwell represents a setback for the Obama administration and a potential financial hit for health insurers. Yet that's not all at stake with such legal challenges to the ACA, Rita Numerof, Ph.D., president of healthcare strategy consulting firm Numerof & Associates, tells FierceHealthPayer.

In her decision Thursday, U.S. District Court Judge Rosemary M. Collyer sided with House Republicans, finding that because funds for the ACA's cost-sharing reductions program were never appropriated by Congress, the government's payments to insurers to cover the cost of low-income individuals' premium subsidies are illegal.

The Congressional Budget Office has estimated that from 2014 to 2024, the government will pay insurers about $175 billion to subsidize their ACA exchange customers' premiums. Collyer has stayed her ruling pending the Obama administration's expected appeal.

Regardless of how House v. Burwell unfolds, Numerof (right) says continued legal and political turbulence surrounding the ACA is likely to make insurers wary of continuing to participate in the individual market.

"This does create a lot more uncertainty for insurers because they have relied on subsidies paid for by the federal government to offset the costs of standing up the exchange products and getting coverage for people who have signed up, who often were not the healthiest in the population," she says. "So you have the limited payment for these people, on top of, in some cases, pretty serious health issues."

Citing financial losses, UnitedHealth and Humana have both indicated they will exit some ACA marketplaces, though other major insurers including Anthem,
and Aetna have indicated they will stay put, and in some cases, expand their presence. 

Cases like House v. Burwell also create uncertainty for healthcare delivery organizations, because the possibility of having to provide even more uncompensated care for patients could have an impact on bottom line of providers that are already feeling "quite a bit of pressure" related to healthcare reform, Numerof adds.

And with that uncertainty, providers will be less likely to enter into risk-bearing, innovative partnerships with insurers. "So the whole thing becomes a really negative spiral," she says.

America's Health Insurance Plans, however, does not yet appear concerned about the implications of the judge's ruling.

"There is a long judicial process ahead before a final decision is made. Our members' focus is and will remain on serving consumers--to ensure their coverage is protected and their healthcare choices are maintained," AHIP President and CEO Marilyn Tavenner said in a statement.

And the Obama administration characterized the development as yet another politically motivated attack on the ACA.

"It's unfortunate that Republicans have resorted to a taxpayer-funded lawsuit to refight a political fight that they keep losing," White House spokesman Josh Earnest said in a briefing with reporters Thursday. "They've been losing this fight for six years, and they'll lose it again."

To learn more:
- here's the AHIP statement
- check out the White House briefing

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