House v. Burwell: What it means for insurers if the plaintiffs win

If the plaintiffs prevail in the challenge to the Affordable Care Act's cost-sharing reductions, House v. Burwell, it could cause significant disruption to the ACA's non-group insurance marketplaces, according to a new report from the Urban Institute.

In the case, the U.S. House of Representatives claims that Congress never approved the ACA's payments to health insurers that are then passed on to individual enrollees to make coverae more affordable.

The effect of a ruling for the plaintiffs would depend on the timing and notice provided to insurers, according to the Urban Institute. If insurers don't receive enough notice, it would cause an almost-catastrophic chain reaction that would culminate in massive disruption for all marketplace insurance enrollees, the report says. 

On the other hand, if the courts find for the plaintiff but provide insurers sufficient time to modify their marketplace premiums through the review process, insurers could be forced to "increase their silver plan premiums to absorb the costs associated with providing eligible low-income enrollees with coverage meeting the actuarial value standards specified in the ACA." However, the report says, financing the cost-sharing reductions through a silver marketplace premium surcharge would still "allow those eligible for tax credits to continue to purchase coverage of equal or higher value than they would if the government directly financed the cost-sharing assistance."

In addition, the report adds, the constant threats of litigation and uncertainty around marketplace policies could affect whether private insurers want to continue participation in the marketplace. Insurers could begin pulling out of certain marketplaces because that uncertainty limits their ability to predict premiums in order to make a sufficient return.

To learn more:
- here is the Urban Institute report

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