Insurers prepare for worst-case scenario in Supreme Court ruling

As the Supreme Court will hear oral arguments on the healthcare reform law next week, the insurance industry has begun prepping for the worst-case scenario--a ruling that the individual mandate is unconstitutional, but insurers still must provide policies for all applicants.

In that situation, insurers say premiums will rise sharply because people with pre-existing conditions and chronic illnesses, for example, would buy health plans, but healthy people wouldn't. "The insurance reforms would have to change if the mandate were struck," Justine Handelman, vice president of legislative and regulatory policy for the Blue Cross and Blue Shield Association (BCBSA), told The Wall Street Journal.

To help avoid this doomsday scenario, America's Health Insurance Plans (AHIP) and BCBSA trade group filed an amicus brief with the Supreme Court, requesting it repeal certain patient protections if it determines the individual mandate is unconstitutional, the Minneapolis Star-Tribune reported.

Insurers point to eight states--Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, New York, Vermont and Washington--that required health plans cover all applicants but didn't implement an individual mandate to support their arguments.

In all of those states, "premiums skyrocketed, consumers had fewer choices and the number of uninsured went up," AHIP spokesman Robert Zirkelbach told The Connecticut Mirror.

But if the individual mandate is struck down and insurers still can't reject any applicants, insurance execs said they would turn their sights on Congress to persuade it to repeal the most detrimental parts of the reform law. Then they would lobby to able to set rewards for people who purchase insurance voluntarily while sanctioning those who don't, WSJ noted.

Additional contingencies that insurers may pursue include:

  • penalizing people for not enrolling during short annual windows
  • denying treatment for specific conditions immediately after a policy begins
  • rewarding certain customers by offering much lower premiums for younger and healthier people
  • expanding employers' role in automatically enrolling workers into plans
  • urging credit-rating companies to consider individuals' health insurance status when determining ratings

To learn more:
- read the Wall Street Journal article
- see the Connecticut Mirror article
- check out the Minneapolis Star-Tribune article