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Monday, May 25, 2015

Ind. Gov't. - "Loss of Obamacare subsidies could be dire"

That was the headline to a column this weekend in the Indianapolis Star, by John Ketzenberger. A few quotes:

You would think contingency plans are being readied as we await the Supreme Court’s decision, expected next month.

You would be wrong.

And the consequences reach far beyond those who might lose their subsidies. Many experts think the entire health insurance market could go into a death spiral if the Supreme Court determines the subsidies are illegal. * * *

The Supreme Court’s decision carries high stakes, according to a white paper produced by Gregory and Appel, a large local insurance agency. The decision “could do real damage — even kill the ACA over time and change how health care is paid for in the country,” according to the paper, authored by Gregory and Appel’s Susan Rider and Karl Ahlrichs.

“If those individuals lost access to subsidies, the cost of coverage would be unaffordable for the vast majority of them,” the paper determined. “A subsidy shutdown could result in 9 million fewer people with coverage by 2016, a 70 percent decline. The resulting adverse selection caused by healthy people leaving the risk pool would spike insurance premiums in the individual market.”

That’s the market beyond those who receive subsidies, so those who currently can afford insurance would soon find that’s not the case anymore. If this happens, health insurers like Indianapolis-based Anthem would have a smaller base over which to spread costs, which means rates for group plans provided through employers likely would spike, too.

“The loss of a healthier risk pool would create unprecedented premium price growth and insurers leaving the marketplace would create an even more uncompetitive insurance market,” the Appel paper observed. “The industry would be in a ‘death spiral.’” * * *

Indiana joined several other states in asking the Supreme Court to eliminate the subsidies. What we don’t know is what they’ll do if the court gives them what they want.

For background, see this ILB post from March 4, 2015, headed "Indiana urges high court to terminate Hoosiers health insurance subsidies," quoting a NWI Times story that began: "Gov. Mike Pence and Attorney General Greg Zoeller are asking the U.S. Supreme Court to effectively cancel the private health insurance policies of more than 100,000 Hoosiers by the end of June."

Posted by Marcia Oddi on May 25, 2015 04:03 PM
Posted to Indiana Government