Will the New ACA Lawsuit Wreak Havoc on Healthcare?

Leigh Page

Disclosures

September 05, 2018

In This Article

The Effect on Rate-Setting

Reports on the DOJ's plan have focused on the preexisting conditions protection, but other aspects of the plan could also have sweeping effects. These involve protections for other groups and the use of standardized rates.

The DOJ plan would remove provisions on community rating from the law, which protect women and older people not yet Medicare-age from being charged exorbitant rates for any type of insurance, not just coverage on the exchanges.

For example, under the ACA's community rating provision, the oldest plan member can't be charged more than three times what the youngest member is charged. Removing this limitation, as the DOJ proposes, would mean that younger people could pay far less for insurance, but older people could pay far more.

Community rating also requires insurers to provide uniform rates, with only a very limited set of variables. Without these limits, plans could adjust rates for each applicant, and it would no longer be possible for a consumer to compare one insurer's rates with another's, Stuart says.

Moreover, without uniform rates, Stuart thinks it would become impossible for the government to calculate subsidies, which are provided to 83% of people who buy insurance on the exchanges.

Currently, exchange subsidies are based on a standard set of premiums, but if premiums were all over the board, subsidies could no longer be correctly calculated, Stuart says. The government would have to reprogram its software, which could take a long time. Meanwhile, without a reliable way to calculate subsidies, the government might suspend them, he adds.

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