GOP plan to sustain subsidies if King wins is flawed, actuaries say

GOP plan to sustain subsidies if King wins is flawed, actuaries say

legalA legislation proposal by Sen. Ron Johnson (R-Wis.) and 31 Republicans that would temporarily preserve federal premium subsidies for enrollees through August 2017 if the Supreme Court rules them unconstitutional in King v. Burwell would simply bandage a festering wound. That’s the conclusion of a recent American Academy of Actuaries analysis.

The bill, “Preserving Freedom and Choice in Health Care” (also known as S.1016), does nothing to prevent substantially higher premiums and the loss of insurance for at least 7.5 million Americans “unless other equally strong mechanisms are implemented that would encourage participation by a broad cross section of risks,” the group cautions in an issue brief.

Catherine Murphy-Barron, vice president of the Academy’s Health Practice Council, said recently that “policymakers should understand the implications of any policy proposal intending to address the disruption caused by the potential loss of subsidies.” Apart from broader risks, the AAA cited two other key considerations as necessary for health care reform to succeed: a level playing field for carriers and reduced health care spending growth.

In addition, the actuarial analysis suggests Johnson’s proposed repeal of the Affordable Care Act’s individual mandate “could result in adverse selection that would raise premiums and threaten the viability of the market,” which one published report likened to “a death spiral.” Other contributing factors to this scenario include provisions that would allow for association health plans and health insurance to be sold across state lines, the AAA notes.

Johnson told Bloomberg last month that “if the Supreme Court rules, as the law clearly states, that those subsidies don’t flow through the federal exchange, we’re recognizing the reality that that’s going to be a mess. We could be looking at a moment of chaos.”

Johnson, who’s expected to face a difficult re-election battle next year, has described his plan as a major concession on the part of Republicans, though some House conservatives dismissed it as deferential to the ACA.