On Tuesday morning, a federal appeals court for the case Halbig v. Burwell raised the question of whether premium subsidies should be authorized on the federal exchange in states where the government set up the insurance marketplace. One court ruled that the ACA authorizes subsidies in states that run their own exchange. However, another court ruled that the wording in the ACA is vague and ambiguous. The language used in the document is open because subsidies are essential to fulfilling the goal of the ACA, making healthcare affordable.
Will this decision affect Covered California?
This decision does not affect California because that is a state run exchange. This decision will determine whether only state run exchanges will be eligible to receive premium subsidies, meaning that all 36 states that opted out of setting up their own insurance marketplace would no longer be eligible to receive those subsides.
Who will be affected by this decision?
According to Business Week, this ruling could lead to the loss of subsidies for 4.7 million people. About 86% of the people who enrolled in the federal insurance marketplace qualified and received a premium subsidy. This decision will also have a large effect on the two biggest states, Florida and Texas, who had the biggest number of participants on the federal exchange. About 1/3 of all insurance subsidies from the enrollees on the healthcare.gov website went to someone in Florida or Texas. This means that if those participants lose their subsidies and become uninsured, those states will have to raise the prices of emergency care regardless of whether or not their patients will be able to pay.
While there are advocates, there are also opponents for the Supreme Court decision. The opponents believe that it is important to note that the cost of subsidies is expected to cost over $1 trillion dollars within the next ten years. By eliminating the subsidies in states that chose not to set up their insurance marketplace, the cost of the healthcare exchange would decrease significantly.
In August, California lawmakers will discuss three important bills related to health care reform that may affect both consumers and insurers. The three bills tend to be opposed by insurers while consumers are considered to be the advocates.
What are the bills?
- SB1176 would require insurers to record any out of pocket costs made by plan policy holders and then any expenses that go over a set limit would be reimbursed by the insurer.
- AB1917 is a bill that is trying to decrease the costs of specialty medications for policy holders with chronic medical conditions. This bill would also require insurers to cover Hepatitis C screenings which are not currently covered.
- AB2533 would require insurers to pay for an out-of-network provider when there is not an in-network provider available. This is slated for review this fall.
What are consumer advocates saying?
These bills are meant to help consumers seek medical attention once they are enrolled in an existing plan. There have been issues with insurers like Anthem Blue Cross and Blue Shield of California for inflating their list of physicians covered in their provider networks. AB2533 would help patients who cannot seek treatment in network to go outside of their network without suffering high costs and financial burden. President Deborah Burger of the California Nurses Association also argues that access to physicians in-network is limited and the options are minimal. California is pretending like they are giving enough choices but in reality they are delaying proper care and treatment. These bills would help resolve some of those issues.
What are the opponents saying?
The California Association of Health Plans is saying that these bills are too expensive. Other opponents argue that these bills could bankrupt the private insurance marketplace because the cost to cover specialty medications would be too high. By enabling policy holders to seek treatment at out-of-network providers, that also hinders the ability to control healthcare costs.
A recent announcement by the Washington Post revealed that the insurance subsidies that are meant to help millions of Americans pay for health insurance may be considered illegal in three dozen states according to a ruling by the US Court of Appeals for the District of Columbia Circuit. This is a major component of the healthcare law that is meant to make insurance more affordable. Over 5.4 million people signed up for healthcare coverage on the federal exchange and nearly 87% of them received subsidies. In addition, the US Court of Appeals in Richmond also made a contradictory ruling regarding the legality of the Affordable Care Act to the Supreme Court. Therefore the Supreme Court is discussing a series of legal challenges facing the law that was enacted four years ago.
What’s the biggest issue facing the ACA?
The main argument involves whether subsidies may be awarded in states that enabled the federal government to set up their insurance marketplace because they chose not to. The District case is known as Halbig v. Burwell. The DC Circuit court will review the District case and the ruling will not take immediate effect. The Obama administration has stressed the importance that people who are currently receiving subsidies will continue to do so while the courts come to a decision regarding the law.
The subsidy ruling goes to the core of the ACA. This is considered a “last chance” effort to expose the issues with the program. They believe that states that enable the federal government to set up the exchange still have the right to determine whether they want to allow subsidies to be given.
What happens if the DC decision is upheld?
The decision would effect 36 states, 27 which opted to have the federal government set up their exchanges and 9 which opted for partial help. If the decision is upheld, companies in these states will not be penalized under the employer mandate for not offering coverage to workers. The reasoning is that employer penalties take effect when an employee received a subsidy because coverage by their employer does not follow the minimum essential benefits and affordable coverage components of the law.
How does this affect Americans in those states?
Subsidies would not be given in states that opted to set up their own exchanges and thus the millions of Americans who have qualified and relied on the subsidies would no longer be able to afford coverage (the point of the law).
Recent investigations by the California Department of Managed Health went underway for Anthem Blue Cross and Blue Shield of California due to policy holders complaining they were given misleading information by the insurance giants. Policy holders argue that they were given inaccurate information regarding their benefit plans and provider networks. Anthem and Blue Shield are now facing multiple law suits from frustrated consumers.
So what is California doing about this? California is “quietly” taking a stand by educating consumer’s about a provision under the Affordable Care Act that acts in their favor. The ACA states that a person can receive health coverage during an open enrollment period or after a “qualifying life event”. A qualifying life event is usually considered when a person moves, gets married or divorced.
Under the ACA provision, the qualifying life event also includes when a person experiences misconduct by an insurer or receives misleading or inaccurate plan information from an insurer. Therefore, the provision under the ACA may enable these policy holders to switch health plans outside of the enrollment period because it is considered a “qualifying life event” since they were given misleading information from insurers.
California has slowly been implementing this provision for the past few months as complaints about Anthem Blue Cross and Blue Shield of California continue to rise. Still, Dana Howard, a Covered California Spokesperson has mentioned that every complaint will be considered but not every complaint will result in the ability to switch plans. According to Howard, there is not complete information on the number of switches thus far but confirms that the exchange has not been overwhelmed with requests to switch plans.
Anthem Blue Cross is a well-known, major play player in the insurance marketplace. However, the insurance giant is under investigation by the California Department of Managed Health Care. Covered California is looking into the accuracy of Anthem Blue Cross’ provider networks due to a series of complaints by policy holders. This investigation initiated from multiple law suits brought on against Anthem by the consumers including one last June by WellPoint, Inc.
What are policy holders upset about?
- Narrow provider networks
- Loss of benefits
- Bait and switch tactics to get consumers with expiring plans to enroll in different coverage where former benefits may no longer be provided without the consumer’s knowledge
Many California policy holders are stating that Anthem Blue Cross has extremely narrow provider networks making it difficult for them to seek medical attention covered under their current plan. People who purchased Anthem plans under the Covered California health exchange thought they had more options, which is why the California Department of Manager Health Care is investigating whether Anthem may have inflated the number of providers in an effort to increase enrollment participants. Anthem is saying that in order to reduce premiums, they had to decrease the number of doctors and hospitals available to patients.
According to the LA Times, one policy holder who had an Anthem plan no longer compliant with the Affordable Care Act was forced to switch to a different policy that Anthem assured her would cover the same benefits as her previous plan. However, the exclusive provider network they were claiming to enroll her in ended up being a PPO that did not cover her expenses leading to to rack up thousands of dollars in medical bills. Anthem Blue Cross refuses to pay the bills.
As a result, the executive director of Covered California, Peter Lee, is looking into these EPO policies for 2015 since they seem to have caused many consumer frustrations and large, unknown medical bills. An exchange spokeswoman stated that EPOs will still be part of the exchange benefits but they are looking into ways to better educate people about how the networks and coverage work.