To: Interested Parties

From: The Office of Sen. Chris Murphy (D-Conn.)

Re: Academy of Actuaries report on Republican alternatives to the Affordable Care Act ahead of King v. Burwell

Date: 5/28/2015


As the Supreme Court prepares its ruling on the controversial King v. Burwell case, it’s worth examining the proposals put forth by Congressional Republicans in the unlikely event that the Court places its political judgment ahead of that of Congress, and rules in favor of the politically-motivated plaintiffs.

The American Academy of Actuaries, the foremost experts in the field of insurance markets and risk, today released an issue brief analyzing common components of Republicans’ Affordable Care Act alternatives. Unsurprisingly, their conclusion highlights what Democrats have been saying all along: a ruling for the plaintiffs would be terrible, and Republican proposals would make the situation even worse.

The bottom line is this: Republicans are rooting for the Supreme Court to gut the Affordable Care Act because they view it as a way to open the door to full repeal.  Do not be fooled. The proposals they have prepared ahead of the ruling are not tweaks or legislative fixes – they are full-on repeal proposals dressed up as a response to a potential Court ruling. In fact, Republicans’ recently passed budget resolution calls for repeal of the ACA and says that reconciliation should be used specifically for this purpose. Not only do these proposals make no effort to permanently restore subsidies for Americans to afford health insurance, they make things even worse by eliminating critical reforms that ensure the marketplace remains stable.

One such proposal is the Preserving Freedom and Choice in Health Care Act. It would be more realistically named the ACA Repeal and Market Disruption Act.

Opponents of the Affordable Care Act have been scratching and clawing to go back to the days before the ACA, where insurance companies could deny coverage to the sick, charge women more and make unlimited profits off the backs of American patients. In a nightmare scenario where the Court strikes down subsidies in Healthcare.gov states and this bill passes, Republicans will be on their way to making that happen.

HIGHLIGHTS FROM AMERICAN ACADEMY OF ACTUARIES REPORT

Negative decision by the Supreme Court would increase health insurance costs


“If federal premium tax credits become no longer available in FFM states, enrollment in the individual market would decline precipitously among those previously eligible for premium assistance…Such adverse selection would cause average health costs, and therefore premiums, to rise.” [p. 2]


Elimination of subsidies “would cause massive disruption in the individual market”


“An immediate or near-term elimination of federal premium subsidies would cause massive disruption in the individual market. Potentially millions of people would drop coverage, and the average costs of those remaining insured would soar.” [p. 3]


Elimination of subsidies would cause millions to lose coverage, costs to soar


“If the subsidies are ultimately eliminated, potentially millions of individuals will drop coverage and premiums will increase substantially, unless other equally strong mechanisms are implemented that would encourage participation by a broad cross section of risks.” [p. 3]

“Eliminating the individual mandate could threaten the viability of the health insurance market”


“When health insurance markets include guaranteed issue and modified community rating requirements to ensure that coverage is available to people with pre-existing conditions, market viability depends on attracting a broad cross section of risks. If individuals with lower cost health care needs opt to forgo coverage, average costs of those purchasing coverage will be higher, potentially creating a premium spiral. By encouraging enrollment among low-risk individuals, the ACA’s individual mandate helps mitigate these adverse selection concerns.

“Weakening or eliminating the individual mandate could result in adverse selection that would raise premiums and threaten the viability of the market, unless alternative provisions are implemented that would create equally strong incentives for low-risk individuals to obtain coverage.” [p. 3]