- New language in the contracts between exchange insurers and the Centers for Medicare and Medicaid Services will permit insurers to stop offering plans if federal subsidies should no longer be available. According to the language, "CMS acknowledges that [the insurer] has developed its products for the [federal exchange] based on the assumption that [advance payments of the premium tax credit] and [cost-sharing reductions] will be available to qualifying enrollees. In the event that this assumption ceases to be valid during the term of this agreement, CMS acknowledges that issuer could have cause to terminate this agreement subject to applicable state and federal law."
- Currently, the legality of the use of premium subsidies for those purchasing plans on the federal exchange is up for the debate. Two courts handed down opposite rulings on the issue over the summer.
- There is debate over what the new contractual language signifies. Some believe it suggests that the federal government believes it may lose the right to administer the subsidies, as it has been, to those purchasing plans on Healthcare.gov. Others call it just practical thinking in an ever-changing policy environment.
If the subsidies do disappear, no one knows if insurers will pull their products off the exchanges. Robert Laszewski, president of the Health Policy and Strategy Association, told Modern Healthcare that because the ACA prevents insurers from canceling policies for nonpayment until the three-month mark, if subsidies disappeared mid-2015 and people stopped paying their premiums, insurance companies might stay on the exchange until January 1. The federal government will cover most losses through 2016, and this would allow the insurers to exit smoothly. That said, Laszewski also noted that according to HIPAA, insurers that cancel coverage for individuals who purchased it on the exchange must cancel that entire class of coverage off of the exchange as well.
There is also uncertainty surrounding the piece of the language that refers to "applicable" state laws, which obviously vary.
"People are just kind of shaking their heads going, 'I don't know what this means,'" Laszewski told Modern Healthcare.
Clare Krusing, a spokeswoman with America's Health Insurance Plans, said that the insurance industry agreed to the new language with the federal government, but offered no further clues as to how insurers would react if the subsidies are determined to be illegal.