Everyone is watching the King v. Burwell case, a case that calls into question the legality of the subsidies on the federal exchange. (A ruling is expected by the end of June.)
And the benefits industry is no exception. We asked a handful of benefits experts what they predicted as the ruling outcome — and how that would affect both the Patient Protection and Affordable Care Act and the industry in general.
Here's what they said.
1. It's irrelevant.
"The outcome is irrelevant. If they uphold the law and say subsides are eligible in all exchanges, then all is as it is. But let's say they claim it needs to be in state exchanges only — then I believe there will be a transitional period for states to get it running, and most states will likely opt for a partnership exchange, or the justices will find a way to interpret the law that finds for the plaintiffs but allows the subsidies to continue.
So, my belief is that regardless of outcomes, subsidies will be uninterrupted one way or the other."
—David C. Contorno, CEO of Lake Norman Benefits and Benefits Selling's 2015 Broker of the Year
2. The government will prevail.
"I'm confident the government will prevail here as I just cannot see subsidies, and potentially health insurance for those in jeopardy of losing these subsidies in the federal exchange, being taken away over what I see as an obvious language/drafting error in the law."
—Mark Parabicoli, Managing Director, Exchanges & Emerging Distribution at ARAG Legal
3. It will be business as usual.
"I really feel at this point there will be ongoing reform but not repeal. When you look at this case, it hinges on 4 words: "established by the state." As with many things in this bill, when you isolate a section, it loses context.
I think at the end of the day, when you take a step back and do a common sense read on PPACA instead of a technical read, we all understand that the primary goal of PPACA was to expand health insurance coverage as much as possible. A major component of this was to try and do so as equally as possible across the country, while giving states as much flexibility as possible to get it done.
My gut says that it will be business as usual for us and it will be on to the next Monday Morning Quarterback."
—Susan Combs, owner and president of brokerage firm Combs & Company
4. Subsidies should be gutted, but they won't be.
"The current SCOTUS justices are reticent to overturn any legislation passed by elected officials, even if the law beats up the U.S. Constitution. In the case of King vs. Burwell, those who brought the case forward against the government have a legitimate legal case. Unfortunately, the collective immediate economic damage that would take place with the insureds and the respective participating carriers would be too great for those stakeholders to absorb to make it worth the effort to dismantle PPACA.
I'm not sure the justices have the will and stomach to make a tough choice against PPACA. That said, it would financially be better on a long term basis for the country, employers, insurers, and individuals if the case went against the administration and the individual mandate, which is a key element of the law, albeit a bad piece of legislation in its rationale, impact, and unconstitutional implementation.
If the NAIC was smart, they would pass model rules and lobby for both federal legislation and state legislation in all states that would allow for the competitive market of insurance sales across state lines, fix tort law to reduce the financial impact of lawsuits, and provide increased healthcare advocacy and medical provider accountability to reduce the net cost of healthcare delivery. The subsidies would go away, which would help taxpayers who pay for them, overall cost of insurance would go down due to increased competition in the marketplace, and nationalized health care would not be a threat to the nation's population."
—Mark Roberts, a health and accident insurance agent in all 50 states
5. The employer mandate would become 'moot'.
"Should the executive branch be upheld, it will be business as usual. Our industry will continue along the same path on which we are progressing.
If premium subsidies are overturned for federal exchanges, the first confusion that brokers and their clients will wrestle with is the impending requirement of employer reporting (forms 1094 and 1095).
In an odd twist, the elimination of federal subsidies will cause employer mandate penalties to become a moot point in states with federal exchanges, but the requirements behind employer reporting will still be in place. There is certain to be confusion as to why an employer would be obligated to fulfill the reporting requirements when there is no possibility of implementation of the mandate penalties, but the law would still have the reporting requirements intact. How the executive branch will react to that confusion is yet to be seen."
—Don Goldmann, vice president of the Word & Brown General Agency and incoming president of the National Association of Health Underwriters
6. There will be 'little to no disruption'.
"Subsidies are not going anywhere. Frankly, I expect little to no disruption. And the lesson? Next time such a big bill is passed there should be a bipartisan dictionary so all parties on the hill agree on definitions so it doesn't go to the Supreme Court."
—Gentrie Pool, sales director at Sterling Administration
7. We won't see any voluntary disruption.
"While it could go either way, I think that the courts may rule on either leaving the subsidies in play or they may provide some sort of compromise to provide states an opportunity to opt in by a certain time in order for subsidies to continue to be distributed. Too many people may be adversely compromised if the subsidies are struck down.
I don't think this will directly affect the voluntary benefits market because the majority of public exchange participants don't have access through the exchanges to voluntary products today. However, if the issue creates too much confusion for employer decision makers, we could see some slowdown in sales they try to understand what this means to them. I remain optimistic that either way, the voluntary market should continue on its current trajectory without too much of an issue at least for the midterm as lawmakers decide how to react."
—Steve Hesler, AVP, product & market development at Colonial Life
