Guy Boulton

Milwaukee Journal Sentinel

A federal judge in Texas is weighing a request by Wisconsin and 19 other states to suspend the Affordable Care Act — a request that dismays the health insurance industry.

“The market would just be in chaos,” said Karen Bender, an actuary and president of Snowway Actuarial and Healthcare Consulting in Little Suamico, near Green Bay.

Marty Anderson, chief marketing officer for Security Health Plan, said the same.

“There would be chaos in the entire insurance market across the nation,” Anderson said. “That is the only way to describe it.”

Twenty states, including Wisconsin, filed a lawsuit in February to have the Affordable Care Act declared unconstitutional, and in arguments held last Wednesday, lawyers for the Republican-led states did not back off on their request for a preliminary injunction suspending the entire law.

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At a minimum, the states asked Judge Reed O’Connor to strike down in their states the parts of the law that prohibit health insurance companies from refusing to cover people with pre-existing health conditions or charging them higher rates.

If either happened, the 16 Democratic attorneys general who have intervened in the case, including those in Minnesota and Illinois, would likely seek a stay.

“But the worry is still there,” Anderson said.

A preliminary injunction or final ruling declaring the Affordable Care Act unconstitutional would affect more than the roughly 17 million people who have gained health insurance through the law and the people with health conditions.

It would affect children under the age of 26 who are covered by a parent’s health plan. It would affect the pricing for health insurance sold to small employers. It would affect the out-of-pocket costs of prescription drugs for some people covered by Medicare.

Health insurers could impose annual and lifetime limits on coverage, eliminate annual caps on out-of-pocket costs and charge young women higher rates than young men.

It also would affect an array of taxes and other provisions in the sweeping law.

“I don’t know how you would administer this if you had an injunction,” Bender said. “Look at all the things that would have to change administratively.”

At the same time, the open-enrollment period for health insurance sold to individuals and families who don’t get health benefits through an employer begins on Nov. 1.

Wisconsin involvement

In a news release when the lawsuit was filed, Wisconsin Attorney General Brad Schimel took credit with Texas Attorney General Ken Paxton for taking the lead in the lawsuit filed by 18 state attorneys general and the governors of Maine and Mississippi.

The lawsuit was filed with Wisconsin Gov. Scott Walker’s approval.

The Wisconsin Department of Justice did not respond when asked why the states are seeking preliminary injunctions and what happens if an injunction is granted.

In a written response, the governor's office said Walker has asked the Office of the Commissioner of Insurance to come up with a variety of plan options based on possible outcomes in the case.

The options include drawing on the Trump administration's new regulations for short-term and association health plans and issuing emergency orders to ensure the stability of the market.

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The governor's office also noted that insurers must renew someone's coverage regardless of his or her health status.

The states' request for an injunction nonetheless baffles some people in the industry.

“I don’t understand what the end game is,” said Anderson of Security Health, an affiliate of Marshfield Clinic.

Amicus briefs opposing the lawsuit were filed by the American Medical Association and by physician groups for family physicians, internists, pediatricians and psychiatrists.

The American Hospital Association, the Catholic Health Association and other hospital groups as well America’s Health Insurance Plans, the trade group for health insurers, also filed briefs opposing the lawsuit.

So, too, did the American Cancer Society, American Heart Association, American Lung Association and other groups.

An amicus brief supporting the lawsuit was filed by Citizens United, Conservative Legal Defense and Education Fund and other conservative groups, including Gun Owners of America.

Mandate in question

In their lawsuit, the state attorneys general contend that because Congress eliminated the tax penalty for not having health insurance, the mandate to have insurance is no longer constitutional, Katie Keith, a lawyer and health care consultant, has written in her blog on the law for Health Affairs, a policy journal.

They further contend that the mandate is essential to the other provisions in the Affordable Care Act and therefore the entire law must be declared unconstitutional.

The Trump administration has partially sided with the states, agreeing the mandate that people have health insurance now is unconstitutional.

The administration also contends the law’s provisions that bar health insurers from denying coverage or charging people more based on their health cannot work without the mandate and must be struck down.

The administration has not challenged other parts of the law and does not contend the entire law is unconstitutional.

Pre-existing condition protection targeted

The protections for people with pre-existing health conditions are the most popular provision in the Affordable Care Act and have support across party lines.

A poll conducted from Aug. 23-28 by the Kaiser Family Foundation found that three out four people — 76 percent — said the provisions that prevent insurance companies from denying coverage based on medical history are “very important.”

Four in 10 people said they are “very worried” that they or a family member will lose coverage if the Supreme Court overturns the protections.

The Trump administration did not ask for a preliminary injunction but did ask the judge for a declaratory judgment that the provisions on pre-existing health conditions are invalid beginning on Jan. 1.

A ruling in the administration’s favor is likely to be appealed but still would cause turmoil in the insurance market, particularly given that open enrollment begins in less than two months and that insurers must sign contracts on Sept. 25 to sell insurance on the exchanges set up by the law.

Some insurers could opt to exit the market for health insurance sold directly to individuals and families, said Justin Sydnor, a professor of risk management and insurance at the University of Wisconsin-Madison.

The turmoil would be worse if the entire law is declared unconstitutional.

“It would have ramifications in almost every aspect of the health insurance market and the health care delivery system,” said Scott Weltz, a principal and consulting actuary for Milliman, a consulting firm.

Rob Plesha, vice president of actuarial services for Quartz Health Solutions, which oversees Gundersen Health Plan, Physicians Plus Insurance and Unity Health Insurance, said the industry, regulators and consumers would be unable to respond in time.

He, too, was confused by Wisconsin and other states’ request for a preliminary injunction.

O’Connor, the federal judge, is considering ruling on the merits of the case instead of issuing a preliminary injunction.

For now, insurers must wait for his ruling and the results of an inevitable appeal.

“Insurers don’t like uncertainty,” said Bender of Snowway Actuarial and Healthcare Consulting, “and this is the epitome of uncertainty.”