Impact of Supreme Court on Health Insurance Exchange

After the arguments held during the last week of March, the Supreme Court is at present mulling over the constitutionality factor of President Obama’s healthcare law. Whatever may be the Supreme Court ruling, it is bound to impact the state’s decision in setting up Health Insurance Exchanges, the web-based online marketplaces for selling health insurance.
There are three possibilities as far as the Supreme Court ruling on ACA is concerned – the entire ACA together with the Individual Mandate gets repealed, the ACA is declared constitutional while the Individual Mandate gets struck down or both the ACA and the Individual Mandate is upheld as constitutional by the Supreme Court.

If the Individual Mandate is struck down by the Supreme Court but rest of the ACA is upheld, then the states would still need to establish these insurance exchanges. The Health Insurance Exchanges or HIX were designed on the premise that enrolling millions of insurance buyers into the HIX would help spread risk and would make the healthcare more affordable to all. In the absence of an individual mandate, Americans would no longer be bound by law to purchase insurance, which may adversely impact the exchange enrollment figures and consequently the premium rates – a deterministic factor that has led to the high number of uninsured Americans.

Both the state and private health plans planning or already operating their insurance exchange may notice the visible effect of no Individual mandate. In such a scenario, states, private health plans and carriers would need to come up with alternative strategies to counteract the ill-effect of ACA without the Individual Mandate.

The deadline for setting up these exchanges is in January 2014, and if the states are unable to set up fully functional exchanges by then, the federal government would step in and run its own exchange. It would only be clear by 2012 mid-summer when Supreme Court announces its ruling on the ACA and the Individual Mandate.