On October 16, the Centers for Medicare & Medicaid Services (CMS) released the language of their privacy and security agreement with insurers participating on the federally facilitated marketplace (FFM). Some sharp-eyed readers saw that the contract included a clause that allows insurers to terminate the agreement, should federal financial assistance cease to be available to the plans’ marketplace enrollees. Many assumed that this “out” was built into the contract to give comfort to insurers worried about the outcome of lawsuits contesting the legality of the ACA’s premium tax credits for consumers on the federal exchanges. To the architects of those challenges—some of whom are now busy lobbying the Supreme Court to take up the case and overrule a federal appellate decision upholding the tax credits—this new clause appeared quite significant, and was quickly incorporated into the narrative urging immediate Supreme Court intervention.
There’s no denying that the cases themselves are consequential. If the high court were to grant review and conclude that the ACA does not, in fact, authorize federal tax credits in the 34 states with federal marketplaces, millions of low- and middle-income consumers would lose access to the financial assistance that, for many, makes coverage possible. There is a path states can pursue to avoid that outcome; but if the challenges were to prevail, the effects for FFM states could be catastrophic. Many Americans would be forced to drop coverage, while premiums for those who remain enrolled would skyrocket, raising the prospect of a “near death spiral” in the individual market.
But—that new contract provision that’s attracted attention? If you’re a consumer with coverage through the federal marketplace, there’s less there than meets the eye.
The agreement where the termination clause appears is only between an insurer in the FFM, on one hand, and CMS, on the other. It governs how the insurer interacts with the federal data hub, and the steps it, and the entities it contracts with, must take to protect enrollees’ personal information.
Whatever the impetus behind the new language, its effect is to give the insurer greater flexibility to end its agreement with CMS. It does not relieve the insurer of any other obligation it has to continue providing coverage to existing enrollees. This is a point made explicit in the contract itself.
So, in the event the Supreme Court were to rule that premium tax credits are not available to consumers in the federal marketplaces, an insurer in the FFM would still have a federal law obligation to provide coverage on a guaranteed issue, guaranteed renewal basis; would still have to comply with other federal requirements regarding product modifications and discontinuations, and withdrawals from the market; and would still be subject to any state law that regulates how insurers may wind down their plans.
Again, this isn’t to say that transition from the world as it is now, to the one envisioned by proponents of the tax credit lawsuits, would be smooth. For millions of consumers, their states, and the insurance markets in which they shop, there likely would be enormous disruption. But that outcome—were it to occur tomorrow, or two years from now—would stem from a fundamental change in the rules of the road, brought about by the lawsuits themselves. Unlike this new contract provision, that would be big news.