On Thursday June 7th, the Justice Department agreed with the state of Texas's lawsuit claiming the individual mandate is unconstitutional. This deals a huge blow to the Affordable Care Act and could vastly change how individual and small group health insurance policies work in the future.
The individual mandate requires every American to have health insurance or pay a penalty. This was a provision the insurance companies required in order to offer policies with guarantee issue and no pre-existing conditions for everyone. Additionally, carriers would use community rating structures so everyone paid the same premium regardless of their health and smoker status and if they were a man or woman. This of course raised the cost of coverage for millions of healthy Americans who helped to reduce the cost for those who could not previously get coverage due to their health.
This ruling could be the change the republican administration is looking for to dismantle the ACA and start the process of building a better plan to provide health insurance to those who cannot qualify or afford coverage on their own.
We don't see major changes coming for 2019 but going forward the landscape may look much different. The concern we have for our clients with the loss of the individual mandate is young and healthy employees can now drop their insurance with no penalty which reduces the overall premium to protect loss ratios and increases the average age of employees. Both of these are major reasons for health insurance rate increases.