OLDWICK, N.J.--(BUSINESS WIRE)--AM Best is of the view that the recent Supreme Court ruling upholding the Affordable Care Act (ACA) is favorable for U.S. health insurance companies and membership that participates in the ACA marketplaces and Medicaid managed care, as it maintains stability of the current operating environment and ACA-related funding.
The Best’s Commentary, “US Supreme Court Decision Upholding the ACA Is Favorable for US Health Insurers,” notes that profitability of the ACA exchange business has become stable over the past few years, with more insurers participating in the market and offering coverage. Additionally, Medicaid managed care is a significant and growing part of health insurers’ premiums: Medicaid managed care premiums grew to more than 25% in 2020 from less than 20% of total premiums in 2013. Medicaid managed care also has seen enrollment growth since 2014, with the expansion of Medicaid as part of the ACA and states’ expansion of programs offered under Medicaid managed care.
Going forward, AM Best believes that there could be pressure from the Biden administration on ACA-exempt products, such as short-term limited duration medical insurance, which may impact insurers’ ability to offer these products in the medium term. Given that this was the third time that the U.S. Supreme Court has heard and upheld the ACA, AM Best also believes that the risk of future litigation to the Supreme Court level is low.
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