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House GOP Plan Would Make Health Insurance Far Less Affordable in High-Cost States

President Trump has promised to replace the Affordable Care Act (ACA) with something that provides “good coverage at much less cost.” But the House Republican ACA repeal plan that two key committees passed this week violates that pledge for millions of Americans.

The House plan would give consumers in the health insurance marketplace nationally an average of $1,700 less help with premiums in 2020, compared to the ACA’s premium tax credits, according to the Kaiser Family Foundation, with bigger losses for lower-income and older consumers. And consumers’ costs would probably rise even more than tax credits would fall, since the House plan would likely cause individual market premiums to rise.

But the plan would be even worse for people in high-cost states. That’s because, unlike the ACA’s tax credits, the House plan’s tax credits wouldn’t adjust for geographic variation in health insurance premiums. As a result, our new analysis finds:

  • Tax credit losses would be much higher in certain states. Consumers in 11 high-cost states would see their tax credits to purchase health coverage fall by more than $3,000 on average — or more than 50 percent.
  • There would be wide gaps in affordability across the country. Under the ACA, a 45-year old with income of $22,000 (about the median age and income for marketplace consumers) can purchase benchmark health insurance coverage for $1,200 or less anywhere in the country. Under the House plan, that would increase to $5,100 for people in Wyoming (the 5th highest-premium state) and to $11,800 for people in Alaska.
  • Tax credit losses would be bigger, and geographic disparities often magnified, for lower-income and older consumers. Even in a low-cost state like New Hampshire, a 60-year-old with income of $22,000 would see his tax credit reduced by $2,800. In 11 high-cost states, the losses would exceed $8,000.

The House plan’s drastic cuts to financial assistance in high-cost states would almost certainly mean large coverage losses for low- and moderate-income people. Enrollment would decline, due both to these cuts and because the legislation would end the ACA’s individual mandate, which requires most people to buy health insurance or pay a penalty. Those enrollment declines, in turn, also could precipitate further large increases in premiums, resulting in further enrollment declines and further premium increases. In extreme cases, this feedback loop might continue until a state’s individual market shrank drastically, or even completely collapsed — the phenomenon known as an insurance market “death spiral.”

To read our full analysis of the impacts of the House Republican ACA repeal plan tax credits, please visit: