BEYOND THE NUMBERS
Congressional Republicans who are leading efforts to repeal the Affordable Care Act (ACA) say they’re a "rescue party" for the individual health insurance market, but their ideas don't address the problems they’d create with an ACA repeal.
Tomorrow, a House subcommittee will consider several House Republican bills that their sponsors say would help stabilize the individual insurance market in the near term. The proposals themselves are problematic because they would reduce enrollment of eligible people, impose harsh penalties on vulnerable consumers, and raise premiums for older people and those with health issues. But the even bigger, more immediate problem is that these proposals don't come close to protecting insurance markets from the devastating damage Republicans would inflict by eliminating major ACA provisions.
In particular, eliminating the "individual mandate" for people to buy insurance or pay a penalty — which any repeal reconciliation bill is expected to do — would immediately harm the individual market, both inside and outside the ACA marketplaces. More than 4 million people would become uninsured that same year, the Urban Institute estimates. In the first full year after enactment, the Congressional Budget Office (CBO) estimated the number of uninsured would rise by 18 million, and premiums in the individual market would be about 20 to 25 percent higher, relative to current law. (CBO analyzed the repeal bill that Congress passed but President Obama vetoed last year, a likely model for this year’s bill.) Also in that first full year, CBO estimates, roughly 10 percent of the population would live in an area where no insurers offer individual market coverage because many would exit if the requirement for healthier people to buy coverage ends.
The individual market’s unraveling would worsen once the repeal of the ACA subsidies that help low- and moderate-income people pay their premiums and out-of-pocket costs takes effect. These subsidies provide strong incentives for healthier people to buy a plan, which helps hold down premiums overall. Without the subsidies and the mandate, the market would virtually collapse.
Contrary to ACA critics’ claims, the market isn’t collapsing. It’s the Republican course toward repeal that raises that specter. The proposals being discussed at the hearing all have serious drawbacks. They would:
- impose more restrictions on people trying to access special enrollment periods (SEPs). Restrictions would delay new enrollment due to life changes, such as a loss of other coverage, and likely discourage healthier people from accessing SEPs;
- shorten grace periods for people who receive marketplace subsidies and fall behind on their share of the premiums, rendering people quickly uninsured if they miss all or part of a payment;
- allow insurers to charge significantly higher premiums to older customers compared to younger ones; and
- let insurers shift costs to the sick, including by raising their premiums, and institute a “continuous coverage” requirement, which means that people who experience gaps in coverage (of more than a couple of months) wouldn’t have access to the same protections as people who managed to stay insured.
None of these provisions will protect the market from disaster. If Republicans really want to promote stability, they should avoid enacting the biggest threat to the individual health insurance market: the ACA’s repeal.