​Let’s see what the ACA’s subsidies can do

It sure looks like Congress is about to repeal the Affordable Care Act’s individual mandate, which will put a lot of pressure on the law’s premium subsidies. What was once a “three-legged stool” — consumer protections, the mandate and premium subsidies — is down to two legs, and subsidies are the only remaining tool to try to attract the people who weren’t already inclined to seek health insurance.

What’s happening: When President Trump cut off federal payments for the ACA’s cost-sharing subsidies, insurers responded by increasing their premiums in a way that also bumped up the law’s premium subsidies — a bit of gamesmanship that few experts had fully anticipated, and which leveraged the structure of the premium subsidies to make up for the effects of political chaos.

The big question: Would something like that work again? Can subsidies make up the difference if the mandate goes away?

The answer: Probably not, policy analysts told my colleague Caitlin Owens and me.

  • “Mandate repeal could quite likely be the last straw for some insurers, and we are likely to see more bare counties for 2019, possibly bare states, as well as higher premiums as remaining insurers take advantage of their market power to raise premiums,” says Washington & Lee University professor Tim Jost, a vocal ACA supporter.

The bottom line: As premiums go up, subsidies go up. So subsidies would help shield the lowest-income consumers from the cost increases caused by the loss of the individual mandate.

Yes, but: The people who don’t receive subsidies will just have to bear the brunt of those costs. And it won’t be easy to concentrate premium hikes onto a specific set of plans, with the goal of increasing subsidies as much as possible, the way insurers did when Trump cut off cost-sharing payments.

  • “I don’t think there’s the same opportunity to play arithmetic games. Insurers will have to raise premiums across the board,” Kaiser Family Foundation’s Larry Levitt says.

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