![]() One piece of the legislation changes how these insurance marketplaces work, allegedly to avoid the implosion that the CBO says isn’t happening.īut the other, arguably more important, piece of the legislation is an enormous tax cut that’s financed by long-term cuts to Medicaid. The “implosion” argument completely dodges MedicaidĪHCA is really two bills in one. There is no implosion that people need rescuing from. But the point is that this is still a stable and workable outcome. The ACA’s most enthusiastic proponents had higher aspirations for the marketplaces than that. And there are enough young and healthy people who qualify for generous subsidies to ensure a stable long-term risk pool. Which means that for heavily subsidized customers, the higher premiums don’t drive people out of the marketplace. ![]() Translating from wonk-ese, the subsidies offered to lower-income people under ACA are scaled both to income and to the local price of health insurance. The subsidies to purchase coverage combined with the penalties paid by uninsured people stemming from the individual mandate are anticipated to cause sufficient demand for insurance by people with low health care expenditures for the market to be stable. ![]() Under current law, most subsidized enrollees purchasing health insurance coverage in the nongroup market are largely insulated from increases in premiums because their out-of-pocket payments for premiums are based on a percentage of their income the government pays the difference. But CBO says that’s not what’s happening: If that cycle were to simply continue unabated, the law really might implode. Removing relatively health consumers from the marketplace, in turn, encourages higher premiums. The higher premiums mean that for a certain number of more affluent and relatively healthy consumers, it makes financial sense to simply pay the penalty rather than purchase insurance. A lot of insurers have raised premiums, and a lot of insurers have decided to stop participating in the program, which encourages those that remain to raise premiums. Over the past year, the Affordable Care Act’s marketplaces for individual health insurance purchases have been rocked by a series of bad stories. CBO says the Affordable Care Act will stabilize Which means that if the law manages to survive, in a year or so, the Trump administration will likely be able to claim they fixed it. That the instability in the marketplaces we saw in 2016 is a one-time adjustment and the markets will stabilize soon even without policy change. But the CBO is saying that it isn’t doomed to collapse. If it’s really true that the ACA is doomed to collapse, then even a bad replacement looks pretty good. This matters because you can’t beat something with nothing. Paul Ryan also frequently claims that the Affordable Care Act is currently in a “death spiral.” Republicans coming together to get job done!- Donald J. ObamaCare is imploding and will only get worse. We are making great progress with healthcare.
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