Downside of Obamacare Subsidy Repeal Could Be Offset

When Congress repealed penalties for not having qualified health insurance coverage under the Affordable Care Act in the recently enacted Tax Cuts and Jobs Act, the Congressional Budget Office, health insurers and most other health-care industries predicted it would lead to higher premiums as young, healthy people forgo expensive coverage.

But if Congress passes legislation funding high-risk Obamacare enrollees, it would almost negate the impact of those premium increases, estimated at 10 percent. That was a finding of an analysis released Jan. 19 by the Council for Affordable Health Coverage (CAHC), a group that represents a broad range of health-care groups.

“For every dollar of savings that you create through a reinsurance program, the federal government is going to save somewhere between 60 and 80 percent,” CAHC chief economist Jeff Lemieux said at a Capitol Hill briefing I covered. The CAHC is calling for Congress to enact legislation to reinstate federal funding for reinsurance, similar to an Affordable Care Act program that was in effect from 2014 to 2016.

“The market right now is in a very perilous situation,” CAHC President Joel White said at the briefing. “It's highly unstable. The risk pools are unbalanced,” with more older, sicker consumers in ACA marketplaces and premiums rising steeply in 2018 for the second year in a row.

Providing funding to health insurers to cover people with high claims reduces premiums for other ACA enrollees. That in turn reduces the amount of premium tax credit subsidies the federal government must provide under the ACA to enrollees with incomes between 100 percent and 400 percent of the federal poverty level.

Legislation (S. 1835) has been introduced by Sens. Susan Collins (R-Maine) and Bill Nelson (D-Fla.) that would provide $10.5 billion for state-run reinsurance programs in 2019 and 2020, according to the CAHC analysis. Similar legislation (H.R. 4666) has been introduced in the House by Rep. Ryan Costello (R-Pa.).

Lawmakers on both sides of the aisle told reporters that the breakthrough in negotiations over the stopgap funding measure bodes well for the proposed legislation to bolster the ACA insurance markets.

Read my full article here.

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