Experts across the political spectrum are warning that the individual health insurance market could be devastated by the uncertainty around the Affordable Care Act’s future.
The individual market, which sells health plans to those who don’t have insurance through work or public programs, was highly regulated and subsidized by the ACA. Insurers that have remained in the market could well pull out in the face of tremendous uncertainty, causing the market to “very possibly” collapse in some parts of the country, centrist think tank the Brookings Institution said in a Tuesday report.
Eliminating the ACA’s mandate for health insurance coverage could also prompt a “death spiral,” or a cycle of rising premiums and healthy, young people leaving the market, the report said.
Concern about the individual market has crescendoed over the last month as congressional Republicans’ approach to a repeal began emerging. They’re expected to get rid of parts of the law that affect the federal budget, a process called budget reconciliation that allows the GOP to capitalize on its simple majorities in the 2017 House and Senate.
The reconciliation process could eliminate federal funding that subsidizes insurance plans for low and middle-income people and tries to even out insurers’ losses on the exchanges.
Continuing to fund those programs would keep the individual market stable, the Brookings report and experts say. But there’s little to suggest that Republican politicians, who have long opposed the ACA, would support such a move.
What is the individual market, anyway?
Most people get health insurance through their employer or public programs such as Medicare and Medicaid. The individual market has long been a place where those people — who could include the self-employed, early retirees, lower-wage workers or simply those who lost coverage through life changes such as job loss or divorce — can purchase health insurance.
The market became much more regulated under the ACA, which set up marketplaces through which plans could be sold and established new rules for those plans.
There’s evidence that after the ACA was implemented, that market grew. According to one report by the nonprofit Kaiser Family Foundation, enrollment in the individual market increased by 46% between 2013 and 2014 to 15.6 million people.
Federally funded subsidies likely played significantly into that change. Of those who gained health insurance because of provisions of the ACA, three of five adults who had used their plan said they wouldn’t have been able to afford or access care before, according to a survey this year by The Commonwealth Fund.
But while the ACA was able to extend coverage to many previously uninsured people, health insurers said they were losing money because of exchange participation.
Several health insurers, including the nation’s largest, UnitedHealth Group Inc. UNH, -0.42% made plans this year to exit from the exchanges in 2017. Premiums for 2017 exchange plans rose by 25% on average, with much larger increases set for some parts of the country.
Many experts remain convinced that changes to the law can redeem these problems, but President-elect Donald Trump — who has repeatedly said he’d “repeal and replace” the controversial law — is hardly likely to try to improve it.
Trump makes Obamacare repeal a priority
President-elect Donald Trump’s appointment of Affordable Care Act critic Rep.Tom Price as secretary of Health and Human Services signals his emphasis on repealing the law. WSJ’s Gerald F. Seib explains how such a move might play out in the Senate after the new president is sworn in. Photo: AP
What’s the worst-case scenario here?
Experts’ biggest concern is that an end to financial support for the ACA could cause what’s called a “death spiral,” under which remaining health insurers raise premiums, healthy, young people drop their plans and already-high rates rise again.
Such a situation, which has been seen on a state level before, would leave the cost of individual insurance very high and likely cover very few people.
“In this situation, people without access to employer or public coverage would be left without affordable insurance options,” the Brookings report concluded.
Even prolonged uncertainty around the future of the individual market — or the “repeal and delay” that congressional Republicans are considering — could force health insurers to pull out, the American Academy of Actuaries wrote in a recent letter to House Speaker Paul Ryan and Minority Leader Nancy Pelosi.
The group warned of “severe market disruption” in that scenario, and “loss of coverage among individual market enrollees.”