Eliminating ACA subsidies would cause nearly 10 million to lose insurance, study finds

http://www.eurekalert.org/pub_releases/2015-01/rc-eas010815.php

Public Release: 8-Jan-2015
RAND Corporation

Eliminating government subsidies for low- and moderate-income people who purchase coverage through federally run health insurance marketplaces would sharply boost costs and reduce enrollment in the individual market by more than 9.6 million, according to a new RAND Corporation study.

Modeling the likely effects of ending subsidies in 34 states where the federal government operates insurance marketplaces for individuals, researchers found that such a move would cause individual market enrollment to drop by 70 percent among people buying policies that comply with the federal Affordable Care Act.

In addition, unsubsidized individual market premiums would rise by 47 percent in those states. The hike would correspond to a $1,610 annual increase for a 40-year-old nonsmoker who purchased a silver-level plan.

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If the subsidies are struck down, enrollment in the ACA-compliant individual market in the 34 states would drop from 13.7 million people to 4.1 million, according to the analysis. In addition, premium costs for a 40-year-old nonsmoker purchasing a silver plan would be expected to rise from $3,450 annually to $5,060.

Researchers found the effects of ending federal subsidies would be larger in states with federally run marketplaces than in states that run their own marketplaces.

Among the reasons for that difference is that states with federally run marketplaces generally have higher proportions of low-income individuals, who tend to be more sensitive to insurance prices and thus are more likely to drop insurance without subsidies. Those states also had higher uninsurance rates prior to adoption of the Affordable Care Act.

In addition, most of these same states did not expand Medicaid to cover more people as allowed under the Affordable Care Act. This means that there generally are more low-income people buying policies in those states' insurance marketplaces.