By Sarah Lueck, Center on Budget and Policy Priorities
A bill introduced by Senators Lamar Alexander and Bob Corker seeks to address concerns that people in some areas might not have any marketplace plans available in 2018, by allowing residents of such areas (sometimes referred to as “bare” counties) to receive federal premium tax credits in 2018 and 2019 if they enroll in any plan their state allows to be sold in its individual market, including plans that fail to meet basic Affordable Care Act (ACA) standards. The bill would also eliminate the individual mandate for everyone living in a county with no marketplace insurers.
While the bill might appear to reassure consumers in areas that have only a few insurers and those insurers are threatening to pull out of the marketplace, its likely overall effect would be harmful rather than helpful. In particular, the bill likely would worsen the very problem it seeks to address, by encouraging insurers not to participate in the marketplace, as we explain in a new analysis:
The Alexander-Corker bill would allow people to use premium credits for plans offered outside the marketplace that do not conform to the ACA’s market reforms, coverage standards, and consumer protections. These non-ACA-compliant plans can charge people higher premiums based on their health status, gender, and other personal characteristics, for example, and aren’t required to provide the ACA’s list of essential health benefits.
Allowing consumers to use tax credits to buy non-ACA-compliant plans would be attractive to insurance companies that have a substantial business selling those plans, and it could prompt insurers that haven’t offered non-ACA-compliant plans to begin doing so. And, insurers might be able to raise premiums for their non-ACA plans without losing many customers because the new access to premium credits would defray many consumers’ costs even if premiums surged.
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Editor’s Note: This post was originally published on the Center on Budget and Policy Priorities’ website