ACA subsidies 'essential' to individual market, studies show
If the U.S. Supreme Court determines federal subsidies are illegal when it rules in the King v. Burwell case, it would dramatically increase costs and lower enrollment in the individual market, according to two separate studies.
In a new Rand Corp. study, researchers determined that more than 9.6 million people would lose coverage they purchased through the health insurance exchanges, dropping the enrollment down to 4.1 million from 13.7 million people. That's because they wouldn't be able to afford the annual premiums, which would rise from $3,450 to more than $5,000.
"The disruption would cause significant instability and threaten the viability of the individual health insurance market in the states involved," senior author Christine Eibner, who is also a senior economist at Rand Corp., said in a statement. "Our analysis confirms just how much the subsidies are an essential component to the functioning of the ACA-compliant individual market."
Meanwhile, the Robert Wood Johnson Foundation (RWJF) determined in a separate study that eliminating subsidies would cause the number of uninsured people to increase by 44 percent and raise premiums by 35 percent.
RWJF researchers added that such a large drop in enrollment would lead to adverse selection, thereby discouraging insurers from participating in many exchanges as well as individual markets. In addition, markets with higher levels of insurer competition "are likely to revert to smaller numbers of insurers, potentially increasing premium costs even further," according to the study.
The Supreme Court is expected to rule on the case in June; the decision will likely define healthcare politics in 2015, FierceHealthPayer previously reported.
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