|Bloomberg News map; click on it to view a larger version|
Is the ACA is failing, as critics say? The short answer is no, but rural markets are fragile, and insurance may become too expensive for some people who buy individual insurance on government marketplaces because they make too much (about $95,000 for a family of four) to qualify for subsidized plans. When people talk about the ACA failing, they're usually referring to the marketplace exchanges for individual insurance. Some insurance companies have left the exchanges, and premiums have increased, but the "structure of the ACA’s premium subsidies – which rise along with premiums and cap what consumers have to pay for a benchmark plans a percentage of their income – prevents the market from deteriorating into a 'death spiral.' However, premiums could become unaffordable in some parts of the country for people with incomes in excess of 400 percent of the poverty level, who are ineligible for premium assistance," Cox and Levitt say. Insurer pullouts have left one in three U.S. counties, mostly rural, with only one insurer on the exchange. At the state level, individual market competition is relatively stable.
|Kaiser Family Foundation chart|
What happens if the market fails? Some rural areas are at risk of having no insurer offering marketplace plans in 2018. "If no exchange insurer ultimately moves into some of these counties, people buying their own insurance will not be able to get subsidies and would have to pay full price for insurance. Paying for unsubsidized insurance would be particularly difficult for low-income and older adults living in high-cost areas like many rural parts of the country. Our subsidy calculator can show the difference in cost," Cox and Levitt note. Some people may be left without full-price insurance options if insurers exit the regular market in their as well as the marketplace.
What could be done to strengthen the marketplace? "One possible policy response that could receive bipartisan support would be to re-establish a reinsurance program. Reinsurance programs provide funds to insurers that enroll high-cost (sicker) individuals and can work to lower premiums. The Affordable Care Act included a reinsurance program, but it was temporary and phased out in 2016. Republicans in Congress and the administration have also signaled a willingness to establish reinsurance programs; both the House and Senate repeal bills included stability funds for reinsurance," Cox and Levitt note.