The true cost of Obamacare has been exposed by the Schumer shutdown
- Thread starter Diogenes
- Start date
The Affordable Care Act (ACA) relies heavily on subsidies to function, particularly the premium tax credits and cost-sharing reductions that make coverage affordable for low- and middle-income individuals. Without these subsidies, the ACA’s structure faces significant challenges:
- Premium Affordability: Subsidies lower the cost of premiums for about 90% of ACA marketplace enrollees (based on 2023 data). Without them, premiums would spike for many, likely causing healthier, lower-income individuals to drop coverage, shrinking the risk pool.
- Adverse Selection: A smaller, sicker risk pool increases insurer costs, driving up premiums further. This could trigger a "death spiral" where only high-risk individuals remain insured, making the market unsustainable.
- Market Stability: Subsidies stabilize the individual market by ensuring broad participation. Without them, insurers might exit markets due to financial losses, reducing competition and consumer choice. Between 2016 and 2018, insurer exits were a real issue when subsidies were uncertain.
- Mandate Effectiveness: The ACA’s individual mandate (repealed in 2019) aimed to balance the risk pool. Without subsidies, even a reinstated mandate might not compel enough healthy people to enroll, as cost becomes prohibitive.
- Medicaid Expansion: Subsidies indirectly support Medicaid expansion by covering those above the poverty line. Without subsidies, states might face pressure to cut Medicaid, further straining the system.