The Affordable Care Act Marketplace Is Under Threat as Insurers Stand to Lose Federal Subsidies

How Subsidy Cuts Would Affect the Affordable Care Act Marketplace

All over America, uncertainty continues to loom when it comes to the future of healthcare insurance. In recent months, the Republican party has worked hard to repeal and replace the Affordable Care Act or Obamacare. Their version of Obamacare, dubbed as the American Health Care Act, presented challenges to both individuals and healthcare facilities with possible changes with their health plans.

However, this attempt failed to secure enough votes to introduce a new healthcare system being supported by President Donald Trump and several members of the Republican party. Following this, President Trump said that the Affordable Care Act would stay in place in the meantime as the GOP carefully plans how best to approach the overhaul of the U.S. healthcare system.

Government Won’t Fund Subsidies

After the failure of the attempt to repeal the Affordable Care Act, President Trump has announced that he may not choose to fund the $7 billion in subsidies to various insurance companies that are participating in the Affordable Care Act marketplace.

Drastic effects are seen if the president follows through with his plans. Nearly a third of the nation's counties only have one insurer selling subsidized coverage. Without any federal payments to insurers, these counties may soon lose their subsidized insurance altogether.

The said federal subsidies currently benefit as many as seven million people in America. The way it works is that insurers would get compensated when they offer reduced premiums to individuals who would not be able to pay for the full cost of their insurance. These premiums typically range between $2,350 to $7,150 per year, depending on the individual's income.

Insurers May Raise Premiums or Force Individuals to Pay Up the Difference

If the subsidies are taken away, insurers would be forced to raise the premiums, which would make insurance largely unaffordable to a significant number of beneficiaries. On the other hand, insurers may also opt to require individuals to pay the difference from the lost federal subsidies.

Should this occur, it is believed that a number of people would simply opt to drop their insurance altogether. This, in turn, would end up starting a national health crisis that would affect millions of Americans.

Fight Continues Over Inclusion of Federal Subsidies

Today, the fate of the federal subsidies rests with the Republican majority in the House of Representatives and President Trump himself. If they cannot agree on the inclusion of subsidy payments for its short-term spending bill, the program's future may become uncertain. On the other side, Democratic leaders are already fighting for the inclusion of $7 billion in insurance subsidies in the spending bill. They are also floating the idea of a possible government shutdown should the subsidies fail to be included.

Meanwhile, the Maine Bureau of Insurance is also reportedly considering a program that would help stabilize the Affordable Care Act marketplace for individuals. According to one recent report, the bureau may request a waiver from the U.S. Centers for Medicare and Medicaid Services that would allow states to create reinsurance programs. This would help reduce financial risk on the part of insurance companies and at the same time, put new money into the health insurance system.

What this means for your patients is that they can still look forward to having health insurance coverage for themselves and the rest of their family amidst uncertainty the political climate may be causing the health care system today. Individuals can still rest easy, knowing that they can still be eligible for affordable health care. However, it helps to consult with an eligibility management firm to determine how to navigate the Affordable Care Act system should federal insurance subsidies no longer be funded.

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Robert Griffin
Robert is the Business Development Manager at DECO Recovery Management. He covers the Southeast region and specializes in ACA related topics. It is DECO’s Mission to maximize reimbursement to our clients by leveraging innovative technology, processes and compassionate advocates to provide exemplary service.

Categories: Affordable Care Act