Tuesday, October 17, 2017

Gaming the ACA health exchanges

A recent headline proclaims that "Pennsylvania ObamaCare to see premiums spike amid Trump pay cuts." While premiums are in fact going up nationally (and are certainly exacerbated by the recent end to certain subsidies), the important part of the story is five paragraphs down.
While the increase is steep, in Pennsylvania it will only apply to the mid-level “silver” health plans that consumers can buy on the exchange.

Plans come in three tiers, bronze, silver, and gold. Government subsidies for purchasers are based on a state's price for the silver plans. The idea was that subsidies will reflect the "average" prices of a plan. It didn't take long, though, for state regulators and insurers to realize how to game this system, raising the price of silver plans to increase the subsidies that people can then use on bronze or gold plans.
If the price of a silver plan increases, tax credits that help customers purchase insurance will also increase, so the cost of the most comprehensive “gold” plan may be much cheaper than in previous years.

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