Escape Options in the ACA. Helpful or Harmful?

The White House released a report on Friday indicating that 2019 ACA updates (striking of individual mandate and increased access to Short Term and Association Health Plans) will generate $450 billion in benefits over the next 10 years. Without intense study, one probably needs to have an economics background to understand what this really means. I provided a link if that's of interest to you; I will applaud your insights.

As I lack the time and inclination to digest the exact economic magnitude, I prefer to view these changes on a qualitative basis. The conventional wisdom is that these rule modifications will harm ACA markets. Naturally, consumers will select what is in their best interest and more options create more opportunities. These plans are clearly a benefit to consumers who find them advantageous (most of whom were harmed by the ACA), but the obvious tradeoff is potentially siphoning off some healthier (and wealthier due to premium subsidy structure) ACA enrollees, although these actuarially-based plans will beneficially attract many from the uninsured roles. 

Here's the real dichotomy that we should appreciate: The provision in the ACA that allows adults under age 26 to be dependents on their parents' plan is exactly the same concept. It allows healthy, young people to "shop" for cheaper off-market coverage in the same fashion and choose between ACA and other markets; off-market options are likely more attractive for young adults ineligible for premium subsidies. In my opinion, this is far more damaging to ACA risk pool composition than the new provisions. You could make a case that "medical underwriting" is a distinction, but that's ignoring the larger picture. If people are avoiding ACA markets, it's because ACA markets aren't providing good value to them. We can have a philosophical debate whether flexible options or forced ACA enrollment (some states have elected this route) is a better approach. We can't in good conscious argue that the Age 26 provision is an ACA feature and that these new options are bugs.

Objectively, we should recognize that off-market options (whether they were initiated by President Obama and President Trump) benefit consumers and recognize that they may potentially harm ACA markets without exaggerating the real impact. Providing people with options who did not have a solution in ACA markets will result in fewer people being uninsured and lower the legitimate frustration with the ACA from this segment of the market. Ultimately, this flexibility improves consumer sentiment, eases legislative pressure on corrective changes, and may help the ACA more than it harms it.

https://www.whitehouse.gov/wp-content/uploads/2019/02/Deregulating-Health-Insurance-Markets-FINAL.pdf