One year after Republicans repealed the Affordable Care Act’s individual mandate, President Barack Obama’s signature health care law remains surprisingly stable and profitable for insurers.
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When Republicans gutted the ACA in the 2017 Tax Cuts and Jobs Act, eliminating the provision that required Americans to either buy health insurance or pay a fine, critics warned that decision would cause younger and healthier people to flee from the marketplace, leaving sicker, more expensive patients, remaining and causing the market to enter a “death spiral.”
But a report released by the Kaiser Family Foundation on Monday found that despite the removal of the mandate, those fears are largely unfounded.
Individual enrollment fell by 5 percent between the first quarter of 2018 and 2019, but the relatively modest growth in claims costs at the beginning of 2019 indicates that enrollment declines and policy changes did not cause healthy individuals to flee the market. In fact, the average number of days enrollees spent in a hospital in the first nine months of 2019 was slightly lower than inpatient days in the previous four years.
“Results from the first nine months of 2019 suggest that the individual market remains profitable and stable despite the effective repeal of the individual mandate,” the analysis said.
A key measure of insurers’ financial strength, margins -- the average amount by which premium income exceeds claims costs per each enrollee in a given month -- are the healthiest they’ve been in nearly eight years. (Insurer financial performance dipped slightly at the end of 2019, but the margins remained higher than all other previous years through 2017).
“These data suggest that insurers in this market remain on average financially healthy,” the report said.
The report comes amid attacks by Republicans and President Trump on arguably the biggest legislative accomplishment of the Obama administration.
Most recently, the U.S. Court of Appeals for the Fifth Circuit, in the case of Texas v. Azar, struck down the individual mandate as unconstitutional, though it did not invalidate the rest of the law, leaving its fate, once again, in limbo. The ruling was issued almost exactly one year after Judge Reed O’Connor in Fort Worth, Texas, struck down the entire law.
A coalition of Democratic states, led by California Attorney General Xavier Becerra, has made it clear that it intends to challenge the appeals court decision by petitioning the Supreme Court to take the case.
The ultimate outcome of the lawsuit will affect millions of Americans, and the repeal of the 9-year-old law could leave up to 32 million people without health insurance by 2026, according to a Congressional Budget Office report from 2017 about the effects of repealing the ACA.