It’s quite simple, create enough adverse selection that a death spiral is created…it’s already started as 2027 is looking at large premium increases again.
The ACA included barring insurers from denying coverage or hiking premiums for people with pre-existing conditions, elimination of annual and lifetime coverage maximums and making it compulsory for all health plans to offer dependent coverage allowing young adults to stay on their parent’s plan until they reach age 26.
Those provisions, while benefiting individuals, drive higher premiums to cover the high risk.
Now, initiated in part by eliminating the higher COVID era subsidies, premiums paid by individuals are rising sharply.
Higher premiums encourage healthier individuals unlikely to use expensive healthcare to drop coverage. The result is the enrolled population is more likely to use health care thereby driving higher premiums to cover those costs and the trend compounds each year driving higher premiums for individuals and higher subsidy payments by government under the original rules because of higher premiums.
The subsidy is the gap between the benchmark premium and your required contribution. That required contribution is set on a sliding scale tied to income, so the subsidy itself changes as premiums change.
Nobody gets richer from these higher premiums, insurance companies still must meet legal requirements for spending those premiums on policyholders.
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