Page 1089 of the House 3rd Wave COVID bill has massive health policy implications if it was to be enacted. The changes would go into place on January 1, 2021 and they would be sufficient to address most of the under-subsidization problems of the ACA.
The big differences would be making the benchmark CSR-94 Silver plan be premium free for anyone earning under 150% Federal Poverty Level (FPL) and then trimming several points from the benchmark premium from 151% FPL to infinity and beyond. Maximum allowed amount to be spent on the benchmark silver plan would be capped at 8.5% of income at any income level instead of the current 9.86% of income up to 400% FPL and infinite percentage of income above 400% FPL.
However the fundamental challenge of the age ratchet and premium spread game is still in place. These policies will make insurance more attractive to the older population that is not particularly selected against versus the younger population that has adverse selection regarding who is covered now. This will not be the case for individuals earning under 150% FPL as a perfectly healthy 21 year old will be paying the same as a deathly ill 64 year old — $0 but above 150% FPL, a lot of the benefit will be going to people who have already shown that they are more than willing to buy insurance at current prices.
Changing the subsidy formula so that the young can buy the least expensive plan relative to benchmark for the same premium as the old would produce bigger enrollment gains. The key is to make the most risk tolerant groups see relatively cheaper prices than they are seeing now. This will have a secondary effect of bringing into the marketplaces a large, fairly healthy cohort that will, in normal years, bring down average premiums because the pool will be, on average, significantly healthier.
At that point, we’ll be under the counter-intuitive dynamics where lower premium levels are bad for subsidized buyers as everyone will be a subsidized buyer and we won’t have a dichotomy of some people caring about spreads and other people caring about premium levels. Instead, everyone who is not in the US Treasury market, will only care about premium spreads, but that is a future problem for a future Congress.