Dean Baker and Brian Dew at CEPR write on ACA market structures. It is interesting but I don’t think they are thinking things through all the way. The ACA market structure, namely a price linked subsidy system where subsidy is a locally fixed sum tied to the second least expensive Silver plan in a region, creates oddities where simple analysis falls apart.
The lack of competition in the exchanges is a serious problem. While people can still buy insurance in the individual market off of the exchange, and still benefit from the ACA prohibition against discrimination based on pre-existing conditions, they are not eligible for ACA subsidies unless they buy insurance through the exchanges. These subsidies are necessary to make insurance affordable for millions of people.
So, the lack of a vibrant market in many counties is a serious issue for the ACA. However, there is an important part of the story that Trump and other Republicans forget to mention. The lack of competition in the exchanges is overwhelmingly a problem for people living in states controlled by Republican governors.
Competition is not an unequivical short term good for subsidized buyers. It becomes a micro level analysis. Competition in this type of marketplace produces odd results for subsidized buyers. We’ll work through some examples below the fold: