ACA subsidies could go to off-exchange insurers under Republican legislation

If a county finds itself with no participating insurers in the Affordable Care Act (ACA) exchanges in 2018, customers would be allowed to use federal subsidies on insurance outside that marketplace under a bill introduced by Tennessee’s two Republican Senators.

The scenario envisioned by Sens. Lamar Alexander and Bob Corker could become reality in their own state, as 19 Tennessee counties could be left without an exchange insurer with Humana promising to drop out of the market after this year.

There’s no provision in the ACA to guarantee coverage if no insurer elects to participate in a given market. The problem was avoided in 2017, though one-third of the nation’s counties were left with only one insurer, and more exits are expected with the uncertainty surrounding the ACA markets under the Trump administration.

“At some point, on behalf of the American people, Congress and the administration have to resolve the issues that are driving up healthcare costs, limiting choices and causing the exchange market to spiral downward,” Corker said in a statement. “However, in the interim, we must take steps to ensure people in places like Knoxville, where more than 34,000 individuals receiving subsidies under current law will have zero options in 2018, have the opportunity to purchase health insurance off the exchange in the individual market.”

The bill would allow customers who are eligible for subsidies for buying insurance to use it on off-exchange plans, which will still have to be approved by state regulators as if they were being offered on the ACA marketplace.

It would also waive the individual mandate penalty for not buying insurance for customers in those areas. Sen. John McCain, R-Arizona, had proposed the same exemption in a 2016 when one county in his state was at risk of having no exchange insurer.  

Unlike some of the past proposals to offer ways around the individual mandate, this one would be temporary, running through the end of the 2019 plan year.