What repealing the individual mandate means in Arkansas

Cal Kellogg, executive vice president of external operations and chief strategy officer, Arkansas Blue Cross

The repeal of the individual mandate penalty effective for the 2019 tax year does not by any means bring an end to the Affordable Care Act (ACA). The individual mandate penalty still exists for tax years 2017 and 2018.  Absent a hardship exemption, any individual who does file a tax return for 2017 and/or 2018 taxes will be faced with individual mandate penalty assessments for each month they or family members were not covered.

Even though some individuals will decide to drop coverage the numbers who drop coverage will likely be much smaller than many estimate — particularly in 2018. Highly subsidized Exchange and Medicaid recipients in Arkansas did not enroll in coverage because they feared the individual mandate, but because they basically got free coverage. The exchanges will continue to operate although the number of non-Medicaid enrollees and the risk profile of the enrollees may change significantly in 2019 and beyond.

Advanced premium tax credits are still in place and will continue to keep premiums affordable for consumers with lower incomes, even when the base premiums go up. The maximum premium a person pays is based on a percent of their income, not the premium amount.  So if the premium goes up, the tax credit gets larger for the person at lower income levels. Coverage will continue to be available to all consumers regardless of preexisting conditions in the traditional individual market. The remaining parts of the ACA are in place for now.

Repeal of the penalty will undoubtedly do some harm to insurance markets and those who depend on them. For a variety of reasons, Arkansas will likely be a state that does not see immediate significant effects. Premiums will increase in the individual market in many states, and increase dramatically in some states. Other insurers may well abandon some states with smaller markets. This will be especially true in the longer term if new rules allow yearlong short-term policies that exclude pre-existing conditions, are medically underwritten, omit essential health benefits and impose annual and lifetime limits. If this occurs, the exodus of healthy younger people and healthier well-paid individuals from the individual exchange market will accelerate the move to short-term policies. That will leave the remaining individual market for subsidized enrollees as essentially a high-risk pool. Beginning in 2019, we may see two distinctly different individual markets, one subsidized and high cost, and another healthier and lower cost with leaner benefits.

As has long been the case, Arkansas Blue Cross and Blue Shield will work with agents to help them find the best coverage available based on their client’s situation. At this point no one knows exactly what will happen and how fast changes may occur, but Arkansas Blue Cross will work to offer a variety of coverage options for customers in the individual markets in the future.