ICYMI: Economists: Strengthening the Individual Market is Pro Market

Economic Experts Encourage Congress to Ditch Excessive Government Mandates and Extend Critical Tax Credits to Avoid Higher Health Care Costs and Lost Coverage for Hardworking Americans

A new opinion piece today in RealClearMarkets highlights the importance for the U.S. House to remove government mandates and bureaucratic red tape targeting the individual health insurance market in the One Big Beautiful Bill (OBBB) as the legislation is finalized ahead of the July 4 holiday — and the critical urgency for Congress to avert a massive health care tax hike by extending tax credits millions of hardworking Americans rely on to afford their coverage.

Authors Ike Brannon, PhD., president of Capital Policy Analytics, and Anthony Lo Sasso, Ph.D., professor and chair of the economics department at DePaul University, highlight key findings from their recent economic analysis demonstrating that should Congress pass excessive mandates proposed for the OBBB and fail to extend enhanced Premium Tax Credits (PTCs), monthly health care premiums would increase by an average of 75 percent for Americans who buy their own insurance in the individual marketplace and benefit from tax credits.

The combined impact of these blows could destabilize the individual marketplace and lead to millions of hardworking Americans losing their health care coverage entirely.

“In recent years, the individual marketplace has achieved record levels of insurer participation, driven by improved affordability and predictable enrollment processes,” said Brannon and Lo Sasso. “Disrupting this delicate balance with subsidy withdrawals and complex administrative hurdles risks market destabilization, insurer exits, and fewer affordable private coverage options.”

“We recognize the importance of reducing enrollment fraud and ensuring proper subsidy targeting, but our analysis suggests that introducing burdensome verification and payment requirements alongside subsidy rollbacks would drive between four to six million eligible Americans out of private marketplace coverage,” noted Brannon and Lo Sasso. “The modest savings achieved from tighter controls would pale in comparison to the economic and social costs associated with higher uninsured rates or increased reliance on public programs such as Medicaid.”

The authors conclude that Congress should preserve the PTCs and remove red tape in the OBBB in order to “support a robust healthcare system that would boost the economy and ultimately save taxpayer dollars.”

Key takeaways from Brannon and Lo Sasso’s economic analysis, “Private Plans, Public Goals: Preserving an Individual Market that Offsets the Employer Tax Advantage and Avoids Medicaid,” include:

• Premium Shock: Allowing enhanced credits and silver loading to lapse would raise net premiums roughly 75 percent for most subsidized households, a move that would deepen the employer-tax distortion already warping the market.
• Fraud Control vs. Coverage Loss: Tighter verification can curb improper enrollments, but coupling new paperwork with higher premiums would push four to six million eligible people out of Marketplace plans, trading limited fraud savings for a surge in uninsurance or Medicaid crowd-in.
• Risk Pool Erosion: The main impact of ending auto-reenrollment, shortening sign-up windows, and adding a five-dollar nominal monthly payment would be to deter healthier enrollees from enrolling, triggering predictable adverse selection yet still preferable to losing them entirely to the uninsured pool.
• Fragile Equilibrium: Today’s individual market, while imperfect, has achieved record insurer choice with only modest premium growth. This market could unravel if abrupt subsidy cuts force carriers to reprice sharply or exit.
• Most Market-Friendly Approach: Subsidized Marketplace coverage, especially if bolstered by Custom Health Option and Individual Care Expense (CHOICE) employer contributions, remains the most market-aligned way to offset the far larger Employer-Sponsored Insurance tax break while preserving consumer choice and provider access.

Read the full Brannon-Lo Sasso op-ed HERE.

Read the full Brannon-Lo Sasso economic analysis HERE.

Read more on the implications of excessive mandates and red tape targeting the individual health care marketplace, combined with the looming prospect of a massive health care tax hike, HERE.