Restructuring Subsidies Could Help Fix ObamaCare

Sarah Kliff: “For as long as I’ve covered Obamacare, I’ve always found Caroline Pearson to be an exceptionally smart and honest observer of the law. Pearson is a senior vice president at the research firm Avalere Health, and I called her up Tuesday morning to talk about Obamacare’s spiking premiums.”

Pearson: “I think what you have to do is rethink the subsidy structure and benefit design structure to make coverage more appealing for people between 200 and 300 percent of the poverty line.

If you look at the report that [the Department of Health and Human Services] put out on Monday, the average income of the marketplace population is 165 percent of the poverty level. It is a very low-income population.

The mandate penalties are not working to compel people into the market, but the subsidies are in. Absent higher mandate penalties, which even in a Democratic Congress is hard, you might see getting rid of the subsidies for people between 300 and 400 percent of the poverty line and doubling down on the people between 200 and 300 percent. If you could get better enrollment among that group, it might stabilize the market.”

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