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Republican plan for PPACA subsidies won't prevent 'massive disruption,' report concludes

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(Bloomberg Politics) — A new analysis of a Republican proposal to temporarily continue Patient Protection and Affordable Care Act (PPACA) premium subsidies if the Supreme Court erases them warns that it would “only delay” the onset of higher insurance premiums and loss of coverage for potentially millions of Americans.

“Even if a temporary extension of premium subsidies would help avoid disruption in the short term, it is likely that the disruption would be only delayed, not avoided altogether,” the American Academy of Actuaries (AAA) says in a brief.

“If the subsidies are ultimately eliminated, potentially millions of individuals will drop coverage and premiums will increase substantially, unless other equally strong mechanisms are implemented that would encourage participation by a broad cross section of risks,” the AAA says.

The analysis evaluates ideas in a bill put forth by Wisconsin Sen. Ron Johnson and 31 Republicans that would preserve — through August 2017 — the PPACA premium tax credits.

See also: GOP leaders consider preserving PPACA subsidies until after the 2016 election

Some say 7.5 million Americans could lose access to the tax credits if the Supreme Court rules against the government in King vs. Burwell next month.

The legislation also would repeal the PPACA individual mandate. That would exacerbate the disruption, as mandate repeal “could result in adverse selection that would raise premiums and threaten the viability of the market.” 

While Johnson’s plan has the support of Senator Majority Leader Mitch McConnell, R-Ky., it isn’t faring well with House Republicans. Other Republican contingency options have even less support, leaving open the question of whether the party will unite behind any solution. 

“If the Supreme Court rules, as the law clearly states, that those subsidies don’t flow through the federal exchange, we’re recognizing the reality that that’s going to be a mess,” Johnson told Bloomberg earlier this month. “We could be looking at a moment of chaos.”

The AAA warns in its analysis that a sudden elimination of the PPACA subsidies could case “massive disruption” in the individual market. If the disruption is severe, “millions of people would drop coverage, and the average costs of those remaining insured would soar.”

See also: Court blocks PPACA congressional benefits suit

“I think it’s a pretty big concession on our part,” Johnson said of his proposalin an interview. Some House conservatives have criticized the idea of continuing the subsidies, even temporarily, as a ratification of PPACA. Johnson, who will likely face a tough reelection battle in 2016, said failing to address the effects of a King vs. Burwell decision ending the subsidies would “of course” endanger Republicans in the election, as Democrats would blame Republicans for causing many Americans to lose their insurance.