How might premium costs differ within states under the ACA and AHCA ?

Accounting for age, income, and geography in premium tax credit structure

Whether or not states would embrace the waivers included in the AHCA to fundamentally restructure health insurance in the individual market remains a question. But what is clear, even without waivers, the AHCA will significantly alter how premiums and subsidies are set resulting in significant changes in what people pay for coverage.

Health care costs vary within and across states, and states may vary premiums based on these geographic differences. The ACA’s tax credit structure offsets some of this cost variation by allocating premium tax credit dollars based on regional premium costs and accounts for income and age. In short, the ACA minimizes the impact of geographic price variation.  The AHCA’s tax credit structure does not account for this variation, instead issuing a flat tax credit that ranges from 2,000- 4,000 depending upon  age and limited once income reaches $75,00 for an individual. The AHCA will also permit insurers to charge older individuals five times more than younger individuals (instead of the 3-to-1 ratio established under the ACA).

The result? Some younger people in lower cost regions of a state could see lower premium costs, but many in higher cost areas could see significant premium increases. NASHP explores why geographic variation matters and includes state by state projections of how the AHCA could affect premiums, tax credits, and consumer spending on premiums.

Support for this work was provided by the Robert Wood Johnson Foundation. The views expressed here do not necessarily reflect the views of the Foundation. We are also grateful for the work of the Kaiser Family Foundation whose data we leveraged for this analysis (available at: We send special thanks to the policy team at Covered California for their analytic assistance, especially Andrew Feher, Isaac Menashe, and Katie Ravel.