Consequences of American Rescue Plan Act Premium Tax Credits Expiring Leave a comment

According to a brief from the Princeton, N.J.-based Robert Wood Johnson Foundation through the Washington, D.C.-based Urban Institute, over 3 million individuals could become uninsured in 2023 if Congress does not extend enhanced subsidies for Affordable Care Act (ACA). The brief entitled, “What If the American Rescue Plan Act Premium Tax Credits Expire? Coverage and Cost Projections for 2023” is authored by Matthew Buettgens, Jessica Banthin, and Andrew Green.

The authors state that “The American Rescue Plan Act of 2021 (ARP) increased premium tax credits (PTCs) for Marketplace coverage and extended eligibility for PTCs to people with incomes above 400 percent of the federal poverty level (FPL). Consequently, Marketplace enrollment reached a record high during the 2022 open enrollment period (OEP), which ended in January. However, these enhancements are set to expire after 2022.”

The brief estimated health coverage and costs in 2023 with and without an extension of the ARP’s enhanced PTCs. Some key findings include:

  • If the enhanced PTCs expire, 3.1 million more individuals will become uninsured
  • If the enhanced PTCs expire, individuals and families enrolled in the Marketplaces or other nongroup coverage will have their premiums increase hundreds of dollars more per year
  • People eligible for PTCs with incomes between 150 and 400 percent of FPL would pay more than $1,000 more per person for a silver plan
  • People with incomes above 400 percent of FPL who would lose PTC eligibility would pay approximately $2,000 more per year
  • The non-Hispanic Black population, young adults, and people with incomes between 138 and 400 percent of FPL will experience the greatest coverage losses if the enhanced PTCs expire
  • Enhancing PTCs will raise the federal deficit by $305 billion over 10 years

The authors add that state policy decisions will have the greatest role in influencing how many people will lose Medicaid after the public health emergency and how many of those losing Medicaid will then become uninsured. Additionally, individuals gaining PTC eligibility will need to be made aware that they are eligible and if the enrollment process is easy, more people will enroll. New guidance from the Centers for Medicare & Medicaid Services promotes states to automatically transfer contact and eligibility information to the Marketplaces and encourages working with community-based organizations to improve assistance with enrollment in coverage.

That said, “If Congress wishes to extend the enhanced PTCs, it would be best to do so soon. The 2023 Marketplace OEP starts in November. If enhanced PTCs are not extended in the first half of 2022, insurers may not have time to adjust their final premium bids for 2023, which could lead to a disconnect between the expected and actual risk pools. Consequently, Marketplace premiums will likely be overstated. This would increase federal PTC and reinsurance costs and would lower coverage take-up for the minority of nongroup enrollees not covered by PTCs. Further, if the enhanced PTCs are not extended until September or October, federal and state governments will have limited time to update enrollment systems and plan outreach, which could result in lower enrollment.”


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