ARPA Reduced Fiscal Challenges on CA Affordable Care Act Marketplace

Enrollees in California’s Affordable Care Act marketplace were less likely to experience financial barriers in 2021 compared to 2017 due to provisions in the American Rescue Plan Act (ARPA) that decreased cost-sharing, according to a study published in Health Affairs.

The researchers used data from a survey of Californians enrolled in an individual health insurance plan in 2021. They combined this with data from the state-based Affordable Care Act marketplace, Covered California, and two large carriers’ data for off-marketplace enrollees. The study was based on 2,118 respondents.

The researchers noted that they did not consider the uninsured population in this study. Some data collected in the survey might have changed during the study's timeframe, such as unemployment compensation amounts or subsidy-eligibility statuses.

“Although some affordability problems remained in 2021, choosing subsidy-ineligible plans was associated with worse enrollee-reported affordability among those eligible for the most generous premium and cost-sharing subsidies—that is, those receiving unemployment compensation and those with incomes up to 250 percent of poverty,” the study found.

“This finding reinforces the consequential impact of potential plan’ choice errors’ and missed opportunities for subsidies that have been documented in this setting.”

Individuals who were eligible for enhanced silver plans with cost-sharing reductions under the American Rescue Plan Act (ARPA) were more likely to select silver plans, the results showed.

Those who had incomes of up to 250 percent of the federal poverty level (FPL) had the highest rate of silver plan selection, with 58 percent of this population choosing to enroll in a silver plan. These were followed by those receiving unemployment compensation (56 percent), those with incomes at 251 percent to 400 percent FPL (44 percent), and those with 400 percent FPL or more (31 percent).

Higher-income individuals were more likely to choose off-marketplace plans, with nearly a quarter of this population deciding to do so (23 percent). Meanwhile, among those in the lowest income bracket or who were receiving unemployment compensation, a quarter or more enrolled in bronze plans.

Nearly three in ten participants had trouble covering their monthly premiums (28 percent).

Individuals in off-marketplace plans were the most likely to report challenges in covering premiums (41 percent).

For those receiving unemployment compensation, bronze plans appeared slightly more affordable than silver plans. Slightly more than a quarter of those receiving unemployment compensation and enrolled in bronze plans said that they had a hard time paying their monthly premiums, compared to 34 percent of those enrolled in marketplace silver plans.

Some individuals with incomes of 250 percent of FPL or less eligible for premium and cost-sharing reduction subsidies also struggled to cover premiums. Slightly more than three in ten respondents reported difficulty covering bronze plan premiums, compared to a little over two out of every ten respondents who struggled with paying silver plan premiums.

Affordability challenges also extended into covering healthcare expenses. A quarter of enrollees delayed care because of cost. Healthcare affordability challenges were particularly strong among individuals who were receiving unemployment compensation and were enrolled in bronze plans (41 percent) and individuals with incomes of up to 250 percent FPL.

While financial barriers remain, the results of this study demonstrated an improvement from the 2017 study. In 2017, 40 percent of enrollees struggled to pay premiums, but by 2021 that share had dropped to 28 percent.

“This difference suggests that the ARPA subsidy expansions improved the affordability of premiums among individual market enrollees in California,” the study concluded.

“With the extension of ARPA’s income-based premium tax credits under the Inflation Reduction Act, greater attention to helping consumers make informed plan choices that balance the trade-off between premium amounts versus coverage generosity could help further improve the affordability of individual-market insurance.”

Separate research indicated that permanently establishing the ARPA subsidies would increase the deficit by $247 billion over the next nine years but would decrease uninsurance by 2.2 million people. The US Census Bureau estimates that 27.2 million people were uninsured as of 2021.