NY Anticipates the Impact of Ending the American Rescue Plan Act Flexibilities

The American Rescue Plan Act established enhanced tax credits that boosted New York’s state health insurance marketplace enrollment, but the end of those tax credits could lead to a spike in premiums that forces enrollees off of the marketplace, according to a report from New York State of Health.

“Given the ongoing COVID-19 pandemic, the importance of having access to and maintaining health coverage as the gateway to accessing health care has never had such global significance,” Danielle Holahan, executive director of NY State of Health, said in a press release. 

“Without an extension of these subsidies, New Yorkers will receive notice of steep premium increases in October ahead of the annual open enrollment period, and we expect tens of thousands of New Yorkers to forgo coverage they feel they can no longer afford.”

When the American Rescue Plan Act’s enhanced premium tax credits end, premiums will rise 58 percent for New Yorkers who received enhanced tax credits, the report shared.

As of May 2022, the state of New York provided health insurance coverage for nearly 6.6 million residents through Medicaid, Child Health Plus, qualified health plans, and the Essential Plan. This represented a big boost in enrollment compared to March 2020 when the state covered 4.9 million residents.

More than 139,500 individuals are receiving enhanced American Rescue Plan Act tax credits. When the law ends these individuals will experience an increase in premiums that might drive them out of the state health insurance marketplace.

With the advanced premium tax credits, over 42,450 individuals pay less than $100 per month. Nearly 25,480 individuals pay less than $150 per month due to the advanced premium tax credits and over 13,140 enrollees pay less than one dollar per month due to the American Rescue Plan Act’s provisions.

The tax credits primarily serve lower-income individuals and families. Almost 80 percent of individuals who receive enhanced tax credits have incomes below 400 percent of the federal poverty level. About one-fifth of all of the enrollees who receive enhanced tax credits have incomes above 400 percent of the federal poverty level.

However, if the American Rescue Plan Act stayed in place, the report projected a spike in enrollment in qualified health plans. 

The law has already proven influential on marketplace enrollment trends and consumer plan selection. Its enactment preceded a migration of over 8,000 enrollees from off-marketplace plans to on-marketplace plans.

The Silver plan enrollment rose from 37 percent to 40 percent while Bronze plan enrollment dropped by the same margin. This shift could indicate that enrollees are moving from less comprehensive to more comprehensive health plans due to the decreased cost.

The Essential Plan also saw a significant enrollment shift. New York eliminated its monthly premium for the Essential Plan. Within a year of making this change, the plan saw its enrollment spike by 92,000 enrollees. Nearly all New Yorkers who qualify to enroll in the Essential Plan have done so (97 percent).

However, if the American Rescue Plan Act ends, the state will lose $600 million to $700 million in federal funding for the Essential Plan. The report noted that this drop in federal funding could stunt expansion opportunities.

When the public health emergency ends, the state’s Medicaid program is likely to experience impacts similar to those that separate studies have projected on a broader scale.

Separate studies have anticipated that Medicaid enrollees will start losing their eligibility the month after the public health emergency ends.

Some states are already considering action steps to prevent these impacts. The Massachusetts Medicaid program—which also grew substantially as a result of the pandemic— outlined ways that states can prepare for the end of the public health emergency and protect their residents from major coverage losses.

Policymakers have sought to take legislative action to control the Medicaid enrollment churn rate if the continuous enrollment policy ends with the public health emergency.