HHS: ARPA Premium Subsidy Expiration Will Boost Uninsurance, Costs

The US Department of Health and Human Services (HHS) has released a fact sheet elucidating the fallout of the impending American Rescue Plan’s premium subsidy expiration, including higher uninsurance and higher out-of-pocket healthcare spending.

“The American Rescue Plan included subsidies that lower health care costs and expand access to affordable, comprehensive health coverage,” HHS stated. “Premiums will skyrocket—if Congress does not extend American Rescue Plan subsidies.”

American Rescue Plan subsidies are set to expire after December 31, 2022.

HHS projected that out-of-pocket healthcare spending will grow significantly after the law’s relief expires.

The change to premium tax credits will mean that many Americans will have lower premium tax credits, but it could also mean that they will not be eligible for tax credits at all.

HHS experts estimated that 13.3 million enrollees on the individual health insurance marketplace could be impacted when the subsidies end. Approximately 8.9 million people will see their tax credits drop by around $406 per person. 

Additionally, 1.5 million enrollees could lose their subsidies altogether, while retaining their insurance coverage. On average, HHS stated that enrollees who lose their entire subsidies could lose $3,277.

Affordability is not the only factor at stake if the American Rescue Plan Act’s subsidies expire. The expiration of these subsidies will usher in a new wave of uninsurance, HHS projected. Around 3 million individuals could lose their health insurance as a result of the boost in cost.

The American Rescue Plan Act led to a record-breaking Affordable Care Act marketplace enrollment of 14.5 million in 2022, with 5.8 million new enrollees. For four out of five enrollees, their health plan options on the federal health insurance marketplace included at least one plan that would cost $10 per month and families saved around $67 per person per month in 2021 as a result.

However, much of that progress is at risk if the subsidies expire, HHS warned. Nine out of ten enrollees on the federal healthcare website were receiving financial assistance, the department estimated. If the subsidies that enabled that financial support expire, millions of Americans will experience a change in the affordability and accessibility of their healthcare coverage.

The HHS fact sheet included a state-by-state breakdown of the American Rescue Plan Act subsidy expiration date’s impact.

Some states could see premium increases of 86 percent or more if the subsidies end. Wyoming and South Dakota had a particularly high potential increase, with projected premiums rising as much as 132 percent and 95 percent, respectively. However, these states are among the ten states with the lowest number of plan selections.

Some states saw the American Rescue Plan Act decrease state premiums by 40 percent and others saw their premium costs cut in half.

The concerns that HHS stated are not new. Other experts and policymakers have voiced concerns that the end of the subsidies will leave many Americans with higher healthcare costs.

Urban Institute researchers found that the elimination of American Rescue Plan Act subsidies could have implications for health equity in rural healthcare.

Urban Institute also reinforced the HHS projection that at least 3 million Americans could lose their healthcare coverage if the American Rescue Plan Act subsidies expire.