ARPA Tax Credit Expiration Will Increase Uninsured Population by 3M

The uninsured population may increase by more than 3 million if policymakers do not extend the premium tax credits under the American Rescue Plan Act (ARPA), according to an Urban Institute issue brief.

ARPA introduced premium subsidies for individuals and families on the Affordable Care Act (ACA) marketplace. The legislation also expanded eligibility for these subsidies to individuals and families with incomes higher than 400 percent of the federal poverty level (FPL).

The premium tax credits allow enrollees with incomes below 150 percent of FPL to receive silver health plan coverage at no cost. The ARPA subsidies led to a record increase in Marketplace enrollment, with 5.8 million new enrollees signing up for coverage during the 2022 open enrollment season.

The premium subsidies under ARPA are currently set to expire on December 31, 2022, which may lead to significant coverage losses for many Americans.

To understand how individuals and families will be impacted if policymakers let the tax credits expire, researchers generated health coverage estimates using the Urban Institute’s Health Insurance Policy Simulation Model.

The researchers found that without premium tax credit expansions, 8.5 million people will receive marketplace coverage with premium subsidies next year, which is 4.9 million fewer people than if the subsidies were extended.

Premium tax credit expiration will also lead to one million more unsubsidized nongroup enrollees on the marketplace, as many enrollees with incomes above 400 percent of FPL will lose their subsidy eligibility. In addition, 3.9 million people with nongroup coverage will lose that coverage if the subsidies end.

The end of the public health emergency (PHE) will also impact marketplace enrollees if the premium tax credits expire.

Medicaid programs were required to provide continuous coverage for beneficiaries throughout the PHE. After the PHE ends, states will begin dis-enrolling individuals who no longer qualify for coverage.

With the PHE expected to end sometime in 2022, the researchers estimated that Medicaid enrollment will drop by more than 14 million in 2023.

If policymakers extend the ARPA premium tax credits, the individuals who will lose Medicaid eligibility could enroll in affordable marketplace plans and avoid losing health insurance coverage.

However, if the premium tax credits expire, 3.1 million additional people will be uninsured, which is 12 percent more than if the tax credits were extended, the brief stated.

People with incomes between 200 and 400 percent of FPL will experience the harshest consequences from subsidy expirations, with 1.1 million individuals losing coverage. The number of uninsured individuals with incomes between 138 and 200 percent of FPL would rise by 634,000, the report found.

A significant share of individuals with incomes below 138 percent of FPL would become uninsured as well, as these enrollees would lose access to zero-premium silver plans if the ARPA subsidies expire. Individuals would lose this coverage mainly in states that have not expanded Medicaid, the brief noted.

Young adults between 19 and 34 years of age are likely to experience the most significant coverage losses, with an estimated 1.5 million individuals becoming uninsured.

ARPA expirations will also unevenly impact non-Hispanic Black individuals, with 522,000 or 17.7 percent losing coverage. The uninsurance rate for this population would increase from 8.6 to 10.1 percent, the researchers found.

Individuals of all incomes who will not lose coverage will have higher premiums if the subsidies expire.

Low-income enrollees will pay an average of $457 more per person per year, and individuals with incomes between 150 and 400 percent of FPL would pay $1,045 more per person each year. People with incomes above 400 percent of FPL would lose eligibility for the subsidies, leading to an average yearly premium increase of $2,003 per person.

Although extending the tax credits will keep premiums low and help individuals maintain coverage, the brief noted that without legislation that raises revenue, the extension would increase the federal deficit by $25.3 billion. Over 10 years, this would amount to a $305 billion increase.