American Rescue Plan Act Subsidies Reduce State Premiums by 40%

Healthcare costs have declined for consumers during the special enrollment period, largely due to the American Rescue Plan Act (ARPA) subsidies, according to new data from CMS.

The Biden administration launched the special enrollment period in February 2021, extending the window for consumers to apply for affordable marketplace coverage at HealthCare.gov. CMS savings data reflects healthcare spending from April 1, 2021, when the ARPA tax credits took effect, to June 30, 2021.

A state-by-state breakdown highlighted individual states’ savings as a result of the ARPA subsidies.

Several states have seen savings of more than 40 percent, with some premium costs being cut in half.

Before the ARPA subsidies, Nebraska’s average premium was $109. After the subsidies, the premium dropped to $53, with the state seeing a 51 percent reduction.

Mississippi also saw a 51 percent reduction in healthcare costs, with the average monthly premium dropping from $79 to $39 following the American Rescue Plan implementation. Iowa saw strong savings as well. The average premium went from $146 to $74, amounting to a 49 percent decrease.

Returning consumers’ monthly premiums have decreased by an average of $40 per month. Over one in three members now spend ten dollars or less each month for healthcare coverage, according to the press release.

After the ARPA subsidies, new consumers who enrolled in coverage during the special enrollment period experienced a 25 percent average decrease in their monthly premiums, a separate CMS fact sheet stated. Their average deductible also decreased by nearly 90 percent, falling from $450 before the ARPA subsidies, to $50.

The ARPA tax credits may also yield lower healthcare costs on the marketplace for those who have received or will receive unemployment compensation during 2021.

The Biden administration has plans to extend the ARPA tax credits, CMS mentioned. Currently, the subsidies are set to expire on December 31, 2022. If President Biden does not extend the subsidies, consumers could face premium increases up to $12,000, experts have warned.

“Health coverage is more affordable than ever for new and returning Americans at Healthcare.gov,” HHS Secretary Xavier Becerra, said in the press release. “We encourage everyone to take advantage of this opportunity to get the peace of mind that health insurance offers. If you are in need of coverage or you have a friend or family member who is, please sign up today and encourage others to do the same.”

CMS and the Biden administration are encouraging Americans to apply for marketplace health insurance coverage one of three possible ways. Individuals can apply online at HealthCare.gov, over the phone with the Marketplace Call Center, or through a local agent.

The administration extended the special enrollment period to its current August 15 deadline in March to give Americans more time to apply for coverage. Since the period began in February, over 1.5 million individuals have enrolled in a health insurance plan through the marketplace, the press release noted.

In addition to sharing enrollment information and data through the CMS website, the agency and the Biden administration have taken additional steps to increase marketplace enrollment before the special enrollment period ends.

In April, CMS and HHS announced that the administration would spend $50 million on an outreach campaign to advertise the special enrollment period. The educational campaign consisted of broadcast and digital advertising, as well as the use of text and email communication.

CMS also launched the “Summer Sprint to Coverage” campaign in July that included testimonials and traditional advertisements encouraging individuals to seek coverage at HealthCare.gov. The campaign also aimed to increase enrollment in Black and Latino communities where uninsurance rates are high.