AHIP: Set Lasting Affordable Care Act Subsidies for Low Premiums

AHIP is urging Congress to extend the American Rescue Plan Act (ARPA) tax credits beyond the current deadline to prevent increased premiums for consumers under the Affordable Care Act (ACA) and to retain Affordable Care Act subsidies.

The Biden administration passed the American Rescue Plan Act in March 2021 to offer continued relief to ACA members during the coronavirus pandemic. ARPA introduced increased premium tax credits and extended ACA eligibility to individuals whose incomes are above 400 percent of the federal poverty level (FPL).

The tax credits under the current ARPA standards will expire on December 31, 2022. AHIP and Avalere Health have released data estimating how much members’ premiums will increase in 2023 if the ARPA tax credit enhancements are not made permanent.

The research detailed the possible future healthcare spending of individuals in three different circumstances.

A 27-year-old that makes $19,191 a year, or 149 percent FPL, could experience an increase of nearly $800 per year in premium costs. A 46-year-old earning 325 percent FPL ($41,860 annually) could see a $1,304 annual premium increase. A couple aged 55 who makes $70,551 per year—placing them 405 percent above the FPL—could face an annual increase of $9,130, the equivalent of almost $800 more per month.

If the ARPA tax credits are not extended beyond the current 2022 expiration date, 18 million Americans could suffer significant increases to their out-of-pocket premiums, according to the research. The 2023 premium increases will become evident when individuals receive their renewal letters by November 1, 2022.

Individuals who become eligible for Affordable Care Act subsidies under ARPA could be hit particularly hard if the subsidies are not made permanent. AHIP referenced additional Avalere research in the press release that looked at the estimated 2023 premiums for members in specific cities and counties.

For 55-year-old couples whose income is 405 percent FPL in major cities and counties in Arizona, Florida, Georgia, and Pennsylvania, annual premiums could increase by anywhere from $10,361 to $12,816.

“Every American deserves access to affordable, high-quality coverage and equitable care,” Matt Eyles, president and chief executive officer of AHIP, said in the press release.

“After more than a year of an unprecedented pandemic, when reliable, affordable health coverage has been so essential to the health and well-being of Americans, we urge Congress to permanently adopt these tax credit enhancements to protect the coverage on which hundreds of millions of Americans rely on.”

The ACA premium tax credits led to 940,000 new enrollees in the federal health insurance market. Monthly premiums decreased by more than 25 percent for these members. Their out-of-pocket healthcare spending also dropped by nearly 90 percent, due to more affordable plan options.

The ARPA subsidies reduced monthly premiums for almost two million current members as well.

Along with keeping premiums low, making the ARPA subsidy increases permanent could reduce the number of uninsured individuals by nearly 14 percent, which equals out to 4.2 million members, according to a past Urban Institute report.

Solidifying the tax credits could increase marketplace enrollment, with an estimated $475,000 individuals switching from an employer-sponsored health plan to a subsidized marketplace plan.

AHIP is not the first organization to call for the Affordable Care Act subsidy changes to be made permanent. The Alliance of Community Health Plans (ACHP) released recommendations to improve the ACA, one of which included expanding the marketplace subsidies and making the tax credits permanent.  

Other aspects of the ACA have been extended to benefit consumers, such as the Special Enrollment Period extension to August 15, 2021. Making the ARPA tax credits permanent is another step that could help ACA members avoid high out-of-pocket premiums in 2023.