Without the enhanced subsidies, premiums would double on average for some enrollees, and they would pay an average of $800 more per year.
Expanded Marketplace premium subsidies under this year's American Rescue Plan Act are set to expire at the end of 2022.
Congress is debating whether to make these additional subsidies permanent, extend them past 2022 or let them expire. Each option has financial implications both for the federal government and consumers, according to a new analysis from KFF.
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The Congressional Budget Office and Joint Committee on Taxation originally estimated that the additional temporary subsidies provided under the ARPA would increase federal deficits by $34.2 billion. Most of that cost is concentrated in the first two years, although the CBO expected some lingering costs as some subsidized people would remain enrolled for a time, even after the ARPA subsidy enhancements end.
The Department of Health and Human Services reports that ARPA subsidies for existing consumers cost $537 million per month. It is likely these costs could rise next year as more people take up coverage during open enrollment.
The eight million Marketplace enrollees who signed up before the ARPA subsidies were enacted now are paying $68 per month after accounting for an average monthly premium savings of $67 because of the ARPA. Without the enhanced subsidies, premiums would double on average for these enrollees, and they would pay an average of $800 more per year if enrolled for the full year.
Some low-income people may move from generous silver plans with deductibles of less than $200 to bronze plans with deductibles of about $7,000 — more than 30 times higher. An estimated 3.7 million people (most with incomes between four and six times poverty) gained subsidy eligibility with the ARPA. If subsidies expire, middle- and upper-middle-income people who lose subsidy eligibility will not only have to make up the difference in the subsidy; they also will be on the hook for any increase in the "sticker price" of the premium between now and Jan. 1, 2023.
Because 2022 is an election year, the decision on whether to continue subsidies is likely to have political implications.
"In the event ARPA subsidies are allowed to expire, the timing of the resulting impact on insurance affordability could become an election issue," the report concluded. "The ARPA premium subsidy enhancements are set to expire at the end of 2022. Open enrollment begins on November 1, just one week before the midterm election is held on Nov. 8, 2022."
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
