SBMs anticipate thousands may disenroll from coverage if the enhanced subsidies expire
Washington DC — Key findings reported by the state-based marketplaces (SBMs) show that the American Rescue Plan Act (ARPA) lowered costs and expanded access to health insurance for over 4.2 million Americans enrolled through the SBMs. These data further show that expiration of ARPA provisions will lead to significant premium increases for the majority of consumers enrolled in coverage through the SBMs.
ARPA has had a significant impact on the health insurance marketplaces, both by enhancing the amount of tax credits available to marketplace consumers and extending eligibility for premium tax credits to more middle-income Americans. Currently, these provisions are set to expire on December 31, 2022.
“ARPA’s enhanced subsidies enable greater financial security and health protections for marketplace consumers,” said Hemi Tewarson, President and Executive Director, National Academy for State Health Policy (NASHP). “Expiration of the enhanced subsidies will lead to market disruptions and premium increases for millions of consumers, resulting in an increase in the uninsured across the country.”
NASHP operates the State Health Exchange Leadership Network, a consortium of the state leaders and staff operating the SBMs. To understand the impact of ARPA’s tax credit enhancements and potential ramifications if those policy changes expire, NASHP engaged its SBM Network and gathered data that reflects the impact of ARPA.
Key findings reported by states include:
- Historic enrollment growth including record-high enrollment in California, Colorado, Connecticut, Maryland, Minnesota, New Jersey, Pennsylvania, and Washington. Over 600,000 individuals newly enrolled in SBM coverage in 2022.
- Substantial affordability support: ARPA’s enhanced subsidies enabled average premium savings that ranged from 7-47 percent across the SBMs. In addition, at least 8 states report that 20% or more of their enrollees are paying less than $25 per month for coverage.
“The reality of even modest increases of premium subsidies on enrollees is notable because people can use the savings to make ends meet. ARPA’s enhanced tax credits have a direct impact in helping individuals mitigate the effects of current inflation. Further, they have allowed the Massachusetts Health Connector to apply state funds otherwise needed for additional premium assistance toward reducing cost-sharing for critical services including primary care, mental health visits, and prescription drugs,” said Louis Gutierrez, Executive Director, Massachusetts Health Connector Authority.
- Significant increases in SBM enrollment of target populations including communities of color: Several SBMs reported notable enrollment increases from key target populations including Black, Latino, and young and older adult populations.
“The American Rescue Plan opened the doors of health insurance to more people than ever before, literally changing millions of lives, by increasing affordability through enhanced and expanded subsidies. Overall, the majority of Covered California’s record-high 1.8 million enrollees saw a 20 percent reduction in what they pay for their coverage, which directly translates into improvements in equity for California’s diverse communities of color. Without the American Rescue Plan subsidies, the financial help for approximately 150,000 middle-income Californians will vanish, and one million Covered California lower-income enrollees with incomes at or below 250% of the federal poverty level will see their premiums double on average,” said Jessica Altman, Executive Director, Covered California.
- Increased purchasing power and financial security: ARPA’s premium savings enabled thousands of SBM customers to “purchase up” (e.g., from bronze plans to silver or gold), granting them more robust benefits and improved financial protection from high out-of-pocket spending on healthcare.
“Developing closer relationships with rural communities has helped to ensure residents in every corner of our state knew about the enhanced savings available. In fact, this Open Enrollment, some of the largest year-over-year increases in signups came from rural counties. From Moffat to Rio Blanco to Mesa County, Coloradans are seeing lower average net premiums than they have in years. Not too long ago, residents in these same counties faced some of the highest premiums in the country and too many families were priced out of coverage. It is critical that we protect access and affordability for these families and for families across Colorado,” said Kevin N. Patterson, Chief Executive Officer, Connect for Health Colorado.
- The majority of SBM enrollees will lose financial support if the enhanced subsidies are not extended. SBMs estimate that consumers average spending on premiums may increase by 15-70 percent.
- Thousands may disenroll from coverage if the enhanced subsidies expire, changing the dynamics of insurance markets resulting in premium increases. In addition to dropping coverage, increased costs will drive many customers to “purchase down” eliminating increased financial security as well as improved access to health care services enabled by plans at higher metal tiers.
Timing is critical if Congress is to extend ARPA’s subsidies. SBMs, state Departments of Insurance, and insurance carriers have already begun planning for the 2023 plan year, with SBMs beginning operation changes and modifications in June. In addition, most states’ insurance rates will be finalized by July, with consumers alerted to changes in renewal notices issued as early as August.
Consumers are also facing the potential end of the federal public health emergency, after which millions are expected to move from Medicaid to the marketplaces. ARPA enhancements make it possible for low-income enrollees to transition into $0 coverage available through the marketplaces, limiting potential rate shock. However, if the end of the public health emergency coincides with the end of APRA subsidies, millions of transitioning individuals will risk coverage losses. Without ARPA, consumers with incomes up to 150 percent FPL could be expected to pay up to $70 per month for a marketplace benchmark plan — unaffordable for most at this income level.
Except where otherwise noted, information for this analysis includes data collected from 17 SBM states: CA, CO, CT, DC, ID, ME, MD, MA, MN, NV, NJ, NY, OR, PA, RI, VT, and WA.
