RAND: Temporary ACA coverage subsidies could prevent losses in future recession if made permanent

Enhanced tax credits and a prohibition on dropping people off Medicaid were able to prevent many people in New York from losing health coverage, a new study found.

The study, published Monday by RAND Corporation, suggests making permanent enhanced subsidies to Affordable Care Act (ACA) coverage could stave off coverage losses in a future pandemic. Congress is considering extending the boosted credits, which currently expire after 2022, but only through 2025.

“Current efforts to enhance tax credits available to help people buy health insurance could make the marketplace more resilient during future economic hard times,” said Christine Eibner, lead author of the study and a senior economist with RAND.

RAND conducted a simulation of coverage loss and insurance enrollment in 2020 and 2021 through several different scenarios to judge the impact of temporary policies.

The researchers estimated that last year about 560,000 New Yorkers lost health insurance due to job loss. However, this coverage loss was blunted by increases in Medicaid, Children’s Health Insurance Program (CHIP) and other insurance coverage options.

The federal government prevented states from disenrolling people on Medicaid for the duration of the COVID-19 public health emergency, which is stretching into next year.

Without that freeze, Rand estimates 250,000 New Yorkers would have become uninsured.

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Rand also found that the combination of the Medicaid disenrollment freeze and temporary tax credits passed under the American Rescue Plan Act would increase insurance enrollment by 160,000 individuals.

But without the interventions, approximately 120,000 more people would not have insurance.

The American Rescue Plan temporarily enhanced ACA subsidies so that people who made lower incomes paid nothing in premiums. It also ensured that people who made more than 400% of the federal poverty level would not pay more than 8.5% of their income on healthcare. The previous limit for eligibility for subsidies was 400% above the level.

RAND said the boon of the temporary policies shows the ACA on its own is not enough to fully prevent insurance loss during a pandemic.

“When continuous Medicaid enrollment and other temporary provisions expire, hundreds of thousands of U.S. residents might become uninsured,” RAND said.

These residents could get coverage on the exchanges but will need help such as more marketing and enrollment assistance to ensure they are aware of the options, the study added.

RAND’s results come as Congress is debating a massive $1.75 trillion infrastructure package that would extend the boosted ACA subsidies through 2025. The legislation would also close the Medicaid coverage gap by offering increased subsidies to eligible residents in states that did not expand Medicaid under the ACA, but only through 2025.

The House is expected to vote on the package this week but then send it to the Senate, where further changes could be made.