A recent analysis by the Urban Institute reveals that if the enhanced federal subsidies for health plans under the Affordable Care Act (ACA) expire in 2025, up to 4 million Americans could lose their health coverage. The expiration of these subsidies could lead to a 16% increase in the uninsurance rate, with a dramatic 42% drop in subsidized marketplace enrollment.
The effects of this change won’t be felt equally across the nation. The 10 states that have not expanded Medicaid—such as Texas, Florida, and Georgia—would bear the brunt of the coverage loss, accounting for nearly 63% of the decline in subsidized plans. These states, which cover 28% of the nonelderly population, would see a significant rise in the uninsurance rate, particularly among Black and Hispanic communities.
The enhanced subsidies, introduced during the COVID-19 pandemic, increased premium tax credits for people earning between 100% and 400% of the federal poverty level (FPL), while also extending eligibility to those earning above 400% FPL. The Biden administration and other proponents argue that these subsidies have been vital in increasing ACA enrollment, which reached a record 21.3 million people this year.
However, Republicans have expressed concerns over the cost of these subsidies and their potential to drive up the budget deficit. The Congressional Budget Office estimates that making the enhanced subsidies permanent would add $335 billion to the deficit from 2025 to 2034.
If the subsidies do expire, many individuals will be forced to choose between healthcare and other essential expenses, such as housing or food. In states without Medicaid expansion, the situation is even more dire, as individuals with incomes between 100% and 138% of FPL will face higher costs without the subsidies.
The expiration could also disrupt the ACA exchanges by driving younger and healthier individuals out of the system, potentially raising premiums for other enrollees. The loss of coverage would have widespread economic impacts, affecting both individuals and communities, especially in underserved states.
As the debate over these subsidies continues, it remains to be seen whether lawmakers will take action to preserve them, or if millions of Americans will face the consequences of higher healthcare costs in just over a year.
TexHealth president Jim Rodriguez echoes these concerns and proposes, “If the enhanced subsidies expire, which I hope doesn’t happen all at once, wouldn’t it be better to gradually phase them out? This way, we can avoid a sudden spike in the number of uninsured individuals. For example, we could set an income limit at 600% of the Federal Poverty Level (FPL) and reduce it by 50 points each year. In the second year, the income limit would be 550% of FPL , then 500%, 450%, and finally, 400%, where it started when the enhanced subsidies were introduced.”
Regardless of the method chosen, if the enhanced subsidies end, TexHealth is prepared to help eligible individuals transition back into coverage without a gap. Our TexHealth Certified Agents are ready to assist small businesses with enrollment, and we are fully equipped to help these new groups access state-sponsored subsidies. We’re here to help!
Source Article:Healthcare Dive