Report: More than 3M could lose insurance if boosted ACA subsidies expire after this year

If Congress does not extend enhanced subsidies for Affordable Care Act (ACA) coverage, 3.1 million people will lose coverage and other consumers will see premium hikes of hundreds of dollars, a new analysis finds. 

The analysis, released Thursday by the Robert Wood Johnson Foundation, concluded Congress needs to act by the summer to extend the enhanced tax credits set to go away in 2023. The ACA exchanges posted record-setting enrollment of 14.5 million people for 2022, with the boosted credits a major reason why. 

“The combined effect of ending both the premium tax credits and the public health emergency could lead to a tsunami of coverage loss,” said Kathy Hempstead, senior policy adviser at the Robert Wood Johnson Foundation, in a statement Thursday. “A reversal of progress in boosting the coverage rate to record levels seems inevitable if Congress does not act.”

Researchers found that, if the boosted subsidies go away in 2023, 8.5 million people will enroll for coverage with premium tax credits next year. There will be nearly 5 million fewer people than if the enhanced credits were extended, a 36.7% decrease.

The American Rescue Plan Act signed in 2021 delivered a major boost to tax credits, ensuring some low-income ACA customers only had to pay $10 or $0 a month for premiums.

Another major change was that people who earned more than 400% of the federal poverty level would not pay more than 8.5% of their income on healthcare coverage. The 400% threshold used to be the cutoff for people to become eligible for income-based subsidies. 

The analysis, conducted by the think tank Urban Institute, found that most people enrolled in the exchanges with 400% income above the poverty level will lose tax credit eligibility and that unsubsidized nongroup enrollees would increase by 1 million.

Urban estimated that 3.1 million more people will become uninsured if the credits aren’t extended. Researchers used a simulation model that featured the latest enrollment data for 2022. 

Not all the people who got coverage under the exchanges this year were previously uninsured, Urban added: Some had coverage via an employer-sponsored plan. 

“The number of people with such coverage would increase by 681,000 if the enhanced [tax credits] were to expire,” the analysis said. “That represents an increase of only 0.4%.”

Urban also found that groups with the greatest losses in coverage would include people with incomes between 138 and 400% above the federal poverty level.

“In addition to experiencing coverage losses, people who already had nongroup coverage before the [American Rescue Plan] will spend hundreds of dollars more per person on health insurance premiums each year I the enhanced [tax credits] are not extended,” the analysis said.

The potential coverage losses also come as the marketplaces face potential changes in the Medicaid rolls due to the ending of the COVID-19 public health emergency (PHE) set to expire later this year. The PHE banned states from dropping anyone off Medicaid rolls, and, with the expiration, states will have to decide who is still eligible for coverage. States have 14 months after the end of the PHE to make redeterminations. 

If the credits are extended, more people falling off Medicaid rolls will be eligible for premium tax credits, “and all those eligible would pay less in premiums, reducing potential losses of health coverage as Medicaid enrollment falls,” Urban said. 

It remains unclear whether Congress will extend the subsidies. An extension through 2025 was included in the $1.75 trillion Build Back Better Act, but the legislation has stalled in the Senate. Senate leaders hope to resurrect some parts of the legislation this year.