Rural residents were the most likely to benefit from enhanced subsidies for Affordable Care Act coverage and face the greatest danger of losing coverage if those benefits expire after this year, a new study finds.
The study, released by the Robert Wood Johnson Foundation Tuesday, comes as healthcare groups are making a major effort to get Congress to renew the boosted subsidies. ACA enrollment grew to a record-setting 14.5 million people this year thanks in part to the higher subsidies.
“The enhanced premium subsidies have been transformational in high-cost rural areas,” said Kathy Hempstead, Robert Wood Johnson’s senior policy adviser, in a statement. “If the tax credits are allowed to expire, rural residents will have few if any policies to choose from that are both affordable and comprehensive.”
Researchers with the Urban Institute on behalf of the foundation looked at average benchmark premiums across several states on the ACA exchanges. The benchmark plan—which is the second-cheapest silver tier plan—is what the federal government uses to calculate income-based subsidies. The government ties the benchmark premium to a certain percentage of the household income.
“Because the percentage-of-income caps do not vary with premiums, the higher the benchmark premium, the greater the size of the federal government’s premium contribution for the household,” the study said.
Urban found that across 34 states, the average benchmark premiums were higher in rural areas than in urban areas, averaging out to about 10% more.
“Only eight states have average urban benchmark premiums that exceed average rural premiums,” the study said.
Researchers discovered that of those 34 states with high rural benchmark premiums, 18 of them had average rural premiums more than 10% higher than the average urban premium. In addition, 12 of those states had rural premiums more than 20% of their urban counterparts.
The study gave an example in California, where a rural benchmark premium was $519 per month for a 40-year-old nonsmoker compared to an urban benchmark of $413.
Rural residents, therefore, got a bigger boost from the income-based subsidies passed under the American Rescue Plan Act.
The enhanced subsidies ensured for the first time, people who earned more than 400% of the federal poverty level—the previous eligibility cutoff—got access to subsidies. Some low-income customers also were able to get subsidies as low as $10 a month or for nothing.
“These enhancements have been valuable nationwide, but particularly in high-cost areas such as rural regions of the country,” the study said.
It comes as efforts to extend the subsidies beyond this year stall in Congress. The Build Back Better Act would have extended the subsidies through 2025 but has been stalled in the Senate.
A collection of both payer and provider stakeholder groups wrote to congressional leaders last week (PDF) seeking action on making the enhanced subsidies permanent. Groups such as the Federation of American Hospitals, the American Hospital Association and AHIP were among the signees.
“Our country continues to work through the economic and public health implications of COVID over the past two years, including rising inflation which is forcing families to pay more at the grocery store and gas pump,” the letter said. “We cannot add to these burdens by putting the healthcare of 14.5 million current marketplace enrollees, and millions of future enrollees at risk.”