Nearly a year ago in early 2021, Congress passed the American Rescue Plan Act (ARPA), a sweeping piece of legislation to help the United States recover from the COVID-19 pandemic. The law contained many provisions, but one set of them—a group of policies making private coverage through the marketplace more affordable—improved health coverage in the United States by putting it within financial reach for millions.
Unfortunately, these provisions expire at the end of 2022. This commentary describes how ARPA made health coverage more affordable in 2021 and 2022. It then examines how the expiration of the ARPA marketplace provisions would impact coverage, arguing that these provisions should be made permanent.
ARPA improved coverage affordability.
Some of the most important provisions of ARPA were its private coverage sections. The law expanded who was eligible for subsidies to help pay for marketplace premiums, and it made those subsidies more generous for people who were already eligible under the ACA. The Kaiser Family Foundation estimated that these provisions increased marketplace subsidy eligibility by nearly 4 million people.
As a result of this increased generosity and eligibility, marketplace enrollment significantly increased in 2021. Around 1.2 million people enrolled for the first time in marketplace plans in the first four months of the Biden administration’s COVID-19 Special Enrollment Period (SEP). The provisions also spurred increased enrollment in 2022—nearly 3 million people newly enrolled in marketplace coverage between November 1, 2021 and January 15, 2022.
Around 1.2 million people enrolled for the first time in marketplace plans in the first four months of the Biden administration’s COVID-19 Special Enrollment Period.
Importantly, the COVID-19 SEP reported data on enrollee gender, race, and ethnicity. These data show that marketplace enrollment was up among populations of color in 2021: Black people were about four percentage points more likely to enroll than in previous years, and Hispanic people were about two percentage points more likely.
These plans were significantly more affordable, as well. A report released by the Department of Health and Human Services in June 2021 found that more than 40 percent of new enrollees had premiums of $10 a month or less after the ARPA subsidies, as did about 30 percent of returning enrollees.
Millions will lose coverage without the ARPA provisions.
The enhanced subsidy eligibility and generosity from ARPA expires at the end of 2022. Without congressional action, the millions of people who newly gained coverage in the marketplace or whose coverage became much more affordable will find themselves unable to afford health coverage in 2023. A Kaiser Family Foundation analysis of the impact of ARPA’s subsidies expiring found that, on average, premiums would likely double for marketplace enrollees.
The same analysis found that these premium increases would be most harshly felt by enrollees with the lowest incomes. Without the subsidies that ARPA provided, monthly premiums would become twenty-five times as expensive for an enrollee making only $15,000 a year—116 percent of the federal poverty level. This drastic increase in premiums might push people from high-value silver plans into far less generous plans, such as bronze plans with lower premiums and deductibles that are up to thirty times higher. Because premiums rise as deductibles fall, this would put families struggling to make ends meet in the position of having to choose between affordable health care or being able to put food on the table.
Without the subsidies that ARPA provided, monthly premiums would become twenty-five times as expensive for an enrollee making only $15,000 a year—116 percent of the federal poverty level.
In addition to people with low incomes being pushed out of affordable coverage, millions of people living on middle-class incomes would no longer be eligible for subsidies at all. The Kaiser Family Foundation estimates that nearly 4 million people with incomes between four and six times the poverty level became eligible for subsidies under ARPA. Without an extension of these subsidies, those millions of people would be on the hook for the entire cost of their coverage in 2022. For older adults, this increase would be even steeper: A 60-year-old making about $55,000 a year would have to pay $560 more each month for the same plan if they weren’t eligible for subsidies.
Preserving premium assistance will help safeguard coverage affordability.
The expanded premium subsidies and eligibility under the American Rescue Plan Act made meaningful health coverage affordable for millions of Americans. However, because the subsidies are only in place through the end of 2022, these millions of Americans will see their premiums increase dramatically when open enrollment begins this November. People will only feel the impact of these higher premiums more deeply after a year of record inflation, which has resulted in a 2.4-percent pay cut for the average worker.
When the House passed the Build Back Better Act in late 2021, the bill extended these subsidies through 2025. As Congress restarts negotiations for some portion of the Build Back Better Act, they should ensure that the premium subsidies passed in the American Rescue Plan Act are included. Without a permanent extension of these subsidies, many Americans will be priced out of access to needed care.