Congress is considering an extension of extra help for people buying their own health coverage on the Affordable Care Act Marketplaces. These temporary subsidies, passed as part of the American Rescue Plan Act (ARPA), increased the amount of financial help available to those already eligible; the ARPA also newly expanded subsidies to middle-income people, many of whom were previously priced out of coverage.
If Congress extends the temporary subsidies, premium payments in 2023 will hold mostly flat for Marketplace enrollees, since the premium tax credits shelter enrollees from increases in the underlying premium. However, if these extra subsidies expire, out-of-pocket premium payments will rise across the board next year for virtually all 13 million subsidized enrollees. In the 33 states using HealthCare.gov, premium payments in 2022 would have been 53% higher on average if not for the ARPA extra subsidies.
Insurers are now in the process of setting 2023 premiums and some are already factoring in an additional premium increase because they expect ARPA subsidies to expire. The National Association of Insurance Commissioners (NAIC) wrote to Congress asking to extend these subsidies by July to provide greater certainty as insurers set premiums for next year. Premiums for 2023 are locked in by this August, so if Congress does not act before its August recess, whatever assumptions insurers make about the future of ARPA subsidies will be factored in to their 2023 premiums.
Health sector inflation, rising utilization, and other factors may cause 2023 premiums to rise by more than in past years. Congress’s action or inaction on ARPA subsidies will have an even greater influence over how much subsidized ACA Marketplace enrollees pay out-of-pocket for their premiums.
Whether subsidies expire at the end of this year or in two or three years, their expiration would result in the steepest increase in out-of-pocket premium payments most enrollees in this market have seen.