Analysis: Permanent ACA subsidies would reduce uninsured by 4.2 million
Temporary provisions in the American Rescue Plan Act could have a long-term impact on the uninsured rate if extended permanently.
Affordable Care Act Marketplace enrollment would increase by 60% next year if temporary subsides under the American Rescue Plan Act became permanent, a new study found.
As the economy continues to recover from the COVID-19 pandemic and recession, the plan includes several provisions designed to expand access to affordable health insurance coverage in 2021 and 2022. One provision allows people with incomes above 400% of poverty eligibility for subsidies to purchase insurance coverage from the Marketplace. The law also increases financial assistance for people at lower incomes who were eligible under the ACA. Both provisions last for two years, retroactive to Jan. 1, 2021.
Related: Premium subsidy boost will test the ACA exchange system
Urban Institute researchers, with funding from the Robert Wood Johnson Foundation, analyzed the potential impact of making these provisions permanent. Among the key findings:
- A majority of previously uninsured individuals would be attracted to the marketplace because of the enhanced subsidies, and subsidized enrollment would increase by an estimated 5.1 million.
- Roughly 317,000 people with non-ACA-compliant coverage would switch to a more comprehensive ACA-compliant plan if they were to become newly eligible.
- These estimates translate to a 60% increase in marketplace enrollment in 2022 if the provisions were to become permanent.
Earlier estimates predicted that 3.5 million people would become uninsured because of COVID-19-related job losses by the end of 2020, although definitive data are not yet available to know how many people actually lost coverage. Researchers said that considering the permanency of the rescue act’s temporary policy changes offers potential solutions for regaining coverage lost during a tumultuous year and further improving the stability of the marketplace.
“Making the enhanced ACA subsidies in the American Rescue Plan Act permanent would have a dramatic effect on both coverage and affordability,” said Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation. “Enhancing premium tax credits could positively impact the marketplace, leading to greater insurer participation and resulting in lower premiums. That’s good news for consumers and insurers.”
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