Key Takeaways:
- The expiration of Affordable Care Act (ACA) health insurance subsidies will likely cause many Americans to switch to plans with lower monthly premiums and high deductibles or decide not to purchase any coverage.
- The average annual premium cost for ACA plan enrollees is estimated to more than double, from $888 to $1,904, by 2026.
- The expiration of subsidies will have economic downstream effects, including increased costs for rural hospitals and people with employer-sponsored health insurance.
- A significant portion of people may drop their marketplace coverage and become uninsured, impacting not only themselves but also the entire healthcare sector.
- The full impact of the subsidies expiring may not be apparent until open enrollment ends on January 15.
Introduction to the Issue
The Affordable Care Act (ACA) health insurance subsidies are set to expire, and this will have a significant impact on Americans who rely on them. According to healthcare policy experts, the expiration of these subsidies will likely cause many people to switch to plans with lower monthly premiums and high deductibles or decide not to purchase any coverage. This will have a serious and damaging impact on the entire healthcare sector. The average annual premium cost for ACA plan enrollees is estimated to more than double, from $888 to $1,904, by 2026, according to a KFF analysis.
The Impact on Healthcare Consumers
The expiration of subsidies will have a significant impact on healthcare consumers, particularly those who rely on the ACA marketplace for their health insurance. A recent survey by KFF found that if the subsidies expire, a third of the 24 million US adults who buy coverage through the ACA marketplace said they were likely to select a lower-premium plan – with higher deductibles and out-of-pocket costs – while a quarter of enrollees said they would be “very likely” to go uninsured. This will not only impact the individuals who become uninsured but also the healthcare sector as a whole. When people with high deductibles or no insurance become sick or injured, they may struggle to pay medical bills, and hospitals will have to treat more people who do not have the means to pay for their care.
The Economic Downstream Effects
The expiration of subsidies will also have economic downstream effects, including increased costs for rural hospitals and people with employer-sponsored health insurance. According to Emma Wager, a senior policy analyst for KFF’s program on the Affordable Care Act (ACA), “a significant portion of people dropping their marketplace coverage and being uninsured, it doesn’t just impact them, it impacts everyone.” Rural hospitals, in particular, will be hard hit, as they have very thin margins and may have to close or raise their prices and charge everybody more, including people with employer-sponsored insurance.
The Politics of the Issue
The expiration of subsidies is a highly politicized issue, with Democratic lawmakers and a small minority of Republicans pushing to extend the tax credits for three years. However, a Republican plan, which would have expanded health savings accounts and provided payments of up to $1,500 to people to purchase the most basic health insurance plans, failed to pass in the Senate. The Century Foundation, a progressive think tank, notes that people in rural areas who depend on rural hospitals and the ACA will see an even greater premium increase than those in urban areas if the subsidies expire. Ironically, these individuals are more likely to support Republicans, who voted against extending the tax credits.
The Consequences of Inaction
The consequences of inaction on this issue will be severe. According to Gerard Anderson, a professor of health policy and management at Johns Hopkins University, when premiums increase dramatically, “the healthy people drop out and therefore the pool is sicker.” This creates a “death spiral,” where the sicker people are the only ones who stay in the program until it becomes no longer sustainable, and the insurance company stops offering the plan. This will have a devastating impact on the healthcare sector, particularly rural hospitals, which may have to close or raise their prices and charge everybody more.
The Future of Healthcare
The future of healthcare in the US is uncertain, particularly for those who rely on the ACA marketplace for their health insurance. The expiration of subsidies will have far-reaching consequences, and it is essential that policymakers take action to address this issue. As Natasha Murphy, director of health policy at the Center for American Progress, notes, “we will see actually who pays that first premium… I think that is really where the rubber is going to meet the road.” The full impact of the subsidies expiring may not be apparent until open enrollment ends on January 15, but it is clear that the consequences of inaction will be severe and long-lasting.
