The Senate Deal Could Keep Millions from Losing Health Insurance

After worrying for months that American Rescue Plan Act subsidies that made health insurance more affordable would go away, state health officials around the country are now hopeful that they’ll be extended and that millions may not lose their coverage as they’d feared.

That optimism stems from Wednesday’s announcement by Democratic Senate Majority Leader Chuck Schumer and West Virginia Sen. Joe Manchin that they’d reached a deal on a multi-billion dollar package they’re calling the Inflation Reduction Act. The legislation would extend the subsidies, now due to expire at the end of the year, for another three years.

With $433 billion in new spending, Schumer and Manchin’s proposal is a considerably slimmed-down version of House Democrats’ $1.75 trillion Build Back Better plan. But it would actually do more in terms of health care coverage.

The new proposal, which includes $369 billion in climate funding, would spend $64 billion to extend the insurance subsidies for three years, a year longer than under Build Back Better.

There’s no guarantee Schumer, of New York, will be able to muster the unanimous support of all 50 Senate Democrats he needs to pass the measure over the expected unanimous opposition of Republicans.  

Still, Zachary Sherman, executive director of Pennie, the agency responsible for running subsidized Affordable Care Act insurance in Pennsylvania, said Friday he was “thrilled” to see the proposal. “These subsidies are the difference for so many Pennsylvanians, allowing them to afford and access necessary health care services,” he said in a statement to Route Fifty. 

“At a time when household budgets are already stretched thin, avoiding an increase in what families pay for their health insurance will go a long way, and more Pennsylvanians will stay and get covered as a result,” he added.

Kevin Patterson, chief executive officer of Connect for Health Colorado, that state’s health coverage agency, was also hopeful. 

“Though we know negotiations are not quite done yet, it’s extremely important that the enhanced subsidies are extended,” he told Route Fifty in a statement. “When affordability increases, so does enrollment, and the ability for people to get health care.” 

Sherman and Patterson were among the heads of 19 state health insurance programs who warned congressional leaders two weeks ago that if the subsidies are not extended, an estimated “3.1 million Americans will drop their health insurance because they can no longer afford it.”

Hemi Tewarson, executive director of the National Academy for State Health Policy, which organized the letter, said officials had wanted the additional subsidies to be made permanant. But they were still “thankful,” she said, with how the deal shaped up.

State officials like Covered California executive director Jessica Altman worried in interviews and statements that people will no longer be able to get the medical care they need. 

But, given that accidents and heart attacks will still happen, state and local governments would likely end up having to spend more to treat people when they show up at publicly-funded emergency rooms and clinics without insurance.

Double Threat

Making matters worse is that all this would happen at the same time millions of others could lose their Medicaid coverage. In addition to responding to the Covid-19 pandemic by creating the ARPA subsidies, Congress barred states from removing people from Medicaid, the federal program that provides medical coverage to low-income people.

The ban in the 2020 Families First Coronavirus Response Act, though, will lapse when the Biden administration declares an end to the public health emergency tied to the pandemic—something that could happen as soon as in October. 

An estimated 15 million people could get kicked off of Medicaid as a result. State officials have been hoping to help them continue to have health coverage by getting them enrolled in the subsidized ACA plans. But should ARPA’s subsidies end, the price of getting that insurance would go up for the former Medicaid recipients, probably beyond what they could afford.

Covered California estimated that without the ARPA subsidies, 1 million in their state would see ACA premiums more than double. New York officials said those who get subsidized ACA coverage would see their premiums rise by 58%.

Manchin blocked the bigger Build Back Better package in the Senate last year, arguing it was too expensive. But, during a press conference on Thursday, he said that when he began thinking about what he could support in a scaled-down bill, keeping insurance costs lower, at a time when inflation is high, was something he could back. His and Schumer’s plan also includes a proposal to lower drug prices.

Lower Premiums, Broader Eligibility

“The subsidies that came with the American Rescue Plan have been really significant,” Sherman had said in an interview last week before Schumer and Manchin announced their deal.

Prior to the pandemic, the Affordable Care Act required that even low-income people pay something for health insurance. 

Those making below 138% of the poverty level, about $31,700 for a family of three this year, had to pay 2% of their premiums. The federal government paid the rest. 

Those making between three and four times the poverty level had to pay 8.5% of the premiums. Those who made more did not qualify for help.

To get more people insured during the pandemic, ARPA made ACA coverage free for those making 150% of the federal poverty level or less. 

It also allowed people making more than four times the poverty level to receive subsidized insurance, as long as they paid 8.5% of the cost.

Sherman said that reduced how much those making less than four times the poverty rate had to pay in out of pocket costs, including premiums, by 15% in 2022, the year after ARPA was passed.

Those who make more than four times the poverty level and now qualify for subsidies paid 28% less.

“There was a really big drop in what consumers were paying,” he said.

As a result, 37,000 more people in Pennsylvania received subsidized coverage in 2022, an 11% increase.

Nationally as well, the health officials said in the letter to congressional leaders that the ARPA subsidies led to record numbers of people enrolled in ACA coverage. The number of 18 to 34 year olds getting subsidized coverage rose by 21%.

In Maryland, the number of people between 55 and 64 years getting subsidized coverage more than doubled. In Colorado, the number of people in rural areas getting coverage rose by 19%.

Patterson said in an interview that the number of people getting ACA coverage in Colorado went up by 10% after ARPA.

Should the subsidies sunset, he said 76% of the state’s enrollees would get less help and the amount spent on premiums for ACA coverage could go up by 40%.

In California, officials estimated that 220,000 people would no longer be able to afford insurance.

To make matters worse, the subsidies would also go away at the same time that premiums are expected to go up, the health officials told Congress.

Demand for health care is rising as more people go to the doctor to get care they deferred during the worst of the pandemic. In turn, medical costs and insurance premiums are increasing.

The health officials noted that in the 16 states that have released the information thus far, insurance companies offering ACA insurance are asking regulators to let them raise premiums next year by between 5.7% to 20.7%. Companies are seeking double-digit increases requested in Colorado, Connecticut, the District of Columbia, Maine, Maryland, New York, and Vermont.

More of the cost of caring for people would also shift from insurance companies to local and state governments should more people become uninsured, Christina Cousart, a senior policy associate with The National Academy for State Health Policy, said in an interview.

Sherman and other state officials agreed. “If you’re uninsured, it’s not like their health care needs go away or unexpected events will go away,” Sherman said.

Michael Karpman, senior research associate at the Urban Institute’s Health Policy Center, noted that a study he authored for the Kaiser Family Foundation last year found that when the number of uninsured dropped after the creation of the 2010 Affordable Care Act, so did the amount spent on what’s called uncompensated care. 

The total annual amount nationally of uncompensated care, about a third of which is paid by state and local governments, dropped from $62.8 billion between 2011 and 2013 to $42.4 billion between 2015 and 2017.

All the uncertainty, including the coming end of the Medicaid benefits, has been stressful for health coverage officials.

“Usually in the health care world one big thing like this is happening. There are a number of big things this year,” Patterson said. “We have to plan for all of these things happening at the same time,” he added. “There’s a lot of big plates spinning and we’re doing everything in our power to make sure they don’t affect the consumer.”