Keeping ACA Premium Tax Credits High May Cut 2025 Group Health Use

Congress will have to decide soon whether to continue a big, temporary increase in premium tax credit subsidies for Affordable Care Act public exchange plan coverage.

If Congress lets the subsidy increase lapse, that could increase enrollment in employer-sponsored health coverage by about 4 million, to 151 million, according to an Urban Institute analysis.

Some small employers might react to ACA plan subsidy cuts by adding health coverage, and that would account for some of the increase in enrollment.

Most of the rest of the increase would be the result of workers who previously found their share of the cost of employer-sponsored health coverage to be unaffordable giving up on exchange plan coverage and returning to their employers’ plans.

Some of the workers focused enough on their health to take up what the federal government classifies as unaffordable employer-sponsored health coverage could be suffering from conditions such as diabetes, arthritis or cancer.

Originally, the Affordable Care Act provided subsidies only for workers earning up to 400% of the federal poverty level. This year, that’s $60,240 for an individual and $124,800 for a family of four in most of the country.

Congress responded to the COVID-19 pandemic by increasing subsidies for lower-income people and making subsidies available to people at any income level who found that their share of employer-sponsored coverage would eat up more than 8.5% of their wages.

The analysts predict that the total number of well-insured people will fall 2%, to 249.5 million, if the increased subsidy levels lapse.

The number of uninsured people and people with skimpy insurance could increase 13%, to 31 million.

The Urban Institute is a non-partisan research center that traditionally has had strong ties to the Democrats.

Analysts at another research center with strong ties to the Democrats, the Center on Budget and Policy Priorities, estimated in a separate report that the ACA and pandemic-era subsidy increases cut the U.S. uninsured rate to 8% in 2023, from 16% in 2010, when the two bills that created the ACA became law.

Richer premium tax credits have helped increase exchange plan enrollment to 21 million this year, from 12 million in 2021, when the original tax credit rules were still in effect.


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