The nation’s 20 state Obamacare exchanges appear poised to quickly update premiums if Congress passes a straightforward extension of enhanced subsidies when it votes on the matter next month.
But there’s another, increasingly likely scenario that could catch them flat-footed. That’s if lawmakers decide to go a different route – for example, by paying the subsidies directly to consumers, a plan touted by President Donald Trump, or changing the eligibility rules by adding an income cap, which many conservatives would like to see.
“If it is more complex, if they start to change the contribution amounts … that sends us back to the drawing board,” said Lindsay Lang, director of HealthSource RI, Rhode Island’s Affordable Care Act exchange. “That would add time and complexity.”
As part of a deal to reopen the government last week, the Senate will vote on a subsidy extension by the middle of December. A straightforward extension of the subsidies, which expire at the end of this year, could be calculated within a couple weeks and communicated to consumers, several officials at state exchanges told POLITICO.
But it remains unclear if there will be bipartisan consensus on a deal, let alone a clean extension, or if the House would pass it. Open enrollment began Nov. 1 and will end, depending on the exchange, in mid to late January. The enrollment deadline for the federal exchange, Healthcare.gov, which covers 30 states, is Jan. 15.
Consumers must sign up for a plan in mid-to-late December if they want insurance coverage to begin in January. If Congress hasn’t reached a deal that would lower costs by then, they could either pay higher premiums for their preferred plan or pick a plan with less coverage.
Some consumers could decide to do without coverage until February to wait and see if a deal is made and then pick a plan in January, or they could drop out altogether.
State exchanges, and the exchange run by the District of Columbia, are preparing to update their systems and reach out to affected consumers as speedily as possible about any price change.
“State marketplaces will all do whatever needs to be done to get those tax credits out to our consumers,” said Michele Eberle, executive director of Maryland Health Benefit Exchange. “We are ready to do it and poised to do it. We will make it happen.”
The Centers for Medicare and Medicaid Service, the agency that runs the federal insurance exchange HealthCare.gov, said it would not speculate on potential future actions. However, the agency told POLITICO in a statement it uses several strategies to ensure consumers are informed during open enrollment.
“Outreach and marketing for the marketplace continue to focus on reaching as many eligible consumers as possible through a mix of digital and broadcast platforms,” the agency said.
Some states required ACA insurers to submit two sets of rates – one without the enhanced subsidies and another with them. Right now, only the ones without the subsidies are visible to consumers, many of whom have sticker shock.
The enhanced subsidies were first created in 2021 under President Joe Biden to further lower the costs of Obamacare premiums during the pandemic for an expanded pool that includes higher-income Americans who were not previously eligible. It also ensured some low-income Americans paid nothing in premiums.
The income-based tax credits first created under the Affordable Care Act in 2010 remain in place even if the enhanced versions expire.
“If we had a straightforward extension, we would have a set of rates and plans ready to go for 2026,” Lang said. “It would take a couple of weeks to load those rates into the system, test them, re-run eligibility and communicate with our customers.”
But a straightforward extension, demanded by Democrats as a condition for ending the shutdown, now appears highly unlikely after eight senators from that side of the aisle joined Republicans in voting to reopen the government without one.
Republicans have complained in recent months that the subsidies — passed solely by Democrats in 2021 and extended in 2022 through this year — have increased fraud on the exchanges and amount to handouts for insurance companies.
Republicans have floated caps on income eligibility for the subsidies and other guardrails on fraud.
Trump has recently mused about reconfiguring the subsidies into a direct payment to consumers that would bypass insurers, an action that policy experts and economists fear could lead to the collapse of the exchanges. However, legislation to implement such an approach, championed by Sens. Rick Scott (R-Fla.) and Bill Cassidy (R-La.), is still in the very early planning stages, and it’s uncertain whether Democrats would agree.
Some states say it could be fairly easy to implement a cap on income eligibility, but more detailed changes could take more time.
Outreach strategies
State-run exchanges say it isn’t just a case of updating premiums. They must also reach out to customers who have already picked a plan or held off.
“Our goal is to automatically update premiums for currently enrolled customers without requiring them to re-apply,” according to Connect for Health Colorado, the state’s exchange.
States are telling consumers that their plan decisions now don’t have to be final. For instance, a consumer who has already picked a plan can choose a new one after a subsidy deal is implemented, if open enrollment is still ongoing.
State-run exchanges say they are helping consumers process the change to their premiums.
The enhanced subsidies have greatly limited out of pocket costs for ACA consumers. They removed an income cap of 400 percent, ensuring no one would pay more than 8.5 percent of their household income on health insurance no matter how much they earned.
An estimate from the health policy research group KFF found premiums nationwide are expected to go up by 26 percent not just due to the loss of the subsidies but other factors such as higher health costs. The increase varies widely depending on the state, with some consumers now seeing triple-digit premium hikes as they explore plans.
Massachusetts’ state exchange has seen a dramatic spike in call center volume as consumers confront the changes.
“We are hearing folks who simply cannot believe what they are looking at,” said Audrey Gasteier, executive director of the Massachusetts Health Connector. “Folks who have surgery scheduled in the new year [say that] is in question now because they are not sure if they can stay covered.”