Leaders at state-based insurance exchanges are expressing concern about the impact that the Republicans’ “Big Beautiful Bill” could have on people enrolled in Affordable Care Act (ACA) plans.
In a letter (PDF) sent to key Senate healthcare leaders on both sides of the aisle, the directors warn that proposals in the bill would drive up costs for the privately insured, and the end of the premium tax credits would likely push more than 4 million people off of their coverage.
They note that enrollees in marketplace plans are already vetted rigorously for eligibility for tax credits based on both federal and state data. The bill, however, would change the existing process and likely cause a significant administrative burden, particularly on the most vulnerable members.
The bill would also take away flexibilities that states have long enjoyed to manage their own marketplaces, including requiring them to end open enrollment earlier, the directors wrote.
Enrollment in ACA exchange plans has skyrocketed over the last several years to record highs, largely due to enhanced premium subsidies rolled out as part of the response to COVID-19. Those subsidies are set to expire at the end of this year, and the reconciliation package would not renew them.
“The expiration of the enhanced premium tax credits and the House reconciliation bill each increase consumer costs and drive Marketplace enrollees to become uninsured,” the directors wrote. “Both impacts are dramatic when considered separately and could be truly devastating to Americans when taken together.”
In the letter, they urge legislators to extend the tax credits and nix elements of the reconciliation package that could harm the operation of the exchanges and the individuals who secure coverage through them.
Cuts to the Medicaid program proposed in the reconciliation bill have dominated headlines and the policy conversation, but experts have echoed the directors’ letter in warning that the legislation would have significant impacts on the ACA population, too.
A new analysis from KFF finds that insurers are already bracing for the subsidies to go away. Payers operating in the District of Columbia and three states have posted their proposed rates, and all of them refer to the expiry of the tax credits.
Some quantified what premium increases could look like, with estimates ranging from 1% to 7%. The average increase was 4%, per KFF. The likely largest factor driving up cost would be a shift in the acuity of enrollees, with younger, healthier individuals who previously qualified for tax credits leaving the risk pool.
“The expiration of these federal benefits increases premium costs for individuals and families and is expected to result in more people deciding to forego insurance coverage,” according to Blue Cross Blue Shield of Vermont. “This will shrink the population with coverage and worsen the risk pool requiring higher premiums for the remaining members.”
The report also notes that while insurers are preparing for the end of the subsidies, the states where proposed rates are available do have guardrails that may lessen the impact. Vermont, for example, has subsidies that are funded by the state as well.
The reconciliation package could have a downward effect on gross premiums, but “most Marketplace enrollees would still pay more than they do today if the enhanced premium tax credits are not extended,” KFF said. Enrollees who currently receive the enhanced subsidies can expect their net premium payments to increase by more than 75% on average.
A report from Manatt also examines how the reconciliation bill impacts the ACA market, noting the 90% of those currently enrolled in a marketplace plan receive a premium tax credit. A 75% increase in premium payments for this population would hit rural communities, low-income families and small business owners or employees the hardest.
The legislation also adds uncertainty to the pricing process for payers, as “it’s difficult to imagine how insurers will price such dramatic, simultaneous market changes, but it’s a certainty that premiums will increase to reflect such large uncertainty,” the Manatt analysts said.
“If passed in its current form and enhanced APTC are not extended, the Marketplace will look markedly different,” they said. “And it’s coming quickly.”
“Absent common-sense prevailing on the coming impacts to affordable insurance coverage for working people nationwide, entities across the health care industry should prepare for significant enrollment declines and position themselves to withstand major market disruption,” the Manatt experts wrote.