Five Things to Know about the Possible Renewal of Extra Affordable Care Act Subsidies

Five Things to Know about the Possible Renewal of Extra Affordable Care Act  Subsidies | KFF

Source: Kaiser Family Foundation, by Cynthia Cox, Krutika Amin, and Jared Ortaliza

Congress is considering an extension of extra help for people buying their own health coverage on the Affordable Care Act Marketplaces. These temporary subsidies, passed as part of the American Rescue Plan Act (ARPA), increased the amount of financial help available to those already eligible; the ARPA also newly expanded subsidies to middle-income people, many of whom were previously priced out of coverage.

There are reports Congress is considering a temporary extension of the subsidies for two years. If these subsidies expire, either at the end of this year or after a temporary renewal, premium payments will rise. Here’s what to know:

The Big Picture: How Much Higher Would Premium Payments be Without ARPA?

If Congress extends the temporary subsidies, premium payments in 2023 will hold mostly flat for Marketplace enrollees, since the premium tax credits shelter enrollees from increases in the underlying premium. However, if these extra subsidies expire, out-of-pocket premium payments will rise across the board next year for virtually all 13 million subsidized enrollees. In the 33 states using HealthCare.gov, premium payments in 2022 would have been 53% higher on average if not for the ARPA extra subsidies. The same is true in the states operating their own exchanges.

Exactly how much of a premium increase enrollees would see if these subsidies expire depends on the enrollee’s income, age, and the premiums where they live.

For example, using our subsidy calculator, you can see that with the ARPA a 40-year-old couple making $25,000 per year currently pays $0 for a silver plan premium with significantly lowered out-of-pocket deductible costs. Using a new version of our subsidy calculator that shows what premium payments in each zip code would have been if the ARPA had not passed, you can see that same couple would have paid $76 per month (or $915 over the course of 2022) without the ARPA. If Congress extends the ARPA subsidies, though, this low-income couple would save $915.

Here’s another example using the new calculator: If the ARPA hadn’t passed, a 60-year-old couple with an income of $70,000 would have had to pay $1,859 per month (or $22,307 over the course of 2022) for a full-price silver plan. Now, compare this to our 2022 calculator that shows what they currently pay with the ARPA: The same couple currently pays $496 per month (or $5,950 over the course of the year). Instead of being expected to pay about 32% of their income on insurance, which would likely be unaffordable, the couple is paying 8.5% of their income with the ARPA. So, if Congress extends the ARPA subsidies, this older middle-income couple will save over $16,000.

The Double Whammy: How 2023 Premium Increases and Subsidy Expiration Would Affect Some Enrollees

The renewal of these subsidies would also prevent some enrollees from experiencing two kinds of premium increases at once. If Congress does not extend these subsidies, the subsidy cliff would return, meaning people with incomes over four times poverty (or about $51,520 for a single person) would lose subsidy eligibility altogether. So, without the ARPA subsidies, these enrollees would not only pay the increase due to the loss of subsidies, but also any increase in the underlying premium.

Our early look at 2023 premiums shows premiums rising about 10%, with most rate increases falling between about 5% and 14%. This is more than in past years, in part due to inflation and rebounding utilization. These rates are still proposed and will not be finalized until next month.

The figure below shows a hypothetical subsidy cliff if premiums do indeed rise by 10%. For example, a 60-year-old making just above four times poverty ($51,521) in 2022 pays 8.5% of their income on a silver plan under ARPA, but would have paid 22% of their income in 2022 without the ARPA on average across the U.S. If premiums rise 10%, they would pay 24% of their income in 2023.

In the states where premiums are currently highest, people losing subsidies would see the steepest increases without the ARPA subsidies. For example, a 60-year-old making just above four times poverty ($51,521) in 2022 would pay more than a third of their income on a silver plan without the ARPA in West Virginia and Wyoming; and in New Hampshire, the person would have paid 15% of their income without ARPA.

The Ticking Clock: Why the Timing Matters

Insurers are now in the process of setting 2023 premiums and some are already factoring in an additional premium increase because they expect ARPA subsidies to expire.

The National Association of Insurance Commissioners (NAIC) wrote to Congress asking to extend these subsidies by July to provide greater certainty as insurers set premiums for next year. Premiums for 2023 are locked in by this August, so if Congress does not act before its August recess, whatever assumptions insurers make about the future of ARPA subsidies will be factored in to their 2023 premiums.

States and the federal government, which operates HealthCare.gov, will need to reprogram their enrollment websites and train consumer support staff on policy changes months ahead of open enrollment this fall. If Congress ultimately extends the enhanced ACA subsidies but does not give state and federal exchange administrators enough lead time to make changes to enrollment websites, people shopping for coverage may get incorrect information or may temporarily lose access to subsidies, causing some to drop coverage.

The End of the Public Health Emergency: How Enhanced Marketplace Subsidies Could Mitigate Coverage Loss

The end of the public health emergency and, with it, the requirement for continuous enrollment in Medicaid is expected to lead to significant coverage losses. So far, the number of uninsured people has not grown during the pandemic and resulting economic crisis. However, ironically, we could see a jump in the uninsured rate as the public health emergency ends if people disenrolled from Medicaid do not find alternative coverage.

Enhanced Marketplace subsidies could act as a bridge between Medicaid and the ACA Marketplaces when the public health emergency ends. If enhanced Marketplace subsidies are still in place when the Medicaid maintenance of eligibility (MOE) ends, many people disenrolled from Medicaid could find similarly low-cost coverage on the ACA Marketplaces. If they are eligible for Marketplace subsidies, people losing Medicaid coverage may find Marketplace plans that, like Medicaid, have zero (or near-zero) monthly premium requirement, assuming the enhanced assistance is extended.

The Costs: What This Means for the Federal Budget

The Congressional Budget Office (CBO) expects the enhanced subsidies to cost about $248 billion over the course of ten years if extended permanently. A large part of the estimated cost is due to the CBO’s expectation that 4.8 million more people would enroll in the ACA Marketplaces than would if the enhanced subsidies are not extended. The actual cost will depend on how many people enroll and how much premiums rise over the coming years. Congress could lower the total cost by extending subsidies temporarily, for example by two or three years, but the annual cost would likely stay about the same.

Conclusion

Health sector inflation, rising utilization, and other factors may cause 2023 premiums to rise by more than in past years. However, as we’ve written before, Congress’s action or inaction on ARPA subsidies will have an even greater influence over how much subsidized ACA Marketplace enrollees pay out-of-pocket for their premiums than will market-driven factors that affect the underlying premium.

Whether subsidies expire at the end of this year or in two or three years, their expiration would result in the steepest increase in out-of-pocket premium payments most enrollees in this market have seen.

COVID-19 Public Health Emergency Extended In The US

Covid-19 public health emergency extended in the US - CNNSource: CNN Health, by Deidre McPhillips

 

The Biden administration on Friday extended the Covid-19 public health emergency for another three months.

US Department of Health and Human Services Secretary Xavier Becerra officially renewed the declaration, extending it through October 13, 2022.

The emergency declaration has been in place since January 2020, and the latest renewal comes as the Omicron offshoot BA.5, the most contagious variant yet, continues to stake its claim in the US. Daily case rates, though vastly undercounted, are the highest they’ve been in months, as are Covid-19 hospitalizations and deaths.

Data published this week by the US Centers for Disease Control and Prevention shows that more than half of the country’s population lives in a county with a “high Covid-19 Community Level,” where the health care system is at risk of becoming overburdened and universal indoor masking is recommended.

“The Public Health Emergency declaration continues to provide us with tools and authorities needed to respond to the highly transmissible COVID-19 subvariants that are currently circulating around the country,” a Biden administration official told CNN. “The PHE provides essential capabilities and flexibilities to hospitals to better care for patients, particularly if we were to see a significant increase in hospitalizations in the coming weeks.”

Indeed, ensemble forecasts from the CDC published this week do predict that hospitalizations in the US will rise over the next month. It’s the first time in weeks that the forecasts have predicted an increase in hospitalizations, instead of a stable outlook.

“Without the PHE in place, we would be limited in our ability to provide broad and equitable access to lifesaving treatments through our Test to Treat initiative, for example, which relies on flexibility for telehealth and operations,” the official said. “Not renewing the PHE would leave us with fewer tools to respond and mean more Americans would get severely ill and end up in the hospital.”

The public health emergency declaration allows many Americans to obtain free Covid-19 testing, therapeutic treatment and vaccines. Once it ends, people could face out-of-pocket costs depending on whether they are covered by Medicare, Medicaid or private insurance. But vaccinations would generally continue to be free for those covered by Medicare and private insurance, while state Medicaid programs would determine whether to continue covering vaccinations for their enrollees.

Also, Medicare has relaxed the rules governing telehealth so that many more beneficiaries can access such services during the declaration. Telehealth services are no longer limited just to those living in rural areas, and enrollees can conduct visits at home, rather than having to travel to a health care facility, and they receive a wider array of services via telehealth. These flexibilities will end for most beneficiaries after the emergency expires.

And states are not involuntarily disenrolling residents from Medicaid during the declaration, in exchange for receiving more generous federal matching funds. As many as 14 million people could lose Medicaid coverage after the emergency ends, according to separate projections by Kaiser and the Urban Institute.

Plus, many low-income families are receiving enhanced food stamp benefits thanks to the declaration, though some states have ended their own public health emergencies and stopped the beefed-up allotments.

A separate emergency declaration allows for the emergency use authorization of testing, treatments and vaccines. Its end date will be determined by the secretary of the US Department of Health and Human Services.

Its end date will be determined by HHS, and the agency has committed to provide at least 60-day notice before any change

Payers, Providers And States Likely Have More Time Until COVID-19 Health Emergency Ends

Payers, providers, states have more time until COVID emergency ends

Source: Fierce Healthcare, by Robert King

The healthcare industry likely has until this fall to face the end of the COVID-19 public health emergency (PHE) as a key deadline came and went with no notice Monday.

 

The Department of Health and Human Services (HHS) promised to give states a 60-day notice when the PHE will end, giving a vital heads-up for when a slew of regulatory flexibilities that have been in place for more than two years will go away. The current PHE will run until July 16, and HHS did not provide any notice that it won’t be extended again for another 90 days.

The decision to not give a 60-day notice comes after an intense lobbying effort from healthcare providers that are worried about the flexibilities of the PHE going away amid a potential new surge of COVID-19.

“The risk from COVID-19 variants remains, and case rates are currently rising across the country,” said the letter from 16 health groups to HHS leadership dated May 10. “Throughout the pandemic, we have painfully learned that the rapid global spread of new variants has resulted in significantly increased transmission rates and infections in the U.S.”

Some health groups and state Medicaid officials have asked HHS Secretary Xavier Becerra to give them more than a 60-day notice of the PHE going away. A key reason is that states agreed to get a 6.2% increase in federal Medicaid matching funds in exchange for not dropping anyone off Medicaid for the duration of the PHE. Once the PHE ends, states will have up to 14 months to fully redetermine whether Medicaid beneficiaries are still eligible.

Becerra has shot down giving more notice, previously saying the PHE can only be extended for 90 days at a time. Becerra has also said that any decision on the PHE will be made via the science.

 

The PHE brought a series of major regulatory flexibilities that could go away once it expires, chief among them in telehealth. The Centers for Medicare & Medicaid Services temporarily removed barriers that include originating site requirements and audio-only restrictions for telehealth services, enabling providers to get reimbursement from Medicare for the new technology.

The flexibilities, however, only last through the PHE. Several bills introduced this session aim to offer to extend the telehealth flexibilities for several months past the PHE to determine what should be made permanent.

Trump Era Rule That Expanded Duration Of Short-Term Health Plans In Democrats’ Crosshairs

Trump era rule that expanded duration of short-term health plans in  Democrats' crosshairs | Fierce Healthcare

Source: Fierce Healthcare, by Robert King

Democratic lawmakers and advocacy groups are making a push to convince the Biden administration to nix a controversial Trump-era rule that expanded the duration of short-term health plans.

 

A collection of more than 40 House Democrats wrote to Department Health and Human Services (HHS) Secretary Xavier Becerra earlier this week calling for the agency to pull the rule. The action comes after more than 20 advocacy groups wrote to Becerra back in January asking for the rule to be nixed or modified.

“Junk plans pose clear risks to consumers, undermine the strength of the Affordable Care Act and are incompatible with the goal of making affordable, high-quality health insurance accessible to all Americans,” the letter, led by Rep. Cindy Axne, D-Iowa, told Becerra.

Advocates say urgency has been rising to get the administration to reverse the rule, which was finalized in 2018 and lengthened the duration of short-term plans from three months to a year.

A major concern is the potential end of the COVID-19 public health emergency (PHE), which was extended until July. Once the PHE goes away, states will be able to disenroll ineligible Medicaid beneficiaries and extra COBRA subsidies will go away.

“The second that the PHE is allowed to end all of those people are suddenly uninsured and the worry is that if we don’t do something now a lot of those people continue to stay uninsured or will buy a short-term plan that doesn’t meet their needs,” said Caitlin Donovan, senior director of the National Patient Advocate Foundation, one of the groups pressing the administration to act.

 

Donovan said she was confident the rule will eventually be rescinded, as it has not been popular.

The Trump administration finalized the regulation in 2018 for short-term limited duration plans that can bypass requirements under the Affordable Care Act (ACA) to cover preexisting conditions and essential health benefits. The rule said that the 12-month plans can be renewed for up to 36 months.

HHS at the time said the plans were necessary to give consumers options as premiums on the ACA’s exchanges were too high. However, the insurance industry and consumer advocates charged the plans offer skimpy coverage and can deceive consumers that they are getting more robust benefits.

“Individuals that unwittingly purchase a short-term plan that are later diagnosed with a chronic or acute condition may find themselves seriously uninsured as short-term plans typically exclude coverage of key services such as prescription drugs and mental health services, among others,” the letter, led by the National Patient Advocate Foundation and more than 20 other groups, said.

 

The letter has proposed several changes to the initial 2018 rule, chief among them to restore the original three-month limit for the plans.

Other recommended changes include:

  • * Halting sales of short-term plans during the ACA open enrollment. Advocates pointed to studies that indicate the plans can be “aggressively and deceptively marketed to consumers.”
  • * Limit sales of plans via internet and phones to help clamp down on deceptive marketing tactics.
  • * Improve disclosure of the types of risks associated with short-term health plans, including by telling the consumer the plan is not comprehensive.

The Biden administration has been in favor of getting rid of the rule or making changes, referencing it in the latest Unified Agenda that outlines regulatory priorities for the coming year.

So far, HHS has not released any regulations on the issue, and the Centers for Medicare & Medicaid Services did not return a request for comment as of press time.

Last Updated 08/10/2022

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