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If Expanded Federal Premium Tax Credits Expire, State Affordability Programs Won’t Be Enough to Stem Widespread Coverage Losses

Physician assistant looks in patient's mouth

Physician Assistant Sue Covington examines a patient at the Doctors Care clinic in Littleton, Colo., on May 30, 2024. While Colorado is one of several states that help people access the individual insurance market, federal support will be needed to prevent coverage losses if the ACA expanded federal tax credits expire in 2025. Photo: Hyoung Chang/Denver Post via Getty Images

Physician Assistant Sue Covington examines a patient at the Doctors Care clinic in Littleton, Colo., on May 30, 2024. While Colorado is one of several states that help people access the individual insurance market, federal support will be needed to prevent coverage losses if the ACA expanded federal tax credits expire in 2025. Photo: Hyoung Chang/Denver Post via Getty Images

Toplines

  • If expanded federal tax credits for Affordable Care Act marketplace coverage expire, as planned, in 2025, all states will experience significant coverage losses and premium increases

  • Although states play an important role in making health care coverage affordable in the individual market, ongoing federal support is required to prevent widespread coverage losses

Toplines

  • If expanded federal tax credits for Affordable Care Act marketplace coverage expire, as planned, in 2025, all states will experience significant coverage losses and premium increases

  • Although states play an important role in making health care coverage affordable in the individual market, ongoing federal support is required to prevent widespread coverage losses

Authors
Rachel Swindle, Justin Giovannelli
RELATED CONTENT

Abstract

  • Issue: The uninsured rate reached a new low in 2023, in part because of record enrollment in the Affordable Care Act marketplaces. The 2021 expansion of federal premium tax credits drove these gains, but this financial assistance will expire after 2025 unless Congress acts. Meanwhile, states have invested in programs that build on the expanded federal subsidies to make coverage even more affordable.
  • Goal: Identify state initiatives to improve coverage affordability in the individual market; show how they complement enhanced federal tax credits; and discuss impacts to individual market enrollees if the expanded tax credits expire.
  • Key Findings: States are deploying a variety of strategies to reduce cost barriers to enrolling in and using health coverage. These include highly targeted programs that have lowered cost-sharing burdens and boosted enrollment among eligible but previously unenrolled residents. However, none of these are a substitute for the expanded tax credits. No state will be insulated from coverage losses should the expanded federal credits expire, nor would states be shielded from premium increases as their risk pools worsen.
  • Conclusion: States have an important part to play in helping people access and use health insurance, but affordable individual market coverage requires an ongoing federal commitment.

Introduction

A core goal of the Affordable Care Act (ACA) is to make comprehensive individual market health insurance more affordable. To accomplish this, the law features insurance premium tax credits (PTCs) as well as cost-sharing assistance for low- and middle-income people who have enrolled in a health plan through the ACA’s marketplaces. These subsidies have enabled millions of Americans to obtain quality coverage. However, the costs associated with buying and using health insurance have remained the most common barrier to accessing care for some individual market consumers.1

In 2021, the federal government enacted a law that significantly expanded eligibility for and the generosity of PTCs (Exhibit 1).2 Consumers who previously qualified for premium assistance began receiving more help. In addition, the ACA’s “subsidy cliff” — which rendered people above 400 percent of the federal poverty level (FPL) wholly ineligible for financial assistance, regardless of how expensive their coverage was — was replaced with a phased design that extends benefits to any marketplace consumer facing a benchmark premium in excess of the newly specified cap.3 Critically, this higher level of assistance will expire after 2025 unless Congress extends it.

Swindle_expanded_premium_tax_credits_state_affordability_programs_Exhibit_01

The expansion of federal premium assistance has dramatically improved access to individual market coverage. Marketplace enrollment is now at an all-time high and, partly because of this, the uninsured rate reached its lowest level in 2023.4 A secondary effect of the larger federal commitment to premium affordability has been to facilitate state efforts to address coverage costs. More broadly available and generous federal subsidies have made it easier for states to deploy their limited resources in more targeted ways, to address cost-sharing barriers, for example, or to direct additional premium subsidies to consumers for whom such assistance is likely to be especially effective.

This brief describes state actions to make individual market coverage more affordable through insurance premium subsidies and/or lower cost sharing. We examine how these state programs complement, but do not serve as a substitute for, federal financial assistance, and why they will not prevent significant coverage losses if expanded federal PTCs are allowed to expire.

Key Findings

Expanded Access to Tax Credits Has Allowed States to Target Their Limited Resources

To help make health coverage more affordable, some states are funding insurance premium subsidies that build on federal PTCs, taking varied approaches to determining eligibility thresholds based on available resources and coverage needs (Exhibit 2). Several states are targeting priority populations with low coverage rates, including workers in certain economic sectors, younger adults, and immigrants ineligible for federal tax credits due to their immigration status.

Swindle_expanded_premium_tax_credits_state_affordability_programs_Exhibit_02

The District of Columbia’s HealthCare4ChildCare program subsidizes marketplace premiums for employees of child care centers, and nearly half the eligible facilities and their employees had enrolled just nine months into the program’s launch in 2023.5 By September 2024, that number increased to 76 percent.6 Since its inception three years ago, Maryland’s Young Adult Subsidy Program, which provides additional marketplace premium assistance for those ages 18 to 37, has significantly increased coverage rates among eligible but uninsured young adults.7 New Mexico’s Native American Premium Assistance program builds on the state’s other marketplace premium subsidy and federal PTCs to ensure that qualifying enrollees with incomes up to 300 percent FPL will have a $0 premium, while those with incomes between 300 percent and 400 percent FPL also receive subsidies on a sliding scale.8 While the total number of enrollees is relatively small compared to overall marketplace enrollment, the state’s targeted subsidies help ensure that enrollees can access low- or no-cost coverage that they might otherwise be unable to afford.9

States also have sought to provide and subsidize marketplace-quality coverage for immigrants ineligible for federal PTCs.10 Colorado’s program has an enrollment cap due to funding constraints; sign-ups reached capacity within two days of the start of open enrollment in each of its first two years.11 When Washington State rolled out its Immigrant Health Coverage program in November 2023, over 2,200 enrolled in 2024 plans.12

States can also structure premium subsidies to target low-income enrollees more generally.13 Thirty-eight percent of Washington’s marketplace enrollees receive state-funded subsidies through Cascade Care Savings — available for those up to 250 percent FPL — and 38,000 pay less than $10 per month through a combination of state and federal subsidies.14 In 2023, 40 percent of marketplace enrollees in New Mexico received additional subsidies through the state’s premium assistance program, and 30 percent paid $0 for coverage as a result of combined federal and state subsidies.15 Because the Covered Connecticut program covers the portion of enrollees’ costs after federal PTCs, eligible residents (those with incomes below 175% FPL) are able to get coverage with no premiums.16 In 2023, more than one in five of Connecticut’s marketplace enrollees received coverage through the program.17

Finally, one state has taken the approach of providing a small premium subsidy to all marketplace enrollees to offset a cost affecting everyone. California, in common with several other states, requires commercial plans to cover abortion services; however, federal law precludes federal dollars, including PTCs, from being used for these benefits. Thus, some enrollees who otherwise would have a $0 premium because of expanded PTCs would instead face a nominal premium connected to these services. In light of a large and ever-growing body of research showing that even minimal costs can discourage uptake and maintenance of coverage, California implemented a $1 per enrollee per month subsidy to offset this cost.18 Under the state program, enrollees maintain access to these essential health services and those who otherwise qualify can receive a plan with a $0 premium.19

Federal Efforts to Improve Affordability Have Enabled States to Relieve Cost-Sharing Burdens

While premium subsidies make it more affordable for consumers to enroll in marketplace coverage, the high and increasing cost of copayments, deductibles, and coinsurance can make it difficult for those with insurance to access care.20 Federal cost-sharing reductions (CSRs) help offset some of these costs for enrollees between 100 percent and 250 percent FPL, and some states have used funds to further reduce consumers’ cost sharing. In 2024, the second year Colorado offered state-funded CSRs on top of the federal CSRs, Colorado increased the eligibility cutoff from 200 percent to 250 percent FPL, and the number of enrollees receiving these state CSRs doubled from 2023 to 2024.21 The state projected that annual deductibles for newly eligible silver-plan enrollees would decrease by 98 percent — from almost $3,500 to $65.22

In 2024, California is for the first time offering enhanced cost-sharing reductions for enrollees up to 250 percent FPL.23 These CSRs increase the value of silver plans to the level of gold or platinum plans, reducing enrollee out-of-pocket expenses and eliminating deductibles — a key barrier to accessing care — in all silver CSR plans.24 In the first open enrollment period with these enhancements, there was a 49 percent increase in silver-plan enrollment among new consumers compared to the prior year’s enrollment trends, and over 800,000 people benefited from the state-enhanced CSRs.25

New Mexico’s cost-sharing assistance program, which is available for those with incomes up to 300 percent FPL, ensures that enrollees’ out-of-pocket costs will be significantly lower than the federal limitations and expands access to higher-value plans for enrollees with incomes between 250 percent and 300 percent FPL who would otherwise be ineligible for federal CSRs.26 In 2023, these enrollees constituted 44 percent of marketplace enrollment, which increased to nearly 54 percent of total enrollment by July 2024 — illustrating the need for, and responsiveness to, reduced out-of-pocket expenses.27

The Most Comprehensive Affordability Programs Receive Significant Federal Funding

Four states provide individual market consumers access to comprehensive coverage on notably more generous terms than the subsidy programs described above. Massachusetts offers substantial marketplace premium and cost-sharing assistance to individuals with incomes up to 500 percent FPL via the ConnectorCare program, a cornerstone of its pre-ACA health reform efforts.28 Minnesota, New York, and Oregon have used ACA flexibilities to provide low-income individuals affordable coverage that bridges Medicaid and the marketplace. Minnesota and Oregon operate ACA-authorized Basic Health Programs (BHPs), which provide heavily subsidized insurance to individuals with household incomes up to 200 percent FPL who otherwise would be eligible for marketplace subsidies.29 Until recently, New York also administered a BHP, called the Essential Plan. In 2024, the state used an ACA waiver to implement a successor program with a similar structure — and the same name — but expanded eligibility to reach individuals up to 250 percent FPL.30

While Oregon’s program is new — its BHP launched in July 2024 — the other programs now have long track records of enrolling residents in affordable comprehensive coverage. Prior to its recent expansion, Essential Plan enrollment exceeded 1.1 million, for a take-up rate of 97 percent (compared to about 200,000 and 72% for New York’s marketplace).31 For individuals with incomes from 100 percent to 199 percent FPL — roughly the target population of the BHP — the uninsured rates in Minnesota (8.3%) and New York (8.0%) in 2023 rank among the lowest nationwide.32 Meanwhile, ConnectorCare has helped Massachusetts achieve the lowest overall uninsured rate in the nation (2.8% in 2023).33

All four states made important policy commitments and expended significant resources to establish and administer these programs. At the same time, the relative generosity of the financial assistance that they provide, and that makes them successful, is attributable in substantial part to federal dollars. ConnectorCare’s subsidies are supported by federal funds that flow to the state pursuant to a longstanding Medicaid Section 1115 waiver. States’ BHPs receive federal funding equal to 95 percent of what the federal government otherwise would have spent to subsidize enrollees’ marketplace coverage. In practice, these federal payments cover most BHP costs.34 In New York, federal BHP payments were sufficient to fund the Essential Plan in its entirety; the program is now fully financed by monies available under its new federal waiver.35

There is surely value in determining whether these programs’ achievements can be replicated. The answer is not straightforward, however, and depends on state-specific factors.36 For example, New York’s especially high enrollment and low state expenditures may reflect unique regulatory and market conditions not present elsewhere.37 Notably, because federal support for BHPs is a function of federal spending on PTCs, expanded federal premium assistance has provided a significant financial lift to these programs.38

If Expanded Federal PTCs Expire, States Will Not Be Able to Avoid Coverage Losses

The temporary federal PTC expansion has been a boon to state and federal efforts to reduce the uninsured rate and boost marketplace enrollment. But these gains will disappear if it is allowed to expire after 2025.39 The Congressional Budget Office has published increasingly dire estimates of these impacts. Its most recent projection shows marketplace enrollment decreasing precipitously — 7 million people dropping coverage — in the first two years after the temporary PTCs expire.40 Moreover, the loss of enhanced PTCs is expected to cause disproportionate numbers of younger, healthier enrollees to drop coverage. This will leave the remaining risk pool sicker and therefore more costly, contributing to even greater premium increases.41 While the uninsured rate is currently at a record low, it’s projected to increase in the coming years, due in large part to the loss of enhanced PTCs.42

These impacts would vary by state, but even states with generous affordability programs will not be able to shield marketplace enrollees from the sharp reduction in federal PTCs.43 For example, state officials estimate that more than 55,000 current enrollees in Washington State, between 187,000 and 246,000 in California, and over 40,000 in Colorado will drop coverage should the enhanced PTCs expire — this despite the fact that all three states invest substantial funds in subsidies for individual market enrollees.44

Discussion

Thirteen states administer programs that reduce premiums or cost sharing for individual market consumers, and these initiatives have produced real benefits that can inform state policymakers elsewhere.45 While several are long-running, most programs are fairly new, having launched or been substantially modified after the 2021 expansion of the federal PTC.

These recent state efforts were designed as a complement to expanded federal premium assistance, while the influx of federal support has made some older programs, such as Minnesota’s and New York’s, more financially secure. None of these initiatives is a substitute for expanded premium tax credits, nor is there reason to expect that any state could overhaul their program to replicate it. If Congress lets this valuable federal assistance expire, no state is likely to be able to deploy the resources needed to weather the loss.46

NOTES
  1. Sara R. Collins et al., Are Marketplace Plans Affordable? Consumer Perspectives from the Commonwealth Fund Affordable Care Act Tracking Survey, March–May 2015 (Commonwealth Fund, Sept. 2015). ↩
  2. American Rescue Plan Act of 2021, Pub. L. 117-2, § 2801, 135 Stat. 4, 49 (2021); Inflation Reduction Act of 2022, Pub. L. No. 117-169, § 12001, 136 Stat. 1818, 1905–06 (2022); and Centers for Medicare and Medicaid Services, “The Inflation Reduction Act Lowers Health Care Costs for Millions of Americans,” press release, Oct 4., 2022. ↩
  3. The cost cap is calculated based on the price of the second-lowest-cost silver plan available in the consumer’s rating region, or the benchmark premium. Premiums in excess of the benchmark plan rates will cost the consumer more than the cap (8.5% of income for those above 400% FPL) if the consumer chooses to enroll in those higher-cost plans, and, conversely, plans with lower premiums than the benchmark plan will cost the consumer less than the 8.5%-of-income cap. ↩
  4. The Medicaid continuous coverage requirement, put in place during the COVID-19 pandemic, has also played a role in the record-low uninsured rate; in fact, the “unwinding” of this continuous coverage requirement has contributed to recent upticks in the uninsured rate. See, for example, U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, National Uninsured Rate Reaches an All-Time Low in Early 2023 (ASPE, Aug. 2023); Daniel McDermott, Cynthia Cox, and Krutika Amin, Impact of Key Provisions of the American Rescue Plan Act of 2021 COVID-19 Relief on Marketplace Premiums (KFF, Mar. 2021); Matthew Rae et al., How the American Rescue Plan Act Affects Subsidies for Marketplace Shoppers and People Who Are Uninsured (KFF, Mar. 2021); and Karen Pollitz, How the American Rescue Plan Will Improve Affordability of Private Health Coverage (KFF, Mar. 2021). ↩
  5. D.C.’s HealthCare4ChildCare program pays the consumer’s portion of the premium for gold-level standard plans. This subsidy covers premiums for both the worker and any dependents. For more information about enrollment trends, see, for example, DC Health Benefit Exchange Authority, “DRAFT September 2023 Meeting Minutes,” “January 2024 Meeting Minutes,” and “March 2024 Meeting Minutes.” ↩
  6. September 2024 enrollment statistics were provided through correspondence with DC Health Benefit Exchange Authority staff. ↩
  7. The Young Adult Subsidy Program initially began as a two-year pilot program, but in 2023 the program was extended through the end of June 2026 (the end of the state’s fiscal year). The subsidy amount is calculated on a sliding scale based on income and age, and funding for the program is capped annually such that when projected enrollment nears the cap, the subsidy is no longer offered to those who would otherwise be eligible. Maryland Health Benefit Exchange, “2024 Young Adult Subsidy Final Parameters,” presentation, June 20, 2023; MHBE, Maryland Health Connection Annual Report (MHBE, 2023); MHBE, Maryland Health Connection Data Report: June 2024 (MHBE, June 30, 2024; Md. Code, Ins. § 31-122; Md. Code Regs. 14.35.19; and Md. Ins. Administration Bulletin No. 23-9, (June 8, 2023). ↩
  8. New Mexico Office of Superintendent of Insurance, Final 2024 Plan Year Health Insurance Marketplace Affordability Program Policy and Procedures Manual (NMOSI, Apr. 13, 2023). ↩
  9. Enrollment data is current as of July 31, 2024. See, e.g., the BeWellNM Enrollment Dashboard, Subsidy Summary, at https://bewellnm.com/transparency/dashboards/. ↩
  10. Justin Giovannelli and Rachel Schwab, “States Expand Access to Affordable Private Coverage for Immigrant Populations,” To the Point (blog), Commonwealth Fund, Feb. 8, 2024. ↩
  11. Jasmine Arenas, “OmniSalud Health Insurance for Undocumented Coloradans Reaches 11,000 Enrollments in Just 2 Days,” CBS News Colorado, Nov. 9, 2023; and Colorado Immigrant Rights Coalition, “OmniSalud Health Insurance for Undocumented Coloradans Enrollment Hits Funding Cap in Just 2 Days; Demonstrates Need for More Investment,” press release, Nov. 3, 2023. ↩
  12. Washington Health Benefit Exchange, 2024 Open Enrollment Preview Report (WHBE, Feb. 2024); and Washington Health Benefit Exchange, Immigrant Health Coverage: Qualified Health Plan Expansion Data Snapshot (WHBE, Feb. 2024). ↩
  13. During the unwinding of the Medicaid continuous coverage requirement, states also have provided funding for part or all of the consumer share of marketplace premiums for those transitioning off Medicaid. For more information, see, Rachel Swindle and Sabrina Corlette, “What States Are Doing to Keep People Covered as Medicaid Continuous Enrollment Unwinds,” To the Point (blog), Commonwealth Fund, Dec. 6, 2023. ↩
  14. To receive this subsidy, individuals must enroll in a Cascade Care plan. For more information about enrollment data, see Washington Health Benefit Exchange, Health Coverage Enrollment Report: Spring 2024 Report (WHBE, Apr. 2024); and Christine Gilbert and Laura Kate Zaichkin, “Cascade Care Update,” presentation to the Washington Health Benefit Exchange Policy Committee, Mar. 19. 2024. ↩
  15. New Mexico Office of Superintendent of Insurance, Health Care Affordability Fund: Annual Report to the State Legislature (NMOSI, Oct. 31, 2023). Data reported covers fiscal year 2023. In July 2024, 42% of marketplace enrollees received state-funded premium assistance through the two state premium subsidy programs. On average, the state subsidy contributed just over $28 per member per month (not including the Native American Premium Assistance subsidy contributions, which was an additional $17 per member per month). For more information, see the BeWellNM Enrollment Dashboard, Subsidy Summary, at https://bewellnm.com/transparency/dashboards/. ↩
  16. To receive this subsidy, enrollees must select silver-level plans. For more information, see Access Health CT, “3 Things Everyone Should Know About the Covered Connecticut Program,” Access Health CT Blog, n.d.; Access Health CT, 2024 Open Enrollment Summary (AHCT, Feb. 15, 2024; and Access Health CT, A Decade of Healthier: Annual Report 2023 (AHCT, n.d.). ↩
  17. Access Health CT, “January 18, 2024, Board of Directors Meeting,” presentation to the Access Health CT Board of Directors, Jan. 18, 2024. ↩
  18. Adrianna McIntyre, Mark Shepard, and Myles Wagner, “Can Automatic Retention Improve Health Insurance Market Outcomes?,” AEA Papers and Proceedings 111 (2021): 560–66. ↩
  19. See, for example, Rachel Schwab, Justin Giovannelli, and Kevin Lucia, “California’s Marketplace Tries New Tactics to Reduce the Number of Uninsured and Underinsured,” To the Point (blog), Commonwealth Fund, Mar. 31, 2022. ↩
  20. Sara R. Collins, Shreya Roy, and Relebohile Masitha, Paying for It: How Health Care Costs and Medical Debt Are Making Americans Sicker and Poorer — Findings from the Commonwealth Fund 2023 Health Care Affordability Survey (Commonwealth Fund, Oct. 2023). ↩
  21. Colorado Division of Insurance, “Life, Accident, and Health,” 3 CCR 702-4 Series 4-2 3CCR702-4, July 30, 2024; Connect for Health Colorado, “By the Numbers: Open Enrollment Report for Plan Year 2023,” Mar. 2023; and Connect for Health Colorado, “By the Numbers: Open Enrollment Report for Plan Year 2024,” Apr. 2024. ↩
  22. Connect for Health Colorado, “Open Enrollment for Health Insurance in Colorado Starts Today,” press release, Nov. 1, 2023. ↩
  23. This is in addition to the $1 per member per month premium subsidy for qualified health plans that California offers to all enrollees regardless of income. See, for example, Rachel Schwab, Justin Giovannelli, and Kevin Lucia, “California’s Marketplace Tries New Tactics to Reduce the Number of Uninsured and Underinsured,” To the Point (blog), Commonwealth Fund, Mar. 31, 2022. ↩
  24. José Luis Sandoval et al., “Health Insurance Deductibles and Health Care-Seeking Behaviors in a Consumer-Driven Health Care System with Universal Coverage,” JAMA Network Open 4, no. 7 (July 6, 2021): e2115722. ↩
  25. Covered California, “Covered California to Launch State-Enhanced Cost-Sharing Reduction Program in 2024 to Improve Health Care Affordability for Enrollees,” press release, July 20, 2023; and Jessica Altman, “Executive Director’s Report,” presentation to Covered California Board of Directors, Feb. 15, 2024. ↩
  26. Enrollees between 200% and 300% FPL will have out-of-pocket costs capped at $3,150 (individual) — significantly less than the federal maximum of more than $7,000 for an individual. Enrollees with incomes below 150% FPL pay no more than $500 annually in out-of-pocket costs, a sixth of the federal limit. See, for example, New Mexico Office of Superintendent of Insurance, “Final 2024 Plan Year Health Insurance Marketplace Affordability Program Policy and Procedures Manual,” Apr. 13, 2023; and Centers for Medicare and Medicaid Services, “Premium Adjustment Percentage, Maximum Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on Cost Sharing, and Required Contribution Percentage for the 2024 Benefit Year,” Dec. 12, 2022. ↩
  27. New Mexico Office of Superintendent of Insurance, Health Care Affordability Fund: Annual Report to the State Legislature (NMOSI, Oct. 31, 2023); enrollment data is current as of July 31, 2024. See, e.g., the BeWellNM Enrollment Dashboard, Subsidy Summary, at https://bewellnm.com/transparency/dashboards/. ↩
  28. ConnectorCare is the successor program to Commonwealth Care, which Massachusetts created in 2006 through its comprehensive health reform law. Commonwealth Care became ConnectorCare in 2014 and began offering premium and cost-sharing subsidies on a sliding scale to marketplace enrollees with household incomes up to 300% FPL. Under a pilot expansion currently established for 2024 and 2025, the state broadened eligibility for ConnectorCare — including its premium and cost-sharing subsidies — to individuals with incomes up to 500% FPL. Massachusetts Health Connector, “Pilot Expansion of ConnectorCare Reshapes Affordability and Plan Options Through the Health Connector,” press release, Aug. 14, 2023. ↩
  29. By statute, BHP enrollment is limited to individuals with household incomes up to 200% FPL who otherwise would be eligible for federal marketplace subsidies. This includes people with incomes from 138% to 200% FPL (who meet immigration requirements and are not eligible for another source of minimum essential coverage), as well as lawfully present immigrants below 138% FPL who are not yet eligible for Medicaid because of the program’s five-year waiting period for some noncitizens. BHP coverage must be at least as comprehensive and at least as affordable as marketplace coverage. BHP enrollees are in a distinct insurance risk pool that is separate from the individual market. ↩
  30. New York operated the Essential Plan as a BHP from 2015 through March 2024. State policymakers sought to expand eligibility for the Essential Plan to individuals above 200% FPL, but federal statutory limitations governing the structure of BHPs do not permit these programs to expand in such a manner. To achieve its policy objective, the state instead sought and received approval for a federal Section 1332 waiver. The waiver, in effect, allowed New York to convert its BHP into an essentially identical state program over which it has greater control. In April 2024, the new (waiver-modified) Essential Plan took effect. From a consumer standpoint, the program is identical to its BHP predecessor except that it is available to additional individuals (people with incomes up to 250% FPL). The program’s funding stream is now different: previously, it was funded pursuant to federal rules governing BHPs; now it is funded according to the terms of its federal waiver. Federal funds fully covered the cost of the Essential Plan when it was a BHP and the state projects that federal payments under the new waiver will remain sufficient to fund the program. See U.S. Department of Health and Human Services, New York Waiver Approval Letter, Mar. 1, 2024. ↩
  31. These take-up rates are for 2023, the last year for which data are available. New York State of Health, Health Insurance Coverage Update (NYSOH, Apr. 2023). ↩
  32. “Uninsured Rates for the Nonelderly by Federal Poverty Level (FPL),” KFF, Timeframe: 2022. ↩
  33. “Uninsured Rates for the Nonelderly by Federal Poverty Level (FPL),” KFF, Timeframe: 2022. ↩
  34. In 2022, for example, about 90% of the costs for Minnesota’s BHP were borne by the federal government, with the remainder covered by state funds (about 9%) and enrollee contributions (about 1%). Randall Chun, MinnesotaCare (MN House Research, Nov. 2023). ↩
  35. For more information, see note 30, above. ↩
  36. Sabrina Corlette et al., The Basic Health Program: Considerations for States and Lessons from New York and Minnesota (Urban Institute, Apr. 2023). ↩
  37. Sabrina Corlette et al., The Basic Health Program: Considerations for States and Lessons from New York and Minnesota (Urban Institute, Apr. 2023). ↩
  38. New York estimated that the expanded federal premium tax credits increased federal funding for the BHP version of the Essential Plan by $800 to $900 million per year. New York State of Health, Health Insurance Coverage Update (NYSOH, Apr. 2023). ↩
  39. Jennifer Sullivan, Allison Orris, and Gideon Lukens, Entering Their Second Decade, Affordable Care Act Coverage Expansions Have Helped Millions, Provide the Basis for Further Progress (Center on Budget and Policy Priorities, updated Mar. 25, 2024); Centers for Medicare and Medicaid Services, “Historic 21.3 Million People Choose ACA Marketplace Coverage,” press release, Jan. 24, 2024; Eli Y. Adashi, I. Glenn Cohen, and Carmel Shachar, “With the National Uninsured Rate at a Record Low, Focus on Maintaining the Gains,” Health Affairs Forefront (blog), Oct. 19, 2023; and Jared Ortaliza, Cynthia Cox, and Krutika Amin, “Another Year of Record ACA Marketplace Signups, Driven in Part by Medicaid Unwinding and Enhanced Subsidies,” Policy Watch (blog), KFF, Jan. 24, 2024. ↩
  40. Jessica Hale et al., “Health Insurance Coverage Projections for the U.S. Population and Sources of Coverage, by Age, 2024–34,” Health Affairs 43, no. 7 (July 2024): 922–32; and Congressional Budget Office, Federal Subsidies for Health Insurance: 2023 to 2033 (CBO, Sept. 2023). ↩
  41. Matthew Buettgens, Jessica Banthin, and Andrew Green, What If the American Rescue Plan Act Premium Tax Credits Expire? Coverage and Cost Projections for 2023 (Urban Institute, Apr. 2022); and Jessica Hale et al., “Health Insurance Coverage Projections for the U.S. Population and Sources of Coverage, by Age, 2024–34,” Health Affairs 43, no. 7 (July 2024): 922–32. ↩
  42. The unwinding of the Medicaid continuous coverage requirement also plays a large role in the projected increase in the uninsured rate, but many will drop coverage as a direct result of the loss of the expanded federal tax credits. For more information, see, for example, Gideon Lukens, Health Insurance Costs Will Rise Steeply if Premium Tax Credit Improvements Expire (Center on Budget and Policy Priorities, June 2024); Matthew Buettgens, Jessica Banthin, and Andrew Green, What If the American Rescue Plan Act Premium Tax Credits Expire? Coverage and Cost Projections for 2023 (Urban Institute, Apr. 2022); and Sabrina Corlette, “CBO Projections Are Not Destiny: Policies, ACA Investments Can Change Trajectory,” Health Affairs Forefront (blog), June 20, 2024. ↩
  43. Jessica Banthin et al., Who Benefits from Enhanced Premium Tax Credits in the Marketplace? (Urban Institute, June 2024); Jared Ortaliza et al., Inflation Reduction Act Health Insurance Subsidies: What Is Their Impact and What Would Happen If They Expire? (KFF, July 2024); and Jared Ortaliza, Cynthia Cox, and Krutika Amin, “Another Year of Record ACA Marketplace Signups, Driven in Part by Medicaid Unwinding and Enhanced Subsidies,” Policy Watch (blog), KFF, Jan. 24, 2024. ↩
  44. Spencer Budd, “Enhanced Federal Subsidy: Expiration Planning“ presentation to the Washington Health Benefit Exchange Policy Committee, May 14, 2024; “Covered California Policy and Action Items,” presentation to the Covered California Board of Directors, May 16, 2024; and “Health Insurance Affordability Board,” presentation to the Colorado Health Insurance Affordability Enterprise Board, Feb. 23, 2024. ↩
  45. For purposes of this count, Washington, D.C., is considered a state. ↩
  46. Jared Ortaliza et al., Inflation Reduction Act Health Insurance Subsidies: What Is Their Impact and What Would Happen If They Expire? (KFF, July 2024). ↩

Publication Details

Date

Contact

Rachel Swindle, Research Fellow, Center on Health Insurance Reforms, Health Policy Institute, McCourt School of Public Policy, Georgetown University

[email protected]

Citation

Rachel Swindle and Justin Giovannelli, If Expanded Federal Premium Tax Credits Expire, State Affordability Programs Won’t Be Enough to Stem Widespread Coverage Losses (Commonwealth Fund, Sept. 2024). https://doi.org/10.26099/b88e-jm82

Area of Focus

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