Health insurance shoppers who buy coverage on the state and federal exchanges are likely to see a discount in their premiums as soon as next month, thanks to the recent COVID-19 relief law, but prices could rise again in 2023 if Congress doesn’t extend new subsidies before then.
As Democrats consider what aspects of their health agenda their next legislative push may include, lawmakers say they plan to extend the enhanced premium tax credits that were authorized through 2022 in the COVID-19 relief law enacted last month, but they haven’t laid out a specific plan for doing so.
The law increases the size of tax credit subsidies so that no one shopping on a state or federal health insurance exchange would pay more than 8.5 percent of their income on premiums in 2021 or 2022. In the past, people with income of more than four times the federal poverty level did not qualify for any subsidies for the insurance, and that limit would return if the extra help expires.
The new law also covers the full cost of health insurance premiums for people who earn up to 150 percent of the poverty level for those two years.
For Democrats, the law marked one of the first significant improvements to the 2010 health care law since its enactment more than a decade ago. But they are also putting pressure on themselves to extend the enhancements before the 2022 midterm elections.
“As people get these enhanced premium subsidies, it would be terrible both politically and practically to take them away,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation. “Once people start getting these increased premium subsidies, taking them away would mean significant premium increases, which would hit right at the same time as the midterm elections.”
Health care has been a political flashpoint in every election since the law's creation, and the expiration of these provisions could set up another campaign trail land mine in 2022.
Democratic lawmakers say they plan to extend the more generous subsidies before then, but it’s not clear when or how they might do that.
Sen. Tim Kaine, D-Va., said the enhanced health insurance tax credits aren’t the only programs in the COVID-19 relief law that Democrats want to make permanent, noting they also want to extend provisions increasing the child tax credit and the earned income tax credit.
“We definitely want to push for the other provisions but keep these in place. So we just have to figure out a way to do it,” he said.
Improving affordability for consumers could pressure Republicans to vote to extend the health insurance enhancements if the issue comes up as a stand-alone bill or with other policies that Republicans support, Kaine argued.
“When you see what these enhanced tax credits can do in terms of affordability for people who are struggling, you know, they will not want to see them phased back,” he said.
Frederick Isasi, the executive director of Families USA, an advocacy group pushing expanded health insurance coverage, said health care affordability is a top issue for voters in both parties. While most Republicans did not campaign on building on the 2010 health care law, many did run on lowering health care costs.
“This is a win across the political spectrum,” Isasi said. “If it doesn’t get done, it could become a vulnerability for Democrats, and Republicans, who ran on this issue last cycle.”
Still, Republicans are unlikely to broadly support extending the enhancements, said Douglas Holtz-Eakin, the president of the right-leaning nonprofit American Action Forum. Premium costs had stabilized during the Trump administration, and while enrollment dipped during that time, increasing the subsidies is a “Band-Aid, at best,” he said.
“It will be the job of each party to make it the other person’s political liability,” Holtz-Eakin said. “If premiums go up on your watch — and the Democrats run the House, the Senate and the White House — that’s bad news. It’s usually ascribed to the party in power, whether they deserve it or not.”
Republicans uniformly opposed the relief law, which was enacted by using the budget reconciliation process that allowed Senate Democrats to clear the bill without GOP support.
During a Senate vote-a-rama prior to the law’s enactment last month, Republicans offered an amendment that would temporarily raise the maximum income cap for individuals to qualify for premium subsidies to 500 percent of the federal poverty level, up from 400 percent. The amendment was rejected, 49-50. It would have made more people eligible for premium assistance than under the original 2010 law but would have limited some higher earners who now qualify under the Democrats’ relief package.
President Joe Biden hasn’t yet spelled out the details for the health care policies that could be included in an infrastructure bill he plans to propose this year, although White House Chief of Staff Ron Klain said last week that he expected provisions to lower prescription drug prices would be among those in that proposal. The White House did not respond to a request for comment about whether the administration would call for the subsidy enhancements to be extended or made permanent as part of legislation this year.
Progressives, meanwhile, are also pushing for an expansion of the Medicare program that serves seniors and people with disabilities, both to include more benefits and to make people as young as 50 eligible for coverage.
Rep. Pramila Jayapal, D-Wash., chair of the Congressional Progressive Caucus, said last week that the enhanced premium subsidies in the new law were good steps but that Democrats should address more of the structural problems in the nation’s health care system in the next package.
The Biden administration began promoting the more generous tax credits last week, when they became available on the federal exchange website, HealthCare.gov. Officials previously extended the special enrollment period through Aug. 15, giving people three more months to take advantage of lower premiums.
People could save an average of $50 per month on premiums and an average of $85 per month per policy each month because of this year’s changes, according to the Department of Health and Human Services. Four out of five consumers should be able to find a plan for $10 or less each month. On average, three out of five eligible adults who are currently uninsured could find a zero-premium plan, the agency said.
The administration briefed stakeholder groups last week on its outreach about the additional cost savings, Levitt said. In addition to spreading the word about the ongoing special enrollment period, the administration also wants to draw attention to the lower premiums to make sure that people who signed up for coverage last year know about the lower-cost plans now available.
The administration will use a combination of paid media advertising on television and digital platforms, as well as email and text campaigns to spread awareness of the more generous subsidies.
Successfully getting people to sign up for coverage in the ongoing special enrollment period and take advantage of the new subsidies could be a significant step toward extending them or making them permanent, said Chris Jennings, a Democratic health strategist who worked at the White House during the Clinton and Obama administrations.
Offering more affordable plan options could bring in more customers and improve the risk pool of people shopping in the individual market, he said, helping to keep costs down.
“Once you get more people into the program, you also have more of a political demand to sustain the policy,” Jennings said.