The provision of subsidies drives customers to purchase health insurance
An important premise of the Affordable Care Act (ACA) was that Americans who must purchase their own health insurance in the individual market should have coverage regardless of their medical history and that monthly premiums should be affordable.
The rules for achieving these goals have been in place for several years. And while they worked pretty well for some Americans, there were others for whom ACA-compliant health insurance was still unaffordable.
But the American bailout plan, passed earlier this year, has increased the ACA's subsidies and made truly affordable coverage much more available than it used to be.
The numbers speak for themselves: Exchange enrollment likely hit a record high of nearly 13 million people in 2021 after hitting more than 2.5 million people during the COVID / American Rescue Plan registration window that ended this month in most states had enrolled.
How much do consumers save on health insurance premiums?
And the amount people pay for their protection and care is a lot less than it was before the APR increased the subsidy. We can see this in the states that use the state exchange (HealthCare.gov) as well as the states that operate their own exchanges:
- Among those who enrolled during the most recent special enrollment period in the 36 states using HealthCare.gov, the average post-subsidy premiums were 27% lower than the amounts people paid before the ARP.
- Among HealthCare.gov applicants who enrolled or updated their registrations during the special enrollment period to receive the extended subsidies, 35% are now paying less than $ 10 / month for their insurance coverage.
- Average deductibles for new HealthCare.gov members were 90% lower than pre-ARP deductibles, likely largely due to the number of people who were able to sign up for free or low-cost Silver plans with co-payment built in. (This includes people who will receive unemployment benefits in 2021 and people who are not eligible for Medicaid and whose household income is between 100% and 150% of the federal poverty line.)
- The Washington state stock exchange reported that 78% of their enrollments are now receiving premium subsidies, up from 61% before the ARP was introduced. And consumers with incomes above 400% of the poverty line who were not eligible for subsidies before the ARP are now paying an average of $ 200 less in premiums each month. The Washington Stock Exchange also found that 15% of their enrollments are now paying $ 1 a month or less for their coverage, up from just 5% whose premiums were so low prior to the ARP.
- The California State Stock Exchange reported that consumers with household incomes between 400% and 600% of the poverty line save an average of nearly $ 800 per month on their premiums. (That is a person with an income of up to $ 76,000 or a household of four with an income of up to $ 157,000.)
- The Nevada State Stock Exchange reported that people who have registered or updated their account since the ARP was introduced pay an average of $ 154 per month in post-subsidy rewards, while the post-subsidy rewards at the end of open enrollment last winter period (before ARP) was $ 232 / month.
- The Maryland State Stock Exchange reported a 12% increase in the number of enrollments receiving grants; over 80% of current exchange students in Maryland are eligible.
These examples illustrate the improved affordability that ARP has brought to health insurance markets. People who were already eligible for funding can now receive larger funding. And many of the people who were previously not eligible for subsidies – but may face very unaffordable health insurance premiums – are benefiting from the ARP's elimination of the income limit on subsidy entitlement.
How long will the ARP subsidy boost last?
Although the ARP's subsidies for those receiving unemployment benefits in 2021 will only be available until the end of this year, the remaining improvements to the ARP's premium subsidies will continue to be available through 2022 – and possibly longer if Congress extends them.
This means that the affordability gains we've seen this year will be available during the upcoming open enrollment period when people compare their plan options for 2022.
Robust ACA-compliant coverage will continue to be a more realistic option for more people as the need for alternative coverage options such as short-term plans, fixed compensation plans, and health care sharing plans will be reduced.
Even disaster plans – which are ACA-compliant but inconsistent with premium subsidies – are likely to see fewer registrations next year as more people qualify for expanded subsidies that make metal-level plans more affordable.
Can everyone find affordable health insurance now?
Not yet. There are still affordability issues faced by some Americans who need to get their own health insurance. This includes more than two million people affected by the "coverage gap" in 11 states who have refused to extend Medicaid eligibility, as well as approximately 5 million people affected by the ACA "family disorder".
There are strategies for avoiding the coverage gap when you are in a state that has not expanded Medicaid, and Congress lawmakers are also considering the option of a state health program to cover those in the coverage gap.
Families affected by the family breakdown have access to an employer-funded plan that is affordable for the employee but not for the whole family – and yet the family is not eligible for marketplace subsidies. (It is possible that the Biden government could administratively address this issue in future rulemaking.)
Have ARP's subsidy increases been successful?
These two obstacles aside, the ARP has succeeded in making affordable health insurance a more realistic option for most Americans who need to get their own health insurance. We can see its success in the record high enrollment of exchange programs, the increased percentage of eligible enrollments, and the reduction in postpaid premiums people pay.
If you are currently uninsured or covered by a non-ACA-compliant plan (including a grandfather or grandmother's plan), please take a moment to see what your options are in the ACA-compliant market. Open enrollment for 2022 coverage starts in just two months, but you may also find that you can still enroll for a plan for the remainder of 2021 if you live in a state that has a COVID / American registration window Rescue Plan is ongoing, or if you have recently had a qualifying event (examples include loss of employer-funded insurance, marriage, or the birth or adoption of a child).
Even if you only shopped during open enrollment for 2021 plans last winter, you might be surprised how different the rewards you would have paid then and now are. The ARP was not yet in force during the last open enrollment period. So if you weren't eligible for a grant last time around, or the plans still seemed too expensive despite a grant, you should check again this fall.
The 2022 subsidies will continue to be larger and more widely available than in the past, and you owe it to yourself to see what is available in your area.
Louise Norris is an individual health insurance broker who has been writing about health insurance and healthcare reform since 2006. She has authored dozens of opinions and educational papers on the Affordable Care Act for healthinsurance.org. Your state health exchange is regularly quoted by the media reporting on health reforms and by other health insurance experts.