More than 2.5 million Americans enrolled in Marketplace coverage between February 15 and July 31, 2021 during the recent COVID-19 special enrollment period (which closed on August 15, 2021). About 35 percent of these individuals were able to get covered for under $10 per month, thanks in part to the American Rescue Plan Act’s enhanced premium subsidies. Now, as Congress considers making these subsidies permanent as part of its budget reconciliation legislation, new research from the Urban Institute shows that nearly 1 million children and parents would stand to benefit from higher coverage rates and lower health care spending as a result.
The American Rescue Plan Act (ARPA) enacted last spring temporarily expanded the premium subsidies available to individuals purchasing coverage on the Affordable Care Act’s Marketplaces. The law eliminated premiums for individuals under 150 percent of the federal poverty line, extended premium subsidies to those with incomes above 400 percent of the poverty line (by capping premiums at 8.5 percent of income), substantially reduced premiums for those in the middle between 150-400 percent of the poverty line, and expanded eligibility for the most generous level of premium subsidies and cost-sharing assistance to those receiving unemployment benefits.
According to the Urban Institute’s estimates, more than 300,000 kids— including 67,000 children under the age of six and 198,000 children in moderate-income families between 200-400 percent of the poverty line— could gain coverage if these expanded Marketplace subsidies were made permanent. An additional 686,000 parents could gain coverage, including about 443,000 with moderate incomes. 267,000 of the newly-covered parents have children under the age of six and are more likely to have lower or moderate incomes compared to parents overall.
Permanent expanded ARPA subsidies would also reduce health care spending by 18 percent for families overall, lowering premiums by 28 percent and out-of-pocket spending by 4 percent. Families with lower incomes would see the biggest spending reductions, reducing total health care spending by 25 percent for families under 200 percent of the poverty line and by 23 percent for families between 200-400 percent of the poverty line.
Despite these gains, about 3 million children and 6 million parents would still be uninsured in 2022. While most kids (70%) and almost 4 in 10 parents (39%) would be eligible for either Medicaid/CHIP or Marketplace subsidies, more than 15 percent of uninsured kids and 31 percent of uninsured parents would remain ineligible because of their immigration status.
In all, though, Marketplace gains from permanent enhanced subsidies could help reduce the child uninsured rate from 4.6 percent to 4.2 percent, making up for many of the coverage losses kids have experienced over recent years. And as we’ve written before, coverage gains for parents are especially meaningful because of the welcome mat effects for kids’ coverage, because healthy parents are better caregivers, and because insurance can offer financial protection for the entire family.
Open enrollment for the Marketplaces for the upcoming 2022 plan year begins November 1 and extends through January 15, 2022. Making the enhanced ARPA subsidies permanent could go a long way towards allowing more children, parents, and families to get the health coverage they need at a price they can afford.