Congressional Inaction on ACA Subsidies Creates Uncertainty for Consumers

The future of Affordable Care Act (ACA) subsidies is currently under debate in Congress, leading to uncertainty for consumers during open enrollment. This legislative discussion mirrors previous disagreements between congressional Democrats and Republicans regarding the ACA.\n\n### Consumer Concerns and Impact\nA KFF poll from December indicates that approximately half of current ACA enrollees who are registered to vote stated that a $1,000 increase in annual healthcare expenses (including copays, deductibles, and premiums) would significantly influence their voting decisions in upcoming midterm elections. Consumers, such as Daniela Perez, a 34-year-old education consultant from Chicago, have expressed concerns about potential premium increases. Perez anticipates her monthly premium could rise from $180 to $1,200 without the extension of tax credits, leading her to postpone enrollment decisions.\n\n### Congressional Activity\nOn December 11, a Senate vote was held on a proposal to extend the subsidies as part of an agreement to end a government shutdown. Another option, advanced by Republicans, included funding health savings accounts (HSAs). Neither proposal achieved the 60 votes required for passage.\n\nIn the House, Speaker Mike Johnson plans to introduce a legislative package focused on "drivers of health care costs." This package aims to expand access to association health plans, appropriate funds for cost-sharing reduction payments to stabilize the individual market, lower premiums, and increase transparency for pharmacy benefit managers. This House proposal, similar to the Republican Senate bill, does not include an extension of the enhanced ACA subsidies. The timing for a potential vote on such an extension remains unclear.\n\nDemocrats generally advocate for extending the more generous subsidies, which were introduced during the COVID-19 pandemic and are scheduled to expire at the end of the year. Republicans are divided, with some opposing a direct extension due to cost concerns and the political implications of supporting the ACA. However, some Republicans support various proposals to extend tax subsidies, citing concerns about potential political repercussions in the upcoming midterm elections.\n\nDiffering policy positions are being advanced by lawmakers across both parties and chambers. The White House has not specified a preferred plan among the various Capitol Hill proposals, although it supports HSAs in principle.\n\n### Open Enrollment and Market Operations\nEnrollment deadlines for ACA plans are ongoing, with January 15 marking the end of open enrollment in most states for coverage starting February 1. State-run ACA marketplaces, such as the Massachusetts Health Connector and Covered California, have developed contingency plans to adjust their operations and inform consumers if Congress implements changes.\n\nInitial enrollment figures for 2024 indicate some shifts. The Centers for Medicare & Medicaid Services reported 949,450 new sign-ups during the first month of open enrollment, a slight decrease from 987,869 during the same period last year. Conversely, returning customers who have selected a plan for next year increased to approximately 4.8 million, up from about 4.4 million at the same time last year. This trend may suggest that individuals with chronic conditions or immediate healthcare needs are enrolling earlier.\n\nState-level data also reflects affordability as a key factor:\n* In Pennsylvania, the Pennie marketplace reported a 16% decrease in first-time sign-ups compared to last year in the first six weeks. For every new enrollment, 1.5 existing customers canceled, primarily those earning 150% to 200% of the federal poverty level ($23,475 to $31,300 for a single adult).\n* California's Covered California observed a 33% drop in new enrollments through December 6. Jessica Altman, the executive director, noted an increase in consumers opting for "bronze"-level plans, which feature lower premiums but higher deductibles. The national average bronze-plan deductible is $7,476, compared to $5,304 for silver plans.\n* Massachusetts' Health Connector reported a 7% increase in consumer calls during the first month, with representatives receiving calls from individuals expressing difficulty understanding how to maintain coverage.\n\n### Details of Subsidy Changes\nIf enhanced tax credits expire, ACA subsidies will revert to pre-pandemic levels. Under the previous system, households paid a percentage of their income toward premiums, with a tax credit covering the remainder. The enhanced subsidies reduced the required household income contribution and eliminated the upper income limit for eligibility. Without these enhanced subsidies:\n* Individuals in the lowest income brackets will pay at least 2.1% of their household income toward premiums, while the highest earners will pay nearly 10%.\n* Subsidies will not be available for individuals earning more than four times the federal poverty level (e.g., $62,600 for an individual or $84,600 for a couple).\n\nThis change could result in significant cost increases for certain groups. For example, Debra Nweke, 64, and her husband, 62, in Southern California, anticipate their monthly coverage costs could rise from $1,000 to $2,400. Andrew Schwarz, a 38-year-old preacher in Bowie, Texas, will see his monthly premium increase from $40 to $150 for a lower-deductible plan, despite receiving subsidies.\n\nSenate Majority Leader John Thune stated in early December that Republicans seek solutions to lower healthcare costs without providing government subsidies to high earners or offering free coverage to those at the lowest income levels.