A new report published by Covered California identifies the potential impact to consumers if increased health insurance subsidies that were part of the American Rescue Plan (ARPA) are allowed to expire at the end of 2022.
The report finds that all consumers would face significant premium increases and many middle-income individuals would no longer be eligible for financial assistance, which could potentially force over 150,000 Californians to drop their health insurance coverage.
According to the report, ARPA had a dramatic impact on making coverage more affordable for Covered California consumers and increasing enrollment numbers. The average monthly premium paid by Covered California consumers dropped 20% from 2021 to 2022. Enrollment hit a record high of 1.8 million total consumers in 2022, a 9% increase compared to 2021 numbers. The vast majority of these enrollees (92%) are currently receiving subsidies to help reduce the cost of their premiums each month.
The figure below shows coverage enrollment levels between 2020 and 2022 for both California and the U.S.
The report also emphasizes that in California, the biggest positive enrollment impacts have been in communities of color that were particularly impacted by the pandemic. Compared to 2020, African American enrollment increased by 33%, Asian American enrollment increased by 14%, Latino enrollment increased by 18%, and White enrollment increased by 14%.
The report goes on to assert that allowing ARPA premium subsidies to expire would dramatically raise premiums and increase the number of Americans becoming uninsured. Covered California predicts the lowest income enrollees, making less than 250% of the federal poverty level and compromising 60% of Covered California’s subsidized enrollment, would be affected the most. The report says their premiums would more than double on average.
The table below shows the potential premium increases for the lowest-income enrollees if ARPA subsidies are not extended.
In the report’s release announcement, Peter V. Lee, executive director of Covered California, emphasized that enrollees with the lowest incomes would be hit the hardest.
“While lower-income consumers would still be getting federal tax credits, many of those who would see their premiums double will be priced out of the coverage they want and need,” he said. “A total of 1 million Californians, those who can least afford it, will be hit the hardest if these critical subsidies are allowed to expire.”
Middle-income enrollees–individuals who earn more than $51,520 a year and families of four who earn more than $106,000 a year–would lose their eligibility for premium support to protect them from rising costs, regardless of how much it cost them as a percentage of their income. These middle-income enrollees represent about 9% of Covered California’s subsidized enrollment, and if the subsidies were not extended, they would see their premiums increase by an average of $273 per member, per month.
Covered California said they encourage congressional action to ensure that the premium subsidies enacted by ARPA are not left to expire, stating that Americans’ access to health coverage and care will be significantly reduced as a result.