Covered California Warns of Higher Health Insurance Costs if Congress Allows the American Rescue Plan to Expire

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July 14, 2022 – SACRAMENTO, Calif. — An updated Covered California evaluation highlights how the expiration of the American Rescue Plan (ARP) would raise costs for enrollees, including doubling premiums on average for 1 million low-income Californians, and will lead as much as 220,000 people to drop their health coverage. The evaluation comes as Congress deliberates whether to increase the law, which provides increased financial help and is ready to run out at the top of this yr.

“The American Rescue Plan’s financial assistance is a lifeline for tens of millions of Americans, keeping medical insurance more cost-effective and close by,” said Jessica Altman, executive director of Covered California. “Tens of millions of Americans are counting on Congress, as cutting the financial help that the law provides means many families will face the difficult alternative of becoming uninsured and rolling the dice in the event that they get injured or sick.”

Covered California’s evaluation — “Americans Brace for Higher Health Insurance Costs if the American Rescue Plan Is Allowed to Expire” — shows how Californians could possibly be affected if Congress elects to not act. The ARP lowered the monthly premium paid by Covered California consumers by 20 percent from 2021 to 2022, enrollment hit a record high of 1.8 million people, and 92 percent of consumers were eligible to receive financial help. Nationally, monthly premiums dropped by 23 percent and enrollment reached 14.5 million people.

“The American Rescue Plan lowered premiums and boosted enrollment amongst all income brackets and ethnic groups,” Altman said. “Within the absence of federal motion to increase these policies into 2023 and beyond, the gains we’ve got made as a state and as a rustic will probably be in danger.”

Californians Face Higher Costs if the ARP Is Allowed to Expire

Covered California’s evaluation found that if the federal subsidies provided by the ARP expired, enrollees who annually earn lower than 400 percent of the federal poverty level ($52,000 for a single person and $106,000 for a family of 4) would see their monthly costs rise by a median of $70 per thirty days (71 percent).

The evaluation also found that Californians who could least afford the rise — those earning between $17,775 and $32,200 a yr for a person and from $36,570 to $66,250 for a family of 4 — can be affected probably the most, with their medical insurance costs greater than doubling. A complete of 1 million Covered California consumers are on this income bracket, which is 250 percent of the federal poverty level or below (see Figure 1: Potential Premium Increases for Covered California Subsidized Enrollees Earning Less Than 400 Percent of the Federal Poverty Level in 2023).

Along with the evaluation, Covered California can be providing data outlining the impact of the ARP’s expiration inside California’s 53 congressional districts, which may be found here. The info is broken down by income brackets and shows how Californians across the state could possibly be affected.

The expiration of the ARP subsidies would also mean the return of the so-called “subsidy cliff,” which suggests middle-income consumers — individuals who earn greater than $51,520 per yr and families of 4 who earn greater than $106,000 per yr — wouldn’t be eligible for any federal financial help. In California, these middle-income consumers would see their costs increase by a median of $272 per thirty days (see Figure 2: Potential Premium Increases for Covered California Subsidized Enrollees Earning More Than 400 Percent of the Federal Poverty Level in 2023).

“The American Rescue Plan built on the Reasonably priced Care Act and allowed more people than ever before to get the protection and peace of mind that quality health care coverage provides,” Altman said. “Whether you might be one among Covered California’s record-high 1.8 million consumers, otherwise you get your coverage directly from a medical insurance company, you will probably be paying more next yr if these subsidies should not prolonged.”

Figure 1: Potential Premium Increases for Covered California Subsidized Enrollees Earning Less Than 400 Percent of the Federal Poverty Level in 20231  

bar graph showing premium increases doubling for enrollees in segments under 400% FPL

Figure 2: Potential Premium Increases for Covered California Subsidized Enrollees Earning More Than 400 Percent of the Federal Poverty Level in 20231

bar graph showing premium increases due to no financial assistance for enrollees in segments over 400% FPL

Tons of of Hundreds of Californians Could Lose Coverage

An estimated 3 million Americans would lose medical insurance coverage if the American Rescue Plan’s advantages were allowed to expire2, including 220,000 Californians3.

Rolling back the increased subsidies would even have a disproportionate impact on California’s communities of color, whose enrollment increased significantly through the pandemic.

Many individuals may additionally try to stay insured by switching to less-comprehensive coverage, with higher deductibles and lower monthly premiums. In doing so, consumers could expose themselves to higher out-of-pocket costs that might delay or prevent them from accessing care.

The evaluation gives real-world examples of the premium increases that look beyond the averages to the lived experiences of consumers who differ by their age, family size, income and where they live. 

The Importance of Congress Acting as Soon as Possible

Covered California will announce its preliminary health plan rates for the 2023 coverage yr on July 19. The speed changes are affected by the uncertainty surrounding the long run of the ARP and the potential enrollment impact it could have if the federal subsidies should not prolonged.

To avoid disruption for the upcoming renewal period in October and the beginning of open enrollment in November, congressional motion must happen immediately.

“Covered California stands able to move mountains if Congress elects to increase the American Rescue Plan’s subsidies, but each day matters,” Altman said. “The longer we go and not using a decision, the harder it’s going to be to implement a latest subsidy structure and avoid consumer confusion.”

About Covered California

Covered California is the state’s medical insurance marketplace, where Californians can find inexpensive, high-quality insurance from top insurance firms. Covered California is the one place where individuals who qualify can get financial assistance on a sliding scale to scale back premium costs. Consumers can then compare medical insurance plans and select the plan that works best for his or her health needs and budget. Depending on their income, some consumers may qualify for the low-cost or no-cost Medi-Cal program.

Covered California is an independent a part of the state government whose job is to make the medical insurance marketplace work for California’s consumers. It’s overseen by a five-member board appointed by the governor and the Legislature. For more details about Covered California, please visit www.CoveredCA.com.

1 Net premium amounts shown are per member, per thirty days, amongst Covered California enrollees found eligible for subsidized coverage under the American Rescue Plan at the top of the 2022 open-enrollment period (roughly 1.64 million individuals).

2 ASPE. “Projected Coverage and Subsidy Impacts if the American Rescue plan’s Marketplace Provisions Sunset in 2023,” May 23, 2022. https://aspe.hhs.gov/sites/default/files/documents/1647ad29528ee85a48d6ffa9e7bfbc8f/arp-ptc-sunset-impacts-03-22-22%20Final.pdf

3 UC Berkeley Labor Center. “The Threat to Coverage and Affordability Gains in Covered California if Congress Fails to Renew Subsidy Enhancements.” April 14, 2022. https://laborcenter.berkeley.edu/the-threat-to-coverage-and-affordability-gains-in-covered-california/.
Source: Covered CA.

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