Two out of every three California residents qualified this year for a health insurance premium of $10 or less through Covered California, but those rates will skyrocket next year without congressional action.
It looks like U.S. legislators are about to vote on legislation that would extend the federal financial assistance that drastically lowered premiums last year and in 2022. The vast majority of enrollees received some sort of subsidy as a result of the American Rescue Plan, a 2021 federal law aimed at easing the economic pressures from the COVID-19 pandemic. That financial help is set to expire at the end of this year.
“Extending these subsidies will be crucial in keeping coverage affordable for the 1.7 million people enrolled in Covered California,” said Jessica Altman, the executive director of Covered California. “Increased affordability allows more people to get covered and provides access to quality coverage at a time when health care continues to be important for every Californian.”
Consumer advocate Anthony Wright said the legislation was so effective because it capped premiums at 8.5% of income for all enrollees and even less for lower income consumers.
“It’s really critical that we extend his help, especially in a high cost-of-living state like California where people need that help up and down the income spectrum,” said Wright, the executive director of the Sacramento-based advocacy group Health Access.
“The Affordable Care Act thankfully provided help (to households earning) up to four times the poverty level, which is around $110,000 for a family of four, $55,000 for an individual, but in California, there’s a lot of people (making) over that who are struggling to make budgets work, given the cost of housing.”
Senate Democrats are about to begin debating and voting on the so-called Inflation Relief Act that would extend the premium assistance for three years. Health care advocates hope they hurry.
Congress is scheduled to leave shortly for an extended summer recess.
“If Congress is not done before the August recess, things become a lot more difficult for insurance companies and regulators,” said Krutika Amin, a policy expert at the nonpartisan Kaiser Family Foundation.
Companies and regulators are beginning now to set and review rates so that they can offer them to consumers in the fall.
The good news is that extending the financial help looks promising. Fifty-one Senate votes are needed for passage as part of a $739 billion spending and tax bill.
Democrats, who wrote the bill, control 50 Senate seats and Vice President Kamala Harris would break any tie. The Democratic-controlled House is expected to return to Washington quickly if the Senate passes the bill so it can also approve it.
KFF estimated that “if Congress extends the temporary subsidies, premium payments in 2023 will hold mostly flat for marketplace enrollees, since the premium tax credits shelter enrollees from increases in the underlying premium.”
Of the 1.7 million Californians who use the Obamacare marketplaces to buy their coverage, 90% use the financial help, according to KFF data. Although two-thirds qualified for policies with premiums of $10 or less, many of them opted to pay a little more out of pocket on their premium to reduce the out-of-pocket costs they would have to pay for exams, office visits or hospital stays.
If the subsidies expire, the precise premium increase would depend on someone’s income, age and where they live.
Altman said the increased federal subsidy played a central role in growing enrollment this year at the state-based insurance marketplace. If the Inflation Relief Act fails to pass, Covered California has said that it expects 220,000 Californians and 1.7 million people nationwide will not be able to afford the surging premiums.
If the federal financial help ends, premiums for insurance through Covered California, the state-run health marketplace created through Obamacare, are scheduled to increase an average of 6% statewide next year. Premiums in Sacramento, Placer, El Dorado and Yolo counties would go up 4.7%.
Without the increased subsidies, those who could see costs go twice as high are individuals earning between $17,775 and $32,200 a year and a family of four with an income of $36,570 to $66,250.
Without the 2021 subsidies, their premiums would go from the present $65 a month to an estimated $131. For people making between $32,201 to $51,520, or 250% to 400% of the poverty level, the premium would increase from the current $168 to $246 a month.
Very low-income consumers will keep getting some help with premiums under the 2010 Obamacare law.
The 2021 law also provided help for middle-income people, those making more than $51,520 as an individual and $106,000 for a family of four. The amount of aid depends on factors such as age, place of residence and whether health insurance costs exceed 8.5% of income.
