What’s Next for the Affordable Care Act?

KFF webinar explores the future of a Marketplace whose enrollment has soared but has few friends in the Trump Administration.

“It’s definitely been an interesting several months!” This declaration from Larry Levitt, EVP of Kaiser Family Foundation, was an apt kickoff for KFF”s webinar: “What’s Next for the Affordable Care Act?” That question was active throughout the 2024 election cycle and was explored on Feb. 10 in an online panel that included:

• Brian Blase, President-Paragon Health Institute
• Cynthia Cox, VP-KFF
• Sarah Lueck, VP Health Policy-Center on Budget and Policy Priorities

The panel began with a look back at the Marketplace and where it’s been

The Affordable Care Act — then and now

At first, the ACA was “broadly unpopular”. This includes the Marketplace, where Americans who do not qualify for Medicare, Medicaid — or who do not have employer-sponsored health insurance — can purchase and be guaranteed coverage despite pre-existing conditions.

In the Exchange’s early years and as recently as 2020, premiums were higher and many large insurers had exited.

“Enrollment was 11-12 million each year until the subsidies passed, leading to a Marketplace that has doubled in size during the past four years,” notes Cox of KFF.

Marketplace enrollment now exceeds 24 million people — “fueled largely,” says Cox, by subsidies that are set to expire at the end of 2025 unless Congress extends them.

The American Rescue Plan Act of 2021 (COVID relief) enacted temporary and enhanced  premium subsidies (EPS), the latter extended by the Inflation Reduction Act of 2022. Per KFF, these subsidies “increase the amount of financial help available to those already eligible for assistance under the ACA and . . . expand subsidies to middle-income people (with incomes over four times the poverty level.”

More coverage, more care — What’s not to love?

The benefits of these subsidies — broadly and in the everyday lives of millions of Americans — are clear. The panel noted that the average subsidy under is $770 per year with many Marketplace enrollees enjoying a $0 or near $0 premium.

“Through the combination of EPS and COVID protections, the uninsured rate has reached record lows,” notes Cox, adding: “The point of this whole exercise is to make sure people have coverage. Claims data shows that this coverage is translating to access to healthcare.”

Lueck (Center on Budget and Policy Priorities) concurred: “If Congress allows Marketplace subsidies to expire, premiums will increase significantly and some will lose eligibility altogether.

Here Blase — who also served as Special Assistant to the President for Economic Policy during the first Trump Administration — raised several objections. These included the subsidies’ costs to the government and the impact on employer-sponsored coverage.

These subsidies are very expensive. The panel cited a Congressional Budget Office (CBO) projected price tag of $335 billion over the next 10 years if the subsidies continue.

“If they are made permanent, I think you’ll see more small businesses dropping coverage [and directing their employees toward the Marketplace . . .T]hey’ll view the subsidies as a permanent change in government policy that gives them less incentive to offer coverage.”

This was, in fact, a proposal of Trump’s 2020 budget during his first term.

But there are two levels of Marketplace funding . . .

A tale of two subsidies

those for people who earn up to 150% of the Federal Poverty Level (FPL) and those who earn up to 400% FPL (again expanded premium subsidies, or EPS). Cox argues that even the latter group is at risk if the enhanced subsidies expire.

“Four hundred percent of FPL is a good income, but it’s not enough to afford full coverage. Before the subsidies, this group spent 20% of their income on premiums, plus their other healthcare costs. Now, they’re paying more like 8% of income.”

Cos adds: “This is a significant savings. If EPS expires, this group would face a very significant increase in premium and would probably drop their coverage.”

KFF reports that premium payments “for the vast majority of marketplace enrollees would increase with the CBO adding that 3.8 million more people would be uninsured annually.

More questions than answers

How to fix this dilemma — one marked by “philosophical differences” (Blase) that often pit the health of the American consumer against the health of the Marketplace:

1. Is the markeplace broke on largest successful?
2. If the Marketplace is broke, how will future reforms succeed where past attempts have failed? 
3. Are continued subsidies part of the problem or part of the solution?
    

Part 2 of this series will examine these questions and the responses of the KFF panel.