The Center on Budget and Policy Priorities has warned that health insurance premium spikes are imminent as tax credit enhancements are set to expire. The American Rescue Plan Act (ARPA) of 2021 provided temporary enhancements to the Affordable Care Act’s (ACA) premium tax credits, which helped make health insurance more affordable for millions of Americans. However, these enhancements are scheduled to expire at the end of 2022, which could lead to significant premium increases for many consumers.
The ARPA enhancements expanded eligibility for premium tax credits to more people and increased the amount of financial assistance available to those who were already eligible. As a result, many people who were previously priced out of the health insurance market were able to afford coverage. However, if the enhancements are allowed to expire, many of these individuals and families will face significant premium increases, making it difficult for them to maintain their coverage.
According to the Center on Budget and Policy Priorities, if the tax credit enhancements expire, premiums for benchmark plans could increase by 53% on average. This would result in a significant increase in the number of uninsured Americans, particularly among low- and moderate-income families. The report estimates that over 3 million people could lose coverage, and many more would face higher premiums, making it difficult for them to afford the care they need.
The impact of the premium increases would be felt disproportionately by certain groups, including low-income families, older adults, and people with pre-existing conditions. These individuals and families often have limited financial resources and may be forced to choose between paying for health insurance or other essential expenses, such as rent, food, and utilities.
To avoid these premium increases, Congress would need to extend the tax credit enhancements beyond 2022. This could be done through legislation, such as the Build Back Better Act, which includes a provision to extend the enhancements through 2025. Alternatively, Congress could pass a standalone bill to extend the enhancements. The Center on Budget and Policy Priorities urges policymakers to take action to prevent the impending premium spikes and ensure that affordable health coverage remains available to all Americans.