Apr 8, 2022 - Health

Affordable Care Act subsidy cliff hits Southern states hardest

Percent change in the number of uninsured people if premium tax credits expire, 2023
Data: Urban Institute Health Insurance Policy Simulation Model 2022; Cartogram: Jacque Schrag/Axios

A disproportionate share of young adults, low-income, Black Americans and residents of Southern states will lose health coverage if Congress doesn't extend enhanced Affordable Care Act subsidies, according to a new analysis by the Robert Wood Johnson Foundation.

Why it matters: The analysis estimates that 3.1 million Americans would become uninsured when the subsidies expire beginning next year, and millions more would face much higher premiums than they currently pay. But those effects wouldn't be felt evenly across the country.

The big picture: Democrats' coronavirus relief package last year made ACA subsidies more generous and expanded who was eligible for them, but only temporarily.

  • Millions more people have entered the ACA marketplaces as a result. But Democrats' efforts to extend the subsidies have stalled in the Senate, along with the rest of President Biden's domestic agenda.

Details: The uninsured population would increase most significantly among people with incomes of 138-400% of federal poverty absent congressional action, according to the analysis.

  • When looking at race and ethnicity, Black Americans would see the largest change, followed by white Americans. Young adults ages 19-34 would be the most affected age group.
  • States that haven't expanded Medicaid, like Florida, Georgia and South Carolina, would see some of the highest increases in their uninsured populations.

Yes, but: Extending the larger subsidies would cost the federal government more than $25 billion in 2023 alone, and $305 billion over 10 years.

Between the lines: Being uninsured obviously has implications for people who then struggle to pay for health care when they need it.

  • But it also creates financial problems for hospitals, which are required to treat patients having emergencies regardless of their ability to pay.

What we're watching: Insurers calculate premiums months before open enrollment begins in November.

  • That means that if the tax credits aren't extended in the first half of this year, insurers may not have time to adjust their premiums accordingly — meaning premiums would likely be inflated, the authors of the analysis argue.
  • That, in turn, could discourage marketplace enrollment and increase federal costs.

Go deeper: End of the pandemic could usher in spike of uninsured

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