Millions of people in the United States will be spared significant health care costs next year when President Joe Biden signs legislation offering generous subsidies for those who buy plans through the federal and state markets.
The broader climate, tax and health care bill has set aside $70 billion over the next three years to keep premium costs down out of pocket for nearly 13 million people before low prices engulfed a record-breaking one. The year was set to end in high inflation.
As the calendar approached the November 1 open enrollment date, Sarah Cariano was panicking about her job, helping people across Virginia sign up for subsidized, private health insurance on the HealthCare.gov website.
“I expected a very difficult conversation with people about why their premiums were going up,” said Virginia Poverty Law Center policy expert Cariano.
But the passage of the “Inflation Reduction Act” erased those worries.
“Things aren’t going to change for the worst for individuals purchasing coverage through the market,” she said.
The bill will extend subsidies temporarily offered last year when Congress and Biden signed off on a $1.9 trillion coronavirus relief bill that significantly lowered premiums and out-of-pocket costs for customers purchasing plans through the Affordable Care Act’s marketplace. It also continues reduced costs for more individuals and families who live well above the poverty line.
Only Democrats supported the extended health care subsidies and the other proposals in the bill that Biden signed on Tuesday. Republicans criticized the measure as big government overreach that will only worsen inflation. Economists say the account will do little to either fan or extinguish the flames of exorbitant prices.
Health insurance premiums in the marketplace are expected to rise significantly next year, roughly 10 per cent, according to an analysis by the Kaiser Family Foundation. The extended subsidies, which determine premium payments based on income, will guard most people from those price increases, said Cynthia Cox, a vice president at the foundation.
“Generally speaking, people should not see increases in their premiums,” Cox said.
According to estimates by the Centres for Medicare and Medicaid Services, those who bought plans on the government marketplace saved on average about $700 in premium payments from the subsidies this year.
As costs dropped, more people signed up for the coverage over the last year, and the number of those without health insurance dropped to an all-time low of 8% in August, the Department of Health and Human Services announced. Roughly 26 million people, 2 per cent of them children, remain uninsured in the U.S.
In California, many of the 1.7 million people who purchase health insurance through Covered California, the state-operated insurance marketplace, will continue to see savings ranging from $29 and $324 per month, depending on their income level.
State officials predict about 220,000 people will be saved from being priced out of coverage. Between 2 million and 3 million people in California might also turn to the state marketplace if they lose coverage through Medicaid when the federal government’s COVID-19 public health emergency expires. About 15 million people in the U.S. have been extended Medicaid coverage during the pandemic.
Cost is the biggest factor driving whether a person signs up for coverage or not, said Joseph Poindexter, the senior director of health insurance programs at HealthCare Access Maryland.
Some parents, for example, sign their children up for Medicaid but skip buying coverage for themselves, he said.
“It’s really sad to see folks who will say, I’ll forgo treatment or won’t visit the doctor,” Poindexter said.
Poindexter said few people have had to make that calculation with the subsidies, attributing the lowered prices to a 9% increase in new enrollees in the state last year.