Subsidies that help around 20 million Americans pay for health insurance could disappear after next year, depending on the outcome of November’s election.
The subsidies, which reduce the price of health insurance for people who buy their coverage in the Obamacare marketplaces, were passed as a temporary measure in 2021, then extended as part of the Inflation Reduction Act in 2022. In that time, Obamacare enrollment has nearly doubled. If Congress doesn’t extend them, the subsidies will expire at the end of 2025, and the Trump campaign and key Republicans in Congress have said they do not support the extension.
Without the subsidies, some Americans who buy their own health coverage would still get financial help from the government, but hundreds or thousands of dollars less. And families earning more than around $100,000 a year would lose access to federal assistance.
The Congressional Budget Office estimates that 3.4 million people will lose insurance if subsidies drop and prices rise.
Neither presidential candidate is talking much about health policy, but the looming subsidy expiration means the next Congress and president will have a choice with significant consequences.
“So much of the attention right now is on would the Affordable Care Act be repealed and replaced,” said Cynthia Cox, a vice president at KFF, a health research group. “Which is a very important question. But even without taking any action, there could be very significant changes to the A.C.A.”
Republicans in Congress have largely abandoned repealing the Affordable Care Act, after failing to do so in 2017. But to extend the subsidies, Congress will need to affirmatively pass legislation. Many Republican lawmakers have already come out against the idea. A spokeswomen for the Trump campaign told The Washington Post recently that the subsidies were poorly designed and “benefit big insurance companies and brokers more than American patients.”
Kamala Harris, in contrast, has said she supports keeping the subsidies, which Democrats in Congress have already voted for twice. Last week, Chuck Schumer of New York, the Senate majority leader, applauded the introduction of a new bill to extend them. If Democrats control the House, Senate and White House, they are very likely to pass such legislation.
In a divided government, the outcome is less clear. But many analysts believe an extension will be difficult if Republicans win Senate control, which recent polling suggests is the more likely scenario.
Obamacare enrollment has risen to a record high with the extra tax credits, which make insurance effectively free for families earning less than around $20,000 in most states, and which decrease premiums for higher-earning households. That rising enrollment has also led to a more robust insurance market, with more consumer choice of health plans.
The subsidies are expensive, and will increase the deficit by an estimated $335 billion if they are extended for a decade, according to the C.B.O. Congress will also need to consider an extension of the tax changes and cuts passed in the Trump administration, another major policy cliff that will be costly to address.
In a joint statement released after the budget office published its estimate, Jason Smith of Missouri, the House Ways and Means Committee chairman, and Jodey Arrington of Texas, the House Budget Committee chairman, described a proposed renewal of the program as “unconscionable.”
Other key Republican lawmakers, including Senator Mike Crapo of Idaho, the ranking member of the Senate Finance Committee, have also been highly critical of the policy. He has called it “irresponsible” and “nonsensical.”
The Paragon Health Institute, a conservative policy research group staffed by several former Trump administration health officials, has published analyses saying the subsidies led to fraud by making insurance so inexpensive that brokers began enrolling low-income Americans without their knowledge. (The extent of the problem is disputed, but Biden administration officials acknowledge a small number of fraudulent enrollments.)
Theo Merkel, the director of the private health reform initiative at Paragon, who served in the National Economic Council in the Trump administration, described the subsidies as trying to solve underlying problems with the markets by “throwing more money at insurance companies.”
The subsidies were built on assistance written directly into the original Affordable Care Act. Under that law, Americans whose jobs didn’t offer them affordable coverage could qualify for tax credits on a sliding scale, depending on their income.
But over time, Democrats who wrote the law became convinced those subsidies didn’t make insurance affordable enough. Many purchasers could only afford plans with very high deductibles. Others remained uninsured. The enhanced subsidies were designed to boost federal assistance and make insurance more appealing.
The price differences vary by income, age and geography. Many Americans are now paying hundreds of dollars less a month for health insurance. Some older Americans in expensive markets are paying more than a thousand dollars less than they would if the subsidies had not been increased.
Democrats deliberately timed the funding to expire at the end of 2025, to coincide with the expiration of the 2017 tax provisions. Renewing the tax bill will be a major Republican goal, increasing the chances of a deal involving both parties’ priorities. “We wanted it to be part of the tax reform debate,” said Wendell Primus, a longtime health aide to Nancy Pelosi who is now a visiting fellow at the Brookings Institution.
But Mr. Primus said a bipartisan vote to extend the subsidies, while not impossible, would be hard to achieve given Republicans’ continued disdain for Obamacare.
Joe Grogan, the former director of the domestic policy council in the Trump administration, said he could imagine a possible deal that included some form of subsidy extension in exchange for key Republican policy priorities.
“I don’t want to say it’s more likely than not,” he said. “But there’s always the chance some Republicans could sign off on such a package.”
As Democrats make the argument for the subsidies, the health care industry, which wants their renewal, is also gearing up for a major lobbying effort. Doctors, hospitals, insurance companies and disease advocacy groups recently announced the creation of a coalition to push for the subsidy extension. To health professionals and insurance companies, the expiration of the subsidies will mean less revenue.
But the subsidies have not yet been a focus in presidential or congressional campaigns.
Adam Jentleson, a former Democratic Senate leadership aide who is now a strategist, said, “There is a health care cliff coming that will impact millions of people, and nobody is talking about it.”
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