Friday, June 17, 2022

Why Manchin may let the ACA subsidy boosts die

Alarm bells are gonging for the possibility that even if Joe Manchin deigns to dictate to Democrats the terms of a reconciliation bill he'll vote for that includes some fragment of Democrats' spending priorities, it may not include extension of the boosts to ACA marketplace subsidies provided through 2022 in the American Rescue Plan Act. 

Charles Gaba relays reports from one paywalled site (Inside Health Policy) via another:

When a Punchbowl News reporter asked Thursday... whether a reconciliation deal is expected soon, Pelosi’s response was, “It’s alive.”

“There are certain concerns we have about subsidies in the health care bill and the rest, which may or may not be in the negotiations,” she said.

...President Joe Biden included drug pricing reform in an inflation-fighting proposal released over the weekend -- but his plan did not mention the enhanced ACA credits, raising some eyebrows.

..Democrats had counted on drug price controls to pay for the enhanced ACA subsidies, but Manchin recently said the subsidies did not come up in his talks with the White House.

Ancillary to the question of whether and why Manchin may yet deal a death blow to Democrats' electoral prospects by blocking all their legislative priorities is why he would exclude extension of the ARPA subsidy boosts from a possible bill. ARPA made benchmark silver coverage free to enrollees with incomes up to 150% FPL, removed the income cap on subsidy eligibility (formerly 400% FPL), and reduced the percentage of income paid for a benchmark plan at every income level. The ARPA subsidies cut the average enrollee's premium by an average of about $70 per month and drove a 21% enrollment increase nationally (19% in West Virginia) in 2022. If the ARPA subsidies expire, enrollees will pay an average of 53% more (63% in West Virginia), according to a Families USA estimate.

West Virginia is one of the nation's poorest states -- No. 49 in per capita income. Its ACA marketplace has the second highest premiums among states nationwide, with unsubsidized benchmark silver premiums averaging $752 per month for a 40 year-old in 2022 (and more than double that for a 60 year-old). By Families USA's estimate, ending the ARPA subsidy expansion would cost the average West Virginia marketplace enrollee $1,536 per year -- highest in the nation.  Restoration of the income cap on subsidies (which in 2022 would have been $51,520 for an individual and $69,680 for a couple) would render coverage unaffordable for many people above the threshold. Moreover, in 2018 Manchin ran on preserving the ACA, which cut the uninsured rate for West Virginia adults in half, from 20.5% in 2013 to 9.9% in 2019.

All that said, West Virginia's poverty may in fact work against Manchin putting much stock in extending the subsidy boosts. The ACA's impact in the state has been almost entirely via the ACA Medicaid expansion, which extended Medicaid eligibility to adults with income up to 138% FPL ($17,774/year for a single person in 2022).  While the Supreme Court in 2012 did make the Medicaid expansion optional for states, West Virginia, unlike many red states, opted to expand. Medicaid enrollment in the state increased by about 150,000 from summer 2013 to July 2014, from 355,000 to 504,000. 

By contrast, marketplace enrollment in the state peaked at 37,284 in 2016 and then deteriorated, with premiums and out-of-pocket costs spiking in 2017 and 2018. By 2021, enrollment had shrunk to 19,381 before rebounding a bit, thanks to the pandemic and ARPA, to 23,037 this year. Meanwhile, with Medicaid disenrollments paused in March 2020 for the duration of the Public Health Emergency  triggered by the pandemic (which is still in effect), the number of West Virginia Medicaid enrollees rendered eligible by the ACA stood at 214,962* in September 2021. That's about ten times current marketplace enrollment in the state, taking into account the attrition that continues year-long after Open Enrollment season ends.

Back in 2018, when Manchin ran on preserving West Virginians' access to health coverage, he spake not the words "ACA, "Obamacare," or "Medicaid" -- all political anathema in the state. It was all about "protecting coverage for people with pre-existing conditions" and making sure his opponent didn't take away your, um, "medical card." The underlying threat, however, was embodied in Republicans' 2017 bills to repeal the core ACA programs -- including the Medicaid expansion -- and Republicans' continuing efforts as of the 2018 election to get the ACA nullified in the courts.

When the BBB bill was being negotiated, extension of the ARPA subsidy boosts in the marketplace was paired with providing coverage for low income people in the 12 states that have refused to enact the ACA Medicaid expansion. In those states, some two million uninsured adults with incomes below the poverty line get no help at all obtaining coverage. Blood-red West Virginia could easily have been one of them. But it's not. To the extent Manchin adopts the view from West Virginia, it might be "we got ours."

If Manchin doesn't want to consign Democrats (and democracy) to oblivion, he'll enable a stripped-down Build Back Better bill (by another name), and it will include extension of the ARPA subsidy boosts. He's not up for reelection until 2024, and he may not run. Regardless, he may not regard huge premium hikes in the ACA marketplace as a burning issue for West Virginians.

Update, 6/30/22: As I noted in a subsequent post, Manchin should be concerned with the consequences of ending the ARPA subsidies, as tens of thousands of West Virginia enrollees may lose coverage soon:

During the pandemic, thanks in large part to a moratorium on Medicaid disenrollments, the number of West Virginia Medicaid enrollees rendered eligible by ACA expansion criteria (adults with income up to 138% FPL) increased by more than 50,000, or 32%, from February 2020 to September 2021. Total Medicaid enrollment in the state increased by 94,000 (18%) in the same period. When the public health emergency ends and disenrollments recommence, a lot of the newly disenrolled should end up in marketplace coverage. That's a lot likelier under the ARPA subsidy schedule -- or at least the lower end of it.


* For marketplace enrollment totals, see CMS's state-level public use files. For Medicaid enrollment among people rendered eligible for the ACA (alongside total Medicaid enrollment), see CMS's quarterly enrollment data - new adult group.

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1 comment:

  1. Thank you for this good analysis, depressing as it is. Considering the political capital that Obama spent on the ACA, it's almost beyond belief that his own VP and a Democratic majority will fail to make permanent improvements. It seems as if legislation that harms (or even changes the landscape) for any special interest cannot be passed. If the subsidy extension is relying on drug pricing reform (or tax increases of any kind) it's probably dead.