Some bitter pills to swallow in Trump's ACA prescription

Note: Free xpostfactoid subscription is available on Substack alone, though I will continue to cross-post on this site. If you're not subscribed, please visit xpostfactoid on Substack and sign up

Raise that subsidy cap...

It may be a fool’s errand to write about reported features of a now-stayed Trump administration plan to extend the enhanced ACA premium subsidies for two years, with various conditions and haircuts imposed.

Since House hardliners have stayed the plan, it’s likely to get worse if it ever sees light of day. But as outlined in the various media reports, the pending plan is full of poison pills — or, shall we say, enrollment-inhibiting side effects. The features already floated raise a question we may well be confronted with: If Republicans do coalesce round a plan something like what’s been floated, would Democrats (most, some, a handful) get on board? Should they?

Let’s consider the constraints imposed on the enhanced subsidy schedule in the Trump outline.

If the ARPA-enhanced subsidies are renewed...other factors affecting ACA enrollment in 2026

 Note: Free xpostfactoid subscription is available on Substack alone, though I will continue to cross-post on this site. If you're not subscribed, please visit xpostfactoid on Substack and sign up

Thanks to a court order, you can still attest to an income over 100% FPL

It’s good to see the fight over renewal or nonrenewal of the expiring enhanced ACA marketplace subsidies sitting at the center of the current political agenda.

The enhanced summaries created by the American Rescue Plan Act (ARPA) in March 2021 are plainly the main driver of a doubling of ACA marketplace enrollment from OEP 2021 to OEP 2025 (from 12 million to 24 million). The enhanced subsidies gave the ACA a credible claim to fulfilling the mission embodied in its name, offering affordable to care to all who lack access to other affordable insurance (excepting perhaps two million in the coverage gap created by red state refusal to enact the ACA Medicaid expansion).*

Renewal or nonrenewal of ARPA subsidies will determine the basic size and shape of the ACA marketplace in 2026 and who-knows-how-many years beyond. Even if the subsidies were renewed without strings today, however, other changes to the marketplace triggered by Trump’s CMS, the Republican Congress, and political uncertainty generated by their assaults on the law are likely to inhibit 2026 enrollment substantially.

To get a working sense of how some (not all) of these restrictions function, it’s important to recognize that the majority of enrollments in the ACA exchanges are executed by brokers. Brokers played an important role in the marketplace from the beginning, but their ranks swelled from 49,000 in 2019 to 83,000 in 2024 (as CMS told me by email) - spurred first by encouragement and facilitation by the first Trump administration, and then by the increasing attractiveness of offerings and ease of enrollment when the ARPA subsidy schedule kicked in. By OEP 2024, brokers accounted for almost 80% of active enrollments in the states using HealthCare.gov, which account for about three quarters of all enrollment — up from 44% in OEP 2019. Brokers execute a large share of enrollments in most state-based exchanges as well (e.g., 56% of California’s 2 million enrollments in 2025).

A "Manchin trim" for the ARPA subsidy boosts to Obamacare?

Subscribe (free) to xpostfactoid

A high-end haircut for the ARPA subsidies?

It's been reported in the last week or two that Manchin may be open to negotiating a bill that would raise about $1 trillion in new revenue over ten years and devote about half of that to new spending. Yesterday, the Washington Post's Greg Sargent reported that $200 billion of that new spending may be allocated to extending the American Rescue Plan Act's increases in ACA marketplace subsidies (which expire at the end of 2022):

If around $300 billion of that [$500 billion in new spending] went to funding the transition to clean energy, through tax incentives and other means — a key part of BBB that Manchin appears open to — that would leave around $200 billion for expanded ACA subsidies.

Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation, says it’s absolutely possible to fund the vast bulk of extended subsidies with that sum. The cost of extending all of them would be an estimated $220 billion, so getting that down to $200 billion, perhaps by shaving those subsidies for the highest-income people eligible, would be doable.

Welp. I have been assuming that with $500 billion over ten years reportedly on the table, a lot of competing priorities would be in the running. If $200 billion really does get allocated to extending the ARPA subsidies, then no problemo, as Larry Levitt suggests. But all these broad outlines (including the broadest, whether any deal gets done) are very uncertain, and I assume a smaller sum (if any) may be allocated to enhancing a version of the ARPA subsidy boosts. 

Whither the off-exchange individual market? Tea leaves in New Jersey

Subscribe (free) to xpostfactoid

One open question created by the American Rescue Plan Act's boost to ACA marketplace subsidies is the extent to which off-exchange enrollment in ACA-compliant plans has migrated to the exchanges. A related question is how many people who would have been ineligible for subsidies and uninsured pre-ARPA (or insured in noncompliant plans) were drawn into the exchanges.

New Jersey, one of the few states that tracks off-exchange enrollment on a quarterly basis and has a large off-exchange enrollment cohort, will eventually provide an interesting sampling. Unfortunately, the off-exchange tally is at present only complete through Q4 2020. But the state's on-exchange enrollment reports provide some hints, explored below. 

Flowers in the graveyard: Health Policy Valentines 2022

Subscribe to xpostfactoid

U.S. healthcare policy is no rose garden, but this year's HealthPolicyValentines salute a few sweet blossoms. That's notwithstanding the staggering failures of policy -- in many cases malevolent and corrupt -- that have swelled the pandemic death toll to an unfathomable 900,000.

         *     *     *

I'm in love with a cold hard fact:
We've enacted the No Surprises Act.

         *     *     *

Affordable Care?
Yes, we can!
Thanks to the American
Rescue Plan.

A massive boost to subsidies meant
enrollment up twenty-one percent.

Is enrollment surge on GetCoveredNJ driven by off-exchange migration? Maybe not.

Subscribe (free) to xpostfactoid

Liberty State Park, Jersey City, NJ

New Jersey's Department of Banking and Insurance (DOBI) reports that enrollment in health plans on GetCoveredNJ, the state's ACA exchange, was up more than 25% as of December 5 compared to the same time last year. That may be the largest one-state year-over-year surge during an Open Enrollment season in which enrollment was up about 9% nationally as of Dec. 8. 

New Jersey has a large off-exchange individual market, which in 2020 accounted for 30% of enrollment in ACA-compliant plans (94,885 out of 316,580 total enrollments as of Q1 2020). The surge in on-exchange enrollment may provide a hint as to the extent of migration from off-exchange to on-exchange driven by the American Rescue Plan Act's removal of the income cap on subsidy eligibility. Since April of this year, premiums for the benchmark (second cheapest) silver plan have been capped at 8.5% of income, regardless of how high the income is. New Jersey, moreover, layers its own supplemental subsidy on top of the federal APTC. At high incomes, NJ kicks in $100/month per person, up to an income of 600% FPL. This subsidy, like the federal one, is only available on-exchange.

Subscribe (free) to xpostfactoid

If BBB remains blocked and ARPA subsidies go poof, what can CMS do to mitigate the damage?

Subscribe (free) to xpostfactoid

In the wake of Manchin's weekend declaration that he won't vote for the Build Back Better bill,  I am sure I'm not alone in choosing to hope that this is not game over, that some fragments of Biden's domestic agenda will become law. Still, it's time to face the strong possibility that the major temporary subsidy boosts in the ACA marketplace enacted in the American Rescue Plan Act will expire, and that the marketplace will revert to its under-subsidized pre-ARPA state in 2023.

It's time, then, to recall the various ways the administration can boost affordability in the marketplace without legislation, leaving coverage less affordable than it is now, but more affordable than it was before March 2021, when ARPA was enacted. 

Albuquerque vs. Miami, or platinum vs. silver benchmark in the ACA marketplace

Subscribe to xpostfactoid

A week ago, I put a spotlight on ACA marketplace plan offerings for 2022 in New Mexico, which has essentially implemented a platinum benchmark. That is, regulators have instructed insurers to price silver plans as if all enrollees have incomes below 200% of the Federal Poverty Level. Below that threshold, silver plans, enhanced by Cost Sharing Reduction (CSR) do have actuarial values comparable to those of platinum plans. Under these new pricing guidelines, some half-dozen gold plans are priced well below the benchmark (second cheapest) silver plan, and no one with an income above 200% FPL should buy silver.

While New Mexico is a very small market, this pricing scheme could and should be implemented nationwide. That possibility has implications -- or should have implications -- for Democrats' negotiations over the healthcare provisions to be included in the Build Back Better bill. 

Today, then, I want to compare what's available to buyers with incomes above 200% FPL in Albuquerque and in a market with a more typical pricing structure. Miami fits that bill. There, the lowest-cost gold plan is priced 8% above the benchmark silver plan. That's right at the average spread between lowest-cost gold and benchmark silver nationally during the silver loading era (2018-2021), according to KFF.

The ACA as it should have been and may yet be: beyond premium subsidy boosts

Subscribe to xpostfactoid

The Wall Street Journal's Stephanie Armour succinctly captures where Democrats seem to be at on the healthcare reform front:

Many progressive Democrats and President Biden are facing the political reality that far-reaching healthcare overhauls aren’t likely to succeed in the short term, which means their hopes may rest instead on building on recent Affordable Care Act changes and reducing prescription drug costs.

That is, make the premium subsidy boosts in the American Rescue Plan Act (ARPA) permanent, and maybe maybe maybe pay for it by getting some tangible form of prescription drug cost control past Democratic moderates. 

Pretty plainly left behind is the centerpiece of candidate Biden's healthcare plan, which also happens to be the continually submerged Ur-template for Democratic healthcare reform:

Will 60-64 year-olds have a choice between Medicare and Obamacare? What will that look like?

Subscribe to xpostfactoid

I turned 62 recently. Yesterday, for the first time, I took seriously the possibility that my wife and I might be enrolled in Medicare before we turn 65.

According to the Wall Street Journal's Stephanie Amour and Kristina Peterson, the Democrats' next healthcare initiative, envisioned for spring 2022, is likely to contain

measures to reduce drug prices and expand health coverage, lawmakers said. Proposals to expand Medicare eligibility from age 65 to 60 and to enable the federal government to negotiate drug prices in the health program for seniors—both of which President Biden supported on the campaign trail—are also likely to be included.

I can think of a lot of reasons these measures -- paired so that the prescription drug savings will finance the expanded eligibility -- may not happen.  But the odds that they will be enacted are not negligible. Democrats' success holding together to pass the $1.9 trillion Covid relief package have made a lot of bold initiatives seem possible.

If Democrats do manage to drop the Medicare eligibility age, they are also likely to make permanent the major increases to premium subsidies in the ACA marketplace enacted through 2022 in the Covid relief bill, the American Rescue Plan Act. And the two initiatives could overlap -- or clash -- to some degree.

The possibility of passing all of the above raises questions: will Medicare be offered to 60-65 year-olds on the same terms as Medicare for people over age 65?  Will enrollment delayed past age 60 be penalized on the same terms as enrollment delayed past age 65 at present? If enrollment at 60-65 is optional, will those who lack access to employer-sponsored insurance also be eligible for subsidized ACA marketplace coverage? -- will they have a choice between the two programs?

If Medicare is indeed subsidized as heavily at ages 60-64 as at age 65 and over, and if enrollment is optional, and if the ARPA subsidy schedule for the ACA marketplace (or something close to it) becomes permanent, some 60-65 year-olds will have a tough choice to make between Medicare and marketplace coverage. 

Broadly speaking, those with incomes up to 200% of the Federal Poverty Level (FPL) will likely find lower costs in the marketplace -- if they're not dually eligible for Medicare and Medicaid. Those with incomes over 400% FPL will likely favor Medicare.  In between is a gray area, with tradeoffs that are charted and discussed below.