One of the main issues that was at the center of the government shutdown were the enhanced premium tax credits for the Affordable Care Act (ACA) marketplace. The ACA was originally designed to provide financial assistance to individuals who buy health insurance on the ACA marketplace. This was done in the form of Advance Premium Tax Credits (APTC). In 2021 as part of the America Rescue Plan Act (ARPA), the APTC were enhanced to provide additional financial support to enrollees with low income and removed the cap on those who are entitled to the APTC. Therefore, anyone whose health insurance premiums exceeded 8.5% of their income were eligible for APTC. Additionally, many low-income enrollees were able to sign up for plans with $0 monthly premiums. The result was some of the highest number of individuals enrolled in the ACA marketplace since it opened in 2013.
These enhanced APTC were extended in the Inflation Reduction Act of 2022, but they are now set to expire at the end of this year. Many in Congress are advocating for an extension of the enhanced APTC. As part of the deal to end the government shutdown, Senate leaders have indicated that they will allow a vote on an extension of the enhanced APTC sometime next month. Many people with disabilities rely on the ACA marketplace for their coverage and have benefited from the tax credits, so AAHD has urged Congress to extend the enhanced tax credits so that health insurance can remain affordable for those who need it.
As with most things in Congress, some members have floated alternatives to extending the APTC. One of those proposals is to redirect the money being spent on the enhanced tax credits and providing it to individuals in the form of either Health Savings Accounts (HSAs) or Flex Spending Accounts (FSAs). While it might sound like a good idea in theory to take money from insurance companies and provide it directly to consumers, it is unclear how sufficient these funds would be to cover the health care costs for anyone with a disability or chronic condition. Additionally, it also undermines one of the basic principles of insurance and risk management.
Details on this proposal are very limited at this time, but it is unlikely that the amount that would be provided would be sufficient to meet the healthcare costs of anyone who has any sort of ongoing health issues. As a result, this would only be attractive to those individuals who are healthy and are willing to take the risk of not needing insurance. The result of this would be the departure of healthy individuals from the health insurance marketplace which would leave only those who can’t afford to live without some type of health coverage. If all the healthy people leave the marketplace, this will result in a risk pool which will only include those who utilize health insurance more frequently and cause the overall cost per enrollee to increase significantly. This will only cause health insurance to be more unaffordable for those with health conditions, including people with disabilities and chronic conditions. The whole concept of insurance and risk management is to spread the cost for the unexpected among many individuals and this type of proposal will result in a collapse of the system when the healthy people leave and those who really need coverage will find maintaining coverage unaffordable.
AAHD will continue to monitor any proposals which are made that are intended to either extend the enhanced APTC or significantly change the structure of the ACA. For now, we urge Congress to reject any proposal that would take money out of the health insurance marketplace which is necessary to balance the risk pool and make healthcare more affordable for those who rely on it – including people with disabilities. Instead, we call on Congress to extend the APTC in order to continue to make premiums affordable for all who need it.
Resources
Kaiser Family Foundation
- Mapping the Uneven Burden of Rising ACA Marketplace Premium Payments due to Enhanced Tax Credit Expiration
- ACA Marketplace Premium Payments Would More than Double on Average Next Year if Enhanced Premium Tax Credits Expire
- 8 Things to Watch for the 2026 ACA Open Enrollment Period
Georgetown Center on Health Insurance Reforms
- Cash is No Substitute for Coverage: Why Health Insurance Matters
- Damage From Inaction On ACA Tax Credits Has Begun And Will Grow With Further Delays
- The Crucial Role of $0 Premium Plans in the Affordable Care Act Marketplaces
Center on Budget and Policy Priorities
- Vague Offers of Cash Fail to Address Looming Premium Spikes for Marketplace Enrollees
- Beyond the Shutdown: Country Needs Congress and President to Address Health Care Cost Spikes and Rule of Law
- Health Insurance Premium Spikes Imminent as Tax Credit Enhancements Set to Expire
Families USA
- The Importance of Premium Tax Credits: Affording Health Insurance Coast to Coast
- Why Health Insurance Premiums Continue to Skyrocket | Press Release
Community Catalyst