ARPA Reduced Tax Challenges on the CA Affordable Care Act Market

By Kelsey Waddill

– California’s Affordable Care Act market enrollees were less likely to face financial hurdles in 2021 than in 2017 due to provisions of the American Rescue Plan Act (ARPA) that reduced cost sharing, according to a study published in Health affairs.

The researchers used data from a survey of Californians enrolled in an individual health insurance plan in 2021. They combined it with data from the state’s Affordable Care Act Market, Covered California, and data from two major carriers for out-of-market enrollees . The study was based on 2,118 respondents.

The researchers noted that they did not consider the uninsured population in this study. Some data collected in the survey may have changed during the time period of the study, such as unemployment benefit amounts or benefits eligibility statuses.

“Although some affordability issues remained in 2021, choosing non-subsidy-eligible plans was associated with enrollee-reported worse affordability among those eligible for the most generous premiums and cost-sharing subsidies, i.e. those receiving unemployment benefits and those with incomes up to 250 percent of poverty,” the study found.

“This finding reinforces the consequential impact of potential plan selection errors and missed grant opportunities that have been documented in this context.”

Results showed that people eligible for enhanced Silver plans with cost sharing reductions under the American Rescue Plan Act (ARPA) were more likely to select Silver plans.

Those with incomes up to 250% of the federal poverty level (FPL) had the highest silver plan selection rate, with 58% of this population choosing to enroll in a silver plan. These were followed by those receiving unemployment benefits (56%), those with incomes from 251% to 400% FPL (44%) and those with 400% FPL or more (31%).

Higher-income individuals were more likely to choose off-market plans, with nearly a quarter of this population opting to do so (23%). Meanwhile, among those in the lowest income bracket or receiving unemployment benefits, a quarter or more signed up for bronze plans.

Nearly three out of ten participants found it difficult to cover their monthly premiums (28%).

Individuals with off-market plans were the most likely to report difficulty covering premiums (41%).

For those receiving unemployment benefits, the bronze plans seemed slightly more affordable than the silver plans. Just over a quarter of those receiving unemployment benefits and signed up for Bronze plans said they were having difficulty paying their monthly premiums, compared with 34% of those signed up for Silver plans in the market.

Some individuals with incomes at or below 250% of FPL who are eligible for premium reduction and cost-sharing subsidies have also had difficulty covering premiums. Just over three in ten respondents reported difficulty paying Bronze Plan premiums, compared to just over two in ten respondents who had difficulty paying Silver Plan premiums.

Affordability challenges have also extended to covering healthcare costs. A quarter of enrollees delayed care due to cost. Challenges to health care affordability were particularly strong among people receiving unemployment benefits and enrolled in bronze plans (41%) and people with incomes up to 250% FPL.

While financial hurdles remain, the results of this study demonstrated an improvement over the 2017 study. In 2017, 40% of enrollees struggled to pay premiums, but in 2021, that share dropped to 28%.

“This difference suggests that ARPA benefit expansions have improved premium affordability among marketed single enrollees in California,” the study concluded.

“With the extension of ARPA income-based premium tax credits under the Inflation Reduction Act, an increased focus on helping consumers make informed plan choices that balance the trade-off between premium amounts and generosity of coverage could help to further improve the affordability of insurance in the individual market.”

Separate research indicated that the permanent establishment of ARPA subsidies would increase the deficit by $247 billion over the next nine years, but reduce the lack of insurance of 2.2 million people. The US Census Bureau estimates that 27.2 million people were uninsured in 2021.

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