October
29, 2021 Christopher Holt, Stephen Parente
Executive Summary
·
The Build Back Better
“Framework”—released by the White House on October
28—would extend the American Rescue Plan Act of 2021’s enhanced premium tax
credits (PTCs) for individual market coverage under the Affordable Care Act,
while also providing subsidized individual market insurance
to the Medicaid coverage gap population in non-expansion states, both
through 2025.
·
The American Action
Forum’s Center for Health and Economy (H&E) finds that extending
the enhanced PTCs through 2025 would increase the number of people enrolled in
subsidized individual market coverage by 1.2 million in 2023, 1.4 million in
2024, and 1.7 million in 2025, at a cost of $20-$21 billion
annually relative to current law, before reverting to the baseline in
2026.
·
H&E further finds
that covering the 2.2 million individuals in the Medicaid coverage gap through
subsidized individual market coverage from 2022-2025 would cost $211
billion relative to current law.
·
In total, H&E finds
that the provisions would increase the number of insured individuals by 2.2
million in 2022, increasing to 3.9 million in 2025 relative to
current law, and would cost $272 billion; coverage and spending
numbers would, however, revert to current law in 2026.
Background
Earlier
drafts of the Build Back Better (BBB) proposal would have permanently extended
the enhanced premium tax credits (PTCs), limited the subsidized
individual market insurance for the coverage gap population to three years
rather than four, and established a new, fully federal Medicaid program to
cover that population starting in 2025. The American Action Forum’s Center for
Health and Economy (H&E) previously modeled those provisions; that
modeling, along with detailed explanations of the provisions
modeled, is available here.
Changes from Previous Modeling
H&E’s
updated analysis deviates from the previous work in that the enhanced PTCs are
only available through 2025, rather than the entire budget
window, the provision of individual market coverage for the Medicaid
coverage gap population is extended an additional year through 2025,
and no provision for Medicaid-like coverage for the coverage gap
population is included after 2025. Additionally, the impact of the
Biden Administration’s year-round open enrollment for those under 150 percent
of the federal poverty level (described in the
previous analysis) terminates at the end of 2025 along with the enhanced
PTCs.
Cost and Coverage Impact
As
shown in Table 1, H&E finds that extending the enhanced PTCs through
2025 would increase the number of people enrolled in subsidized individual
market coverage by 1.2 million in 2023, 1.4 million in 2024, and 1.7 million in
2025, at a cost of $20-$21 billion annually relative to current law, before
reverting to the baseline in 2026.
Additionally,
H&E finds that covering the 2.2 million individuals in the Medicaid
coverage gap through subsidized individual market coverage from 2022-2025 would
cost $211 billion relative to current law.
In
total, the BBB “framework” released by the White House on October 28,
2021, would increase the number of insured individuals by 2.2 million in
2022, increasing to 3.9 million in 2025 relative to current law, and would cost
$272 billion.
Conclusion
Temporarily
extending the American Rescue Plan Act’s enhanced PTCs through 2025 and
providing temporary subsidized individual market coverage to the 2.2 million
people in the Medicaid coverage gap below 100 percent of the federal poverty
level through 2025 as proposed in the most recent iteration of BBB
would increase the number of insured individuals by 2.2 million in 2022,
increasing to 3.9 million in 2025 relative to current law, and would cost $272
billion.
Significantly,
these provisions would also create a coverage cliff, as H&E modeling shows that
both coverage and spending revert to current law in 2026. This
would leave the same populations the proposals authors seek to
provide assistance to back where they were in 2020 come 2026. It would be
left to the 119th Congress and whoever occupies the White House after the
2024 presidential election to address this new coverage cliff.
https://www.americanactionforum.org/research/creating-a-health-coverage-cliff-implications-of-changes-to-build-back-betters-insurance-provision/#ixzz7GOaRs4ip
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