Millions Will Lose Obamacare If Democrats Don’t Renew Incentives

The expiration of increased subsidies for coverage on the Obamacare exchanges comes later this year.

This is a significant unresolved issue for Democrats who risk losing their congressional majorities in November. It would also result in the loss of health coverage for more than three million individuals.

Failed Extension

Democrats tried, but failed, to extend interim tax credits for premiums paid on Obamacare exchanges as part of President Biden’s pandemic relief proposal.

Per a new Urban Institute estimate, 3.1 million Americans will lose insurance if the extra subsidies expire.

Market policyholders’ premiums will also rise. The American Rescue Plan was signed into law soon after President Biden took office.

It made Obamacare plan subsidies available to people of all income levels and increased financial aid for people who were already eligible under Obamacare.

These were only designed to last two years. The Build Back Better bill, Biden’s signature legislative agenda, was on pace to extend them beyond 2022.

The bill twice failed, mainly owing to West Virginia moderate Joe Manchin’s opposition, a thorn in the side of the Democrat Party’s progressive flank. A 40-year high in inflation raises concerns for Manchin.

According to the report’s writers, nongroup health insurance holders who lost coverage, due to the ARP, may pay hundreds of dollars more each year in premiums if the increased premium tax credits are not extended.

Continuing the tax credits without generating revenue would add $25.3 billion to the federal deficit in 2023. The increase would be $305 billion in ten years.

The House iteration of the Build Back Better bill would have produced around $1 trillion in government revenue from 2022 to 2031 by taxing the ultra-rich, raising taxes on companies, and strengthening tax enforcement to eliminate the yearly gap between taxes owing and taxes paid.

Rise in Enrollments

Enrollment soared, due to the American Rescue Plan’s premium cost reductions in 2021.

In January, CMS said 14.5 million Americans have subscribed to or are effectively re-enrolled in individual market insurance coverage for 2022.

Registration during the most current open enrollment period increased by 21% over the previous year, marking the most significant volume since Obamacare was enacted 12 years ago.

Biden is proud that roughly six million of the overall participants are first-time insurance buyers on the exchanges.

Despite the failure of Build Back Better, Biden urged Congress to keep the subsidies.

Early this year, in his State of the Union speech, “The American Rescue Plan saves millions of ACA-covered families $2,400 annually. Let’s fix the gap in coverage and lock in the savings.”

The delayed healthcare program may cost vulnerable Democrats in November’s congressional elections.

Democrats would almost certainly want to extend them before November, according to Urban Institute research co-author Matt Buettgens. A legislative success would bolster the dominant party, slammed for rising inflation.

“There is an indication it will be renewed as a stand-alone,” Buettgens added.

“The Build Back Better Act increased expenditure and revenue without necessarily increasing spending. It must be accompanied by something that raises revenue.”