WASHINGTON — Millions of people in the United States will be spared from big increases in health care costs next year after President Joe Biden signed legislation extending generous subsidies for those who buy plans through federal and state marketplaces.
The sweeping climate, tax and health care bill sets aside $70 billion over the next three years to keep out-of-pocket premium costs low for roughly 13 million people, just before the reduced prices were set to expire in a year beset by record-high inflation.
As the calendar pushed closer to the Nov. 1 open enrollment date, Sara Cariano was growing nervous about her work helping people across Virginia sign up for subsidized, private health insurance on the HealthCare.gov website.
“I expected very difficult conversation with folks to explain why their premiums were spiking,” said Cariano, a policy specialist at the Virginia Poverty Law Center.
But the passage of the “Inflation Reduction Act” erased those worries.
“Things aren’t going to change for the worst for individuals who are purchasing coverage through the market,” she said.
The bill will extend subsidies temporarily offered last year when Congress and Biden signed off on a $1.9 trillion coronavirus relief bill that significantly lowered premiums and out-of-pocket costs for customers purchasing plans through the Affordable Care Act’s marketplace. It also continues reduced costs for more individuals and families who live well above the poverty line.
Only Democrats supported the extended health care subsidies and the other proposals in the bill that Biden signed on Tuesday. Republicans criticized the measure as big government overreach that will only worsen inflation. In reality, economists say, the bill will do little to either fan or extinguish the flames of exorbitant prices.
Health insurance premiums in the marketplace are expected to rise significantly next year — roughly 10 percent — according to an analysis by the Kaiser Family Foundation. The extended subsidies, which determine premium payments based on income, will guard most people from those price increases, said Cynthia Cox, a vice president at the foundation.
“Generally speaking, people should not see increases in their premiums,” Cox said.
Those who bought plans on the government marketplace saved on average about $700 in premium payments from the subsidies this year, according to estimates by the Centers for Medicare and Medicaid Services.
As costs dropped, more people signed up for the coverage over the last year and the number of those without health insurance dropped to an all-time low of 8% in August, the Department of Health and Human Services announced. Roughly 26 million people, 2 percent of them children, remain uninsured in the U.S.
In California, many of the 1.7 million people who purchase health insurance through Covered California, the state-operated insurance marketplace will continue to see savings ranging from $29 and $324 per month, depending on their income level.
State officials predict about 220,000 people will be saved from being priced out of coverage. Between 2 million and 3 million people in California might also turn to the state marketplace if they lose coverage through Medicaid when the federal government’s COVID-19 public health emergency expires. About 15 million people in the U.S. have been extended Medicaid coverage during the pandemic.
Cost is the biggest factor driving whether a person signs up for coverage or not, said Joseph Poindexter, the senior director of health insurance programs at HealthCare Access Maryland.
Some parents, for example, sign their children up for Medicaid but skip buying coverage for themselves, he said.
“It’s really said to see folks who will say, I’ll forgo treatment, or won’t go visit the doctor,” Poindexter said.
Fewer people have had to make that calculation with the subsidies, Poindexter said, attributing the lowered prices to a 9% increase in new enrollees in the state last year.