This story courtesy of MIRS, a Lansing-based news and information service.
If Congress discontinues tax credits that subsidize working-class employees who get their health insurance through the Affordable Care Act’s affiliated marketplace, costs could skyrocket, based on testimony taken at a recent state Senate committee meeting.
The Center on Budget and Policy Priorities projected that 94,800 small business owners in Michigan, as well as 60,700 individuals tagged as “self-employed,” received coverage through the marketplace.
Without the Enhanced Premium Tax Credits, healthier people receiving coverage through the ACA marketplace may drop their coverage as the price for insurance becomes prohibitive, making coverage even more expensive for those who need it.
Senate Health Policy Committee Chair Kevin Hertel (D-St. Clair Shores) called, through his SR 81, to permanently extend the tax credits, which are set to expire at year’s end. The Department of Insurance and Financial Services (DIFS) told Hertel’s committee, 530,000 Michiganders were enrolled in the ACA marketplace for “Plan Year 2025.”
“For 2024, nearly 90 percent of enrollees qualified for a subsidy, saving an average of more than $380 per month,” said Joseph Sullivan, director of DIFS’ office of innovation and research. “Failing to extend the enhanced tax credits beyond the end of 2025 will impact marketplace consumers out-of-pocket costs, and will have the biggest impact on those who use these tax credits to obtain affordable coverage, but also the entire market as a whole.”
The KKF nonprofit reported that the enhanced tax credits were introduced in 2021, aimed at ensuring non-Medicaid eligible households weren’t spending large portions of their income on health insurance. Through them, a family earning $65,000 annually – or 415 percent of the federal poverty line – would have premiums capped at 8.5 percent of their household income.
Based on the examples Sullivan has picked up, a 60-year-old couple earning $82,000 annually in Michigan will see their monthly premium rise from $580 to $1,710 monthly if the subsidizing tax credits expire.
“That’s over a $1,000 increase a month. As a result, many residents may risk going without health insurance entirely. These individuals may still get injured or sick, and will need to seek care somewhere even if they’re not insured,” he said. “The expiration of the enhanced subsidies will also increase costs when a pool of relatively young and healthy individuals decide not to purchase coverage in the marketplace.”
If healthier folks aren’t purchasing plans through the marketplace because subsidies are no longer making plans budget-friendly, Sullivan suggested the risk pool will be increased and premiums will rise even more.
One of the testifiers was Jill Murphy, a progressive Democratic activist based in Macomb County. She said to the committee that she recently transitioned off of Medicaid when she got a job offering “a small health care stipend.”
She said she spent hours on the phone with ACA representatives trying to figure out which plan would cover her endometriosis treatments, hormone replacement therapy for her perimenopausal symptoms and medications helping with her neuro-divergence.
“I already work a full-time job to afford this coverage. I shouldn’t have to work another full-time job just to secure this packaged healthcare,” Murphy said. “I still live with constant uncertainty every year. I don’t know if my plan will still exist, if my medications will still be covered or if premiums will skyrocket again. That kind of instability creates a cloud of stress.”
Another testifier was Diane Holland of Okemos. She told the committee she was teaching in California, receiving employer insurance until resigning in 2015, following a multiple sclerosis (MS) diagnosis. Upon returning to her home roots in Michigan, Holland found herself diagnosed with breast cancer during the COVID-19 pandemic.
She claimed that the enhanced premium tax credits helped reduce her monthly payments.
“Nov. 1 comes at a dread for us. I use AI to help plan how much I will have to pay. Anxiety is well known in chronic diseases. Why is Congress and the Senate playing games with our lives?” Holland said.
During today’s meeting, Dominick Pallone, the executive director of the Michigan Association of Health Plans, said the potential loss of tax credits, higher prescription drug costs and “elevated acuity of claims” will leave employers and customers “with sticker shock as we head into next year.”
“It’s more important than ever that the state and federal policymakers consider policy solutions to help make health care more affordable. These trends underscore the need for proactive policy solutions,” Pallone said, suggesting that legislators explore ways to allow residents slightly above Medicaid’s eligibility threshold to purchase “Medicaid-like insurance policies.”