Democrats Introduce Bill To Make Increased ACA Subsidies Permanent

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Dive Brief:

• Democrat lawmakers on the Hill introduced legislation on Wednesday that would make more generous federal subsidies for plans in the Affordable Care Act exchanges permanent.
• The Senate bill, released by Sens. Jeanne Shaheen, D-N.H. and Tammy Baldwin, D-Wisc., would avert a 2025 expiration date for the pandemic-era enhanced premium tax credits. Rep. Lauren Underwood, D-Ill., is introducing the same legislation in the House.
• Momentum has been growing among Democrats to keep the subsidies in place, with lawmakers noting they’ve helped needy Americans afford health insurance coverage. Republicans, however, oppose the subsidies, arguing that they’ve increased the federal budget deficit and create more opportunities for fraud. 

Dive Insight:

The subsidies, enacted during the coronavirus pandemic, have been attributed to historic growth in ACA plans. More than 21 million people signed up for ACA coverage during the most recent open enrollment period — a record high, according to the Biden administration.

Under the more generous financial assistance, people with incomes between 100% and 400% of the federal poverty level saw higher premium tax credits. Americans with incomes above 400% of the federal poverty level could also qualify for subsidies, when they previously were completely ineligible for financial assistance.

Progressive lawmakers say they want to move quickly to keep the subsidies around, arguing healthcare costs could suddenly rise for more than 20 million Americans if the tax credits are allowed to expire. Around three million people could become uninsured, and nearly nine million will pay about $406 more per person each year, according to a 2022 estimate by the HHS. 

Though the enhanced subsidies expire in 2025, Congress needs to act quickly to prevent sudden cost increases and give insurers time to set their rates, Shaheen said at a Wednesday press conference. 

“We need to get this done in the first quarter of next year,” she said. “So that means we need to get it done now.”

The healthcare industry is similarly supportive — reducing the number of uninsured individuals generally means higher payments for hospitals — while getting more people on ACA plans means higher premiums for health insurers peddling coverage on the exchanges.

A new coalition called Keep Americans Covered — comprised of representatives from both the provider and insurance industries — has been lobbying Congress to retain the subsidies.

“The enhanced premium tax credits are working for millions of people and Congress should move swiftly to extend this remarkable program and prevent a tax hike on those who can least afford it,” Lauren Aronson, executive director for Keep Americans Covered, said in a statement. “At a time when middle class families are already struggling, protecting the enhanced tax credit is the right thing to do.”

However, Republicans in Washington have come out against the subsidies, pointing to their cost and potential for fraud. This summer, House Republications called for investigations into alleged enrollment fraud on the ACA exchanges, citing a report from conservative think tank Paragon Health Institute that found up to five million people wrongly received the subsidies in 2024. 

The ACA has been a source of contention between America’s two major political parties since it was passed in 2010, and has remained so in this year’s presidential election. Republican nominee and former President Donald Trump has made mixed statements about the law — saying during a debate earlier this month that he “saved” the ACA, despite his record in office that chipped away at the the law’s protections.

Meanwhile, Vice President Kamala Harris, the Democrat nominee, has pledged to make the higher subsidies permanent if elected president.