Democratic U.S. Senator Chuck Schumer of New York, accompanied by Democratic U.S. Senator Cory Booker of New Jersey, points to a poster showing rising medical costs if Congress allows tax breaks under the Affordable Care Act to expire. (Photo: Andrew Harnik/Getty Images)
States are preparing for the possibility that the costs of Obamacare health plans could change quickly, depending on whether Congress extends the subsidies that caused the federal government shutdown.
No matter what Congress does, the amount insurers charge for coverage sold in the marketplaces created by the Affordable Care Act will raise by 26% on average in 2026– says KFF, a non-profit health research organization. In the 30 states that employ federal healthcare.govpremiums will raise by an average of 30%. In states that operate their own marketplaces, the average raise will be about 17%.
However, 22 million of the 24 million people enrolled in marketplace plans receive a tax break. If Congress extends the credits, the amount of subsidized fees applicants pay each month won’t change significantly, even if insurers charge higher fees.
If Congress fails to act, people earning less than 400% of the federal poverty level will receive less financial aid, while people earning above that amount will receive no aid at all. As a result, according to KFF, monthly contributions for all registered persons will raise on average by approx about 114%,
For a month, Republicans and Democrats have been at an impasse on whether to extend these subsidies, leading to a government shutdown. The situation has created confusion for states that run their own marketplaces as many move this weekend to an open enrollment period in which health plans can be purchased.
Some states, such as Maryland, are preparing for a scenario in which they either expand state-funded subsidies to enrollees to assist them stay on schedule or quickly apply federal subsidies if Congress extends them.
“It will vary by state, depending on their technological capabilities and whether they need to do anything with their rates,” Michele Eberle, executive director of the Maryland Health Benefit Exchange, said in a telephone interview.
Eberle said the state of Maryland created a state grant program to offset some of the suspended federal grants. She said if Congress extends the subsidies, it could take about three weeks to implement the changes for the 240,000 people registered on the marketplace in the state.
Maryland would have to ask health insurers to resubmit their rates. According to Eberle, the state may also have to send notices to enrollees to give them the opportunity to change their plan selections.
“We would change [enrollees’] contributions. We would have to withdraw from state subsidies [that we] introduce a new rate, introduce new rates, convert the new tax credit into premiums and apply it,” Eberle said.
In California, where two million people are enrolled in Covered California, residents already do so reel from sticker shock after seeing next year’s contributions on the state website.
“People are very stressed about what to do and what their options are as costs change,” Jessica Altman, executive director of the California-based marketplace, said in an interview. “At the same time, we are very ready and will move any mountain we can move if Congress takes action.”
Altman said the state will automatically recalculate the amount enrollees will pay for their plans if Congress grants them the credits, and he is prepared for people wanting to change their plans if federal lawmakers take action.
“We will also be keen to inform our consumers and give them the opportunity to make a different choice,” she said.
Altman said it should take a few weeks to notify registrants of the changes, but it should only take about a week for the information to change in the state system.
“Even when the enhanced tax credits first went into effect, it was mid-year, in the spring,” Altman said.
“All the state exchanges had to build this and they did it in a matter of weeks, right? That’s who we are and that’s how we think about this challenge.”
Stateline reporter Shalina Chatlani can be reached at: schatlani@stateline.org
This story was originally produced by state linewhich is part of States Newsroom, a nonprofit news network that includes Pennsylvania Capital-Star, and is supported by grants and a coalition of donors as a 501c(3) public charity.
