Democrat governors urge Congress to prevent 'disastrous' coverage loss by preserving ACA subsidies

Dive Brief:

A group of Democratic governors sent a letter to congressional leadership on Tuesday urging them to preserve more generous subsidies for Affordable Care Act plans set to expire at the end of the current plan year, preventing a “disastrous erosion” in healthcare coverage.
The subsidies, enacted by the American Rescue Plan passed in March 2021, contributed to a record 14.5 million people signing up for ACA coverage in its most recent open enrollment period.
The 14 governors, including California Gov. Gavin Newsom and New York Gov. Kathy Hochul, said they’re concerned many Americans will be forced to reduce insurance coverage or forgo it entirely if Congress allows the subsidies to expire. The Biden administration estimates about 3.4 million consumers will lose coverage if the ARP subsidies lapse.

Dive Insight:

The $1.9 trillion ARP increased subsidies for coverage in the ACA marketplaces, and expanded the number of people eligible for them by 2.8 million in 2022.

Now, Democrats at the federal and state level are looking to build on those enrollment gains before the subsidies expire, which would have millions of consumers facing notable premium increases at a time when rising inflation is stressing household finances.

“As we have experienced during the COVID-19 pandemic, access to affordable health insurance can sometimes mean the difference between life or death,” reads the letter to House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Chuck Schumer, D-N.Y., House Minority Leader Kevin McCarthy, R-Calif., and Senate Minority Leader Mitch McConnell, R-Ky.

“At a time when governments at all levels are struggling to find ways to reduce costs for the American people, we cannot allow the looming specter of rising health costs to cause more uncertainty and stress for American families,” it continues. “We urge you to take action and ensure funding is in place” to preserve the subsidies.

The governors of Illinois, Colorado, Connecticut, Michigan, Nevada, New Jersey, North Carolina, Oregon, Pennsylvania, Rhode Island, Washington and the U.S. Virgin Islands joined Hochul and Newsom in signing the letter.

Along with the effect on consumers, the loss of the subsidies could cause health spending to plummet by more than $11.4 billion in 2023, according to one study, leading to a significant loss in provider revenue.

With Tuesday’s letter, the governors are adding their voices to numerous calls from Democrats to act quickly to maintain the more generous financial aid. Along with concerns about coverage, the political fallout from failing to renew the subsidies could be costly for Democrats, as news of spiking insurance premiums would hit voters right before the midterms.

President Joe Biden has pushed Congress to make the subsidies permanent, though the effort has stalled in Congress. Vulnerable Democrats in swing states are now pushing for leadership to fast-track legislation extending the subsidies.