Two New Analyses: House COVID-19 Relief Plan Would Temporarily Lower Marketplace Premiums for Millions and More than Offset Short-Term State Costs to Expand Their Medicaid Programs

The House COVID-19 relief proposal would temporarily lower what millions of Marketplace enrollees and uninsured potential enrollees would pay toward premiums and would provide states that have not expanded their Medicaid programs a financial boost that would more than offset their costs initially, two new KFF analyses find.

The analyses assess two parts of the House plan aimed at expanding access to affordable health coverage by expanding the Affordable Care Act’s tax credits for people buying marketplace coverage and by offering new financial incentives to those states that to date have not expanded their Medicaid programs to cover low-income adults.

The first analysis looks at the House plan’s provisions that would enhance the tax credits available to people who purchase their own health coverage on the marketplace, both for people already eligible for tax credits and for those currently ineligible at higher incomes facing high premiums due to their age and location. The higher tax credits would end after two years.

It finds that the vast majority of the nearly 14 million people already insured through the individual market would see lower premiums under the proposal, and could potentially use the premium savings to buy plans with lower deductibles. Most of the roughly 15 million uninsured people who could buy coverage through the Marketplace would be eligible for new or bigger subsidies.

The group likely to see the biggest drop in premiums are those who make just above 400% of the federal poverty rate ($51,040 for an individual), who are not eligible for marketplace tax credits under current law and face a “subsidy cliff” as they may pay the full cost of coverage.

The analysis finds about 8 million people, including both insured in the non-group market and uninsured people eligible to buy on the Marketplace, do not currently receive tax credits. Many would be subject to the subsidy cliff under current law, but some may have incomes high enough that they wouldn’t qualify for tax credits under the House plan either.

Tax credits would still be tied to age and geography, so the people who would see the largest benefits under the proposal would be older Americans living in high-premium areas such as Wyoming, West Virginia, South Dakota, Nebraska, Connecticut, and Alabama.

The Congressional Budget Office (CBO) and Joint Committee on Taxation project that the enhanced premium tax credits in the House proposal would increase federal deficits by $34.2 billion over 10 years.

The second analysis illustrates the potential impact on state spending under the House plan’s provision temporarily increasing the federal share of traditional Medicaid spending for two years in states that have not expanded their Medicaid programs if they were to do so.

It finds that the two-year boost in federal funding would more than offset the new state costs to implement the Medicaid expansion during that period. After the two years, states would continue to receive the 90% match for the expansion group and their regular match, without the increase, for the traditional population. CBO estimates that the option could increase federal spending by a net of $15.5 billion over the 2021-2030 period and do not assume that all states will adopt the new option.

If the House proposal becomes law, 14 states could be eligible for the enhanced match: Alabama, Florida, Georgia, Kansas, Mississippi, North Carolina, South Carolina, South Dakota, Tennessee, Texas, Wisconsin, and Wyoming, as well as Missouri and Oklahoma, which adopted the expansion via ballot initiative but have not yet implemented it.