We estimate the implications of five alternative Marketplace subsidy schedules, all providing more generous premium tax credit and cost-sharing assistance than that available under current law. All options would extend financial assistance to those with incomes above 400 percent of FPL, but how much they increase assistance for people in different income groups varies. We show the implications of each alternative subsidy schedule for overall insurance coverage, coverage by income group, and federal government costs. Each approach would also provide additional financial assistance to those enrolled in nongroup insurance coverage, and we provide findings for that population as well.
Any of these approaches could reduce the number of uninsured Americans by more than 4 million people. The largest number of newly insured people would be those with modest incomes, 200 to 400 percent of FPL, who are eligible for Marketplace financial assistance today but for whom that assistance is limited. Still, under any of these approaches, almost 1 million of the newly insured would be people with middle incomes (over 400 percent of FPL), who are currently ineligible for any assistance at all.
Accounting for potential offsets due to reduced demand for uncompensated care, we estimate $23 to $26 billion in additional spending in 2022 would be necessary to implement one of these options. This roughly equals $289 to $322 billion over 10 years, depending on the approach chosen. However, federal uncompensated care spending would not fall automatically with the decrease in demand for such care when coverage expands; fully realizing these federal savings requires policy action.
The value of the increase in federal spending would be increased numbers of people insured and significantly reduced financial burdens for those already enrolled in nongroup insurance coverage, with savings averaging more than $1,000 per year per nongroup enrollee.
These reforms can be implemented quickly (i.e., the 2022 plan year), because they would constitute only a change in computation of subsidies and eligibility; the structure in which they would be used is already in place. Marketplace insurers would need to develop new cost-sharing reduction plans to correspond to the new subsidy schedule chosen. Enrollment would be expected to shift away from bronze and silver plans to gold plans.