Congress passed enhanced premium tax credits (PTCs) in March 2021 as part of the American Rescue Plan Act (ARPA) and extended them through 2025 by the Inflation Reduction Act (IRA) of 2022. The enhanced PTCs substantially increased the subsidies available to buy insurance in the Marketplace, making coverage more affordable for eligible people. As a result, enrollment steadily increased and jumped by 5 million people, or 31 percent, during the 2024 open enrollment period. Soon, Congress will debate whether to extend enhanced PTCs again, make them permanent, or let them expire.

In this summary, we estimate coverage of the nonelderly population (under age 65) in 2025 with and without enhanced PTCs by race and ethnicity to gauge the impact of the more generous credits. When estimating coverage under a policy without enhanced PTCs, we assume an alternate scenario in which the original Affordable Care Act PTCs would have remained in effect.

WHY THIS MATTERS

Soon, Congress will debate whether to extend enhanced PTCs again, or possibly make them permanent. With enhanced PTCs, Black and Hispanic people are projected to increase their enrollment in the nongroup market at substantially higher rates relative to White people and will account for a larger share of nongroup enrollment in 2025 than without the enhanced PTCs. In addition, Black and Hispanic people will see greater reductions in the percent of uninsured people relative to White people because of this policy. These impacts are greater in nonexpansion states. The enhanced PTCs are not targeted by race or ethnicity, but they are more generous at lower incomes and directly assist those without affordable insurance offers from an employer. Because Black and Hispanic people are more likely than White people to be low-income, the PTCs are especially helpful, particularly in nonexpansion states where access to Medicaid is severely limited for adults.

WHAT WE FOUND

Our key findings are as follows:

• Under enhanced PTCs, Black and Hispanic people will be enrolled in the nongroup market at higher rates than White people in 2025.
• With enhanced PTCs, Black and Hispanic people will account for a larger share of nongroup enrollment in 2025 than they would have without them.
• Black and Hispanic people will see greater reductions in the percent of uninsured people relative to White people because of enhanced PTCs.
• Increases in nongroup enrollment and decreases in uninsurance among Black and Hispanic people because of enhanced PTCs are greater in nonexpansion states than in expansion states.
• Gains for Black and Hispanic people will likely be reversed after 2025 if Congress does not extend the enhanced PTCs.