The recently enacted American Rescue Plan Act (ARPA) includes several provisions designed to expand access to affordable health insurance coverage in 2021 and 2022, while the economy continues recovering from the COVID-19 pandemic and recession. One provision is the expansion of Affordable Care Act (ACA) marketplace subsidies over that period, which could substantially reduce household spending on health care, reduce the number of people uninsured, and increase marketplace enrollment, but the new subsidies’ effects may be limited by their brief availability.  In this paper, we seek to show the maximum potential impact of the ARP’s enhanced marketplace subsidies on health insurance coverage by modeling the new subsides as if they were permanent changes (instead of limited to 2021 and 2022). 

We find the number of people uninsured would drop by 4.2 million, or almost 14 percent, in 2022 if the ARPA’s enhanced marketplace subsidies were permanent and consumers, employers, and insurers responded to the new subsidy schedule as if it were fully phased in. We estimate subsidized marketplace enrollment would increase by 5.1 million people, an increase of 60 percent in 2022. Because of our different assumptions and models, our estimates differ from those by the Congressional Budget Office (CBO).

Adhering to their mandate, the CBO estimated the ARPA as written, including the temporary nature of changes to marketplace subsidies. Given that a permanent change in subsidies would be expected to have a larger effect than one that is temporary, our estimate of the reduction in the number of people uninsured is more than three times as large as the CBO’s.