The American Rescue Plan (ARP) Act of 2021 increased premium tax credits (PTCs) for Marketplace coverage and extended eligibility for PTCs to people with incomes above 400 percent of the federal poverty level (FPL). Consequently, Marketplace enrollment reached a record high during the 2022 open enrollment period (OEP), which ended in January 2022. However, these enhancements will expire after 2022 unless Congress extends them. In a prior study, we estimated that if enhancements are not extended, 3.1 million more people would be uninsured in 2023, and Marketplace enrollees would spend hundreds of dollars more per person on premiums. We estimated that extending PTCs would increase the federal deficit by $25.3 billion in 2023 unless revenue is also raised to offset PTC costs.
In this new analysis, we find that with the increase of uninsured people, health care spending by private and public insurers and households would decline by $50.5 billion in 2023 if enhanced PTCs expire. Uninsured individuals use substantially less health care than insured individuals. We estimate a spending decrease of $19.0 billion on hospital services, $8.6 billion on services in physician practices, $13.0 billion on other services, and $9.8 billion on prescription drugs.
Thus, if enhanced PTCs are not renewed, every dollar saved in federal deficit spending translates to nearly two fewer dollars spent on health care. A reduction in health care provider revenue is not the only consequence—more than three million people would become uninsured, receive less health care, and likely experience greater morbidity and financial insecurity.