Health care premiums could skyrocket for many SC residents

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The vast majority of South Carolinians who get their health insurance through the Affordable Care Act’s individual marketplace could see their premiums soar in 2023 if Congress allows the expanded health care subsidies included in the American Rescue Plan to expire.

Tea temporary subsidieswhich since 2021 have increased the amount of financial help available to those already eligible for assistance and expanded aid to many middle-income people who previously had been ineligible for help, sunset at the end of the year.

The federal government has warned that millions of people could lose health insurance and recent nationwide gains in health insurance coverage could be wiped out if Congress fails to extend the enhanced subsidies.

The US Department of Health and Human Services estimates about 3 million people nationwide would lose health insurance if the subsidies lapse and another 10.4 million people with an ACA plan would pay significantly more for coverage in order to stay insured.

In South Carolina, where an estimated 365,000 people have ACA plans, 60,000 would lose health coverage and become uninsured if the subsidies aren’t extended, according to Health and Human Services projections. Another 225,000 would lose all or a portion of the financial assistance they currently receive, the federal agency said.

“If there’s anything we learned from the last two years, it’s that having access to quality affordable health care is essential for the well being — both healthwise and economics — of our state, and we cannot afford to go backwards,” said Sue Berkowitz, director of the South Carolina Appleseed Legal Justice Center, which advocates for low-income South Carolinians.

Not everyone is convinced the state’s uninsured rate will spike if the enhanced subsidies go away, however, and even some who think they’ve been beneficial in the short term don’t view them as a permanent solution.

“Subsidies are not addressing the root problem,” of high health care costs, said Brad Wright, a professor of health services policy and management at the University of South Carolina’s Arnold School of Public Health. “They’re sort of a reactionary Band-Aid, but they are helping. They are making sure people have insurance.”

Democrats in Congress have been pushing to extend the subsidies — the recently introduced Inflation Reduction Actalso referred to as the reconciliation bill, includes a three-year extension of the advanced premium tax credits through 2025 – but likely will need the support of all 50 of their members in the Senate to overcome unified Republican opposition.

US Sen. Lindsey Graham and two other Republican senators last month released a joint statement criticizing the subsidies after a Congressional Budget Office analysis found that extending them permanently would cost an estimated $248 billion over the next decade while resulting in 2.2 million fewer people, on average, being without health insurance each year.

The Republican senators bemoaned the CBO’s prediction that some employers would cease offering health insurance to workers if the enhanced subsidies were made permanent, saying it would “make more people dependent on government.”

“This is a proposal as nonsensical as it is irresponsible,” the senators said in a statement. “It’s absolutely critical Americans have an accurate accounting of the real harm these proposals would have on our economy.”

Public health experts credit the subsidies and COVID-era Medicaid policies that prohibit states from terminating enrollees amid the public health emergency for spurring significant national gains in health insurance coverage in recent years. The US Department of Health and Human Services this week announced the nation’s uninsured rate had reached an all-time low of 8% during the first quarter of the year, with more than 5 million people having gained coverage since 2020.

South Carolina has not released data on its uninsured rate since 2019, when an estimated 13.2% lacked coveragebut state and federal data make clear that more South Carolinians are enrolling in ACA plans than ever before.

After remaining mostly flat from 2017 to 2020, the number of Palmetto State residents with health insurance through the individual marketplace has spiked 45% since the pandemic, according to state Department of Insurance data. Roughly 70,000 more South Carolinians enrolled in ACA health plans this year than did the year before, according to the US Centers for Medicare and Medicaid Services.

Such gains are encouraging, public health advocates say, but they could be fleeting if enhanced ACA subsidies aren’t extended.

“Since the passage of ARPA, we have seen significant growth in health insurance enrollment in our state and it scares me for the consumer if these enhanced subsidies go away,” said Joel Lourie, a former Democratic state senator who now serves as president of a regional health insurance firm. “I think the impact will be devastating for tens of thousands of South Carolinians.”

Congress must act quickly to extend subsidies

While the enhanced subsidies don’t expire until the end of the year, Congress must act this month to extend them if it wants to avert premium increases and coverage losses, health care advocates said.

That’s because the federal deadline for health insurance carriers to set their 2023 ACA rates is Aug. 17.

The South Carolina Department of Insurance has asked carriers to file their proposed rates as if subsidies would expire at the end of the year and said it would seek federal guidance on how to proceed if Congress ultimately extends them.

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The new rates health care consumers could see if the subsidies lapse aren’t yet publicly available, but are expected to be considerably higher than what many people currently pay. As a point of reference, the Kaiser Family Foundation found that premiums would have been 53% higher this year on average if not for the enhanced subsidies.

The Department of Insurance has the authority to let carriers revise their rates after this month’s deadline in emergency circumstances, and has done so in the past, said Jim Ritchie, executive director of the South Carolina Alliance of Health Plans.

But if Congress acts after consumers already have received renewal notices that show higher premiums — notices often go out in September or October — it may be too late to avoid having some consumers drop coverage due to sticker shock when open enrollment begins in November.

Ritchie, whose organization advocates on behalf of the state’s health insurance companies, said the ACA subsidies have helped keep people insured during the pandemic, but is less concerned their expiration will lead to a significant decline in the number of South Carolinians with health insurance.

“Given the competition for talent and employees in the nation and in South Carolina, particularly today, employers are providing aggressive benefits to their employees,” he said. “I think the migration to employer-based care will accelerate, and so I don’t think you’ll have a big drop off in the number of insured people should the subsidies come to an end.”

Ritchie said the interest groups pushing for permanent ACA subsidies are using the pandemic as an opportunity to create a backdoor single-payer system that will end up costing taxpayers more in the long run.

“Whenever you subsidize something and you take the market out of it further you’re going to end up with larger costs to the taxpayer, less efficiency in the delivery of care and higher prices,” he said. “That’s not what consumers need today. We need affordability and access to quality care, and the private health care system is the best method we have to assure quality in the delivery of care rather than a subsidized government plan.”

Who benefited from enhanced ACA subsidies?

The two primary groups of people believed to have taken advantage of the enhanced ACA subsidies are those who previously had been unable to afford health insurance and those who lost their jobs during the pandemic and could no longer rely on employer-sponsored coverage.

The subsidies helped both populations by increasing premium tax credits for individuals already eligible for assistance and extending assistance to many middle-income people and families who had not previously been eligible for it.

“It really made a huge difference for working people, especially people who owned their own business, small business owners looking for coverage for themselves,” said Shelli Quenga, director of programs at the Palmetto Project, a nonprofit insurance agency that helps South Carolinians with health care enrollment decisions. “Those are the people we heard a lot from and that’s really the lifeblood of South Carolina’s economy.”

Wright, the USC professor, said he suspects a significant amount of the increase in ACA enrollment in the state was driven by people who lost their jobs and employer-sponsored coverage.

In South Carolina, unlike states that have expanded Medicaid, those people likely ended up uninsured or signing on to one of the subsidized marketplace plans, he said.

Wright, who analyzed South Carolina’s ACA enrollment data at The State’s request, said it indicated that many people who lost employer-sponsored health insurance signed up for the lowest-cost bronze plans.

Others who may already have had bronze plans, or who had not previously been eligible for subsidies due to their incomes — about 21,000 people in South Carolina — probably enrolled in more generous silver and gold plans because they could upgrade coverage while paying a comparable cost, he said.

How the end of enhanced subsidies could affect South Carolinians

The exact amount that ACA health care premiums will increase if subsidies expire depends on an individual enrollee’s age, income and where they live.

The Urban Institute, a left-leaning think tank, estimated that individuals with incomes of between about $20,000 and $54,000 would pay roughly $1,000 more for annual premiums on average. Consumers with incomes more than four times the federal poverty level, who had not been eligible for assistance prior to the enhanced subsidies, are likely to see some of the largest premium increases.

A typical 60-year-old couple making $75,000, or 430% of the poverty level, for example, would see their ACA premiums more than triple, amounting to an annual increase of nearly $16,000, according to the Center on Budget and Policy Prioritiesa progressive think tank.

In South Carolina, increases for middle-class individuals and families would be even greater, the think tank found.

According to the organization’s analysis, a 45-year-old making $60,000 would see their annual premiums increase $920 if subsidies expired; a 60-year-old couple making $75,000 would experience a $16,254 annual increase; and a family of four making $120,000 would see their premiums rise $6,835.

“A $17,000 increase in the cost of health insurance is untenable,” Quenga said. “It would really mean that a lot of people would no longer be able to afford coverage.”

This story was originally published August 4, 2022 12:58 PM.

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Zak Koeske is a state government and politics reporter for The State. Before joining The State in 2020, Zak covered education, government and policing issues in the Chicago area. He’s also written for publications in his native Pittsburgh and the New York/New Jersey area.

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