House Republican Health Care Bill Fails to Address Marketplace Affordability

The health bill House Republicans are preparing to bring to the floor this week not only fails to prevent imminent premium spikes for more than 20 million people in marketplace plans, but would raise costs even higher for many marketplace enrollees and weaken pre-existing condition protections for individuals and small businesses.

If Congress allows premium tax credit (PTC) enhancements to expire at the end of this year, premiums for 2026 marketplace plans will rise for nearly all marketplace enrollees, and 4 million people, including many self-employed workers and small business owners, are projected to lose coverage. But instead of extending the enhancements to help people enroll in affordable, comprehensive coverage during open enrollment season — which is happening right now — the House Republican bill recycles old ideas that do nothing to address the current marketplace affordability crisis.

1. It doesn’t continue the expiring premium tax credit enhancements.

If the PTC enhancements expire and tax credits shrink, millions of people with low and moderate incomes will face higher costs. People with incomes between 100 and 150 percent of the federal poverty level will lose access to silver plans with $0 premiums. The PTC enhancements have been a lifeline for people with low incomes, especially in states that didn’t expand Medicaid. Many people with slightly higher incomes will experience big premium increases that could force them to make difficult tradeoffs as they struggle to afford health care and other basic needs. For example, a 45-year-old in Shreveport, Louisiana earning $32,000 (200 percent of the poverty level) would face an annual silver benchmark premium of $2,159, $1,468 more than with PTC enhancements (see map).

Meanwhile, people with incomes above 400 percent of the poverty level — $62,600 for a single person and $84,600 for a married couple — will face very high premiums and will receive no premium assistance. This will leave many people unable to afford their coverage and create a “cliff” in which people with incomes just over 400 percent of poverty lose support altogether. For example, a 60-year-old earning $63,000 would face a premium for a silver plan of $17,020 per year – more than one-fourth of their annual income — in Scranton, Pennsylvania, an increase of $11,665 over this year.

2. Its changes in the funding of cost-sharing reductions would further raise premiums for many.

The Affordable Care Act’s (ACA) cost-sharing reductions (CSRs) help people with low incomes who are enrolled in silver marketplace plans afford their out-of-pocket health care costs. In 2017, the Trump Administration stopped reimbursing marketplace insurers for the CSRs they are required to provide to lower-income consumers. Insurers responded by building the cost of CSRs into their silver plan premiums, a practice called “silver loading.” Because PTC amounts are based on silver plan premiums, they rose as well, helping people better afford marketplace coverage.

The House Republican bill, however, would directly fund CSRs. While this sounds like a positive, the move actually reduces PTC amounts — on top of the decline in PTC amounts (and increase in premiums) due to the expiration of the PTC enhancements — and will drive more people into lower-value plans, exposing them to higher costs given the those plans’ very high deductibles (an average of approximately $7,500) and high cost-sharing requirements once the deductible has been met.

The bill would also use CSR funding as a vehicle to limit access to plans that cover abortion care by prohibiting CSRs from reaching people enrolled in plans that cover abortion, except in narrow circumstances.

3. It would undermine ACA markets and protections for people with pre-existing conditions.

The bill includes several recycled Republican provisions that would expand coverage options for some people by making marketplace coverage more expensive for many others.

It would expand association health plans (AHPs), a type of health plan that trade associations, professional groups, and other organizations may offer their members, to cover self-employed individuals and small businesses as if they were large employers. By allowing more people to enroll in coverage not subject to ACA standards and consumer protections, this would segment insurance risk pools: individuals who are younger and healthier, or small businesses with younger or healthier employees, could get plans with lower premiums because they would be priced separately from ACA-compliant coverage and wouldn’t have to meet ACA standards such as having to cover a set of essential health benefits. As a result, individuals and small businesses remaining in ACA-regulated markets would see higher underlying premiums.

In addition, the bill would undermine protections for people with pre-existing conditions. While it would bar AHPs from rejecting individuals or charging them more based on certain health factors, it would give them greater ability to base a small group’s or self-employed person’s costs on their health risk compared to individual or small-group coverage. This would likely lead to higher premiums for older and sicker small groups and self-employed individuals, making such arrangements more attractive to healthier individuals and groups.

The bill also would expand Individual Coverage Health Reimbursement Arrangements (ICHRAs), also called Custom Health Option and Individual Care Expense or CHOICE arrangements. It would codify provisions that allow employers to forgo offering a regular group health insurance plan and instead offer a health reimbursement arrangement (a tax-favored, employer-funded account) that workers could use to buy their own coverage on the individual market.

Increasing such arrangements would likely raise ACA marketplace premiums, at the same time that the enhancements are expiring, by attracting firms with employees with greater health care needs; the firms can spend less to fund an ICHRA than they would pay for a group health plan. A new provision in the bill would also enable small employers to offer both an ICHRA and a group health plan to workers, further segmenting risk pools.

The House Republican bill ignores the urgent need to prevent premium increases for marketplace enrollees, and it comes on top of huge cuts to Medicaid and other marketplace changes in the Republicans’ megabill that will lead to large coverage losses over time. Even as millions of people brace for higher costs and difficult tradeoffs, this bill fails to help them afford the health coverage that will meet their needs.