Health care lessons from Texas: Effects of losing marketplace subsidies

Losing federal subsidies for Affordable Care Act health insurance will have effects on residents of Texas, but it’s difficult to make a blanket statement about coverage eligibility. Charles Miller, JD, director of health and economic mobility policy for Texas 2036, discusses the qualifications and differences for residents of Texas as federal subsidies expire for 2026.

Medical Economics: There have been discussion about possibly extending those tax credits that function like insurance subsidies. Do you have an estimate about how many people that would affect in Texas?

Charles Miller, JD: It depends. It'll affect in different ways, right? And so different people, depending on their income status, are affected differentially. The group that is impacted the most, that will have the most extreme swing in what they would be expected to pay for their premiums is that group of people that makes more than 400% of the federal poverty level. And just for context and real numbers, that's about $60,000 for an individual, about $85,000 for a couple, and about $120,000 a year for a family of four. If you make more than that amount of money, you have now basically lost eligibility for any subsidy. And so the premiums that you would be expected to pay for a plan on the individual marketplace could jump dramatically, and we're talking $10,000 or even more for that family. So they are going to be affected dramatically. In Texas, of our roughly 4 million enrollees last year, that was about 125,000 people. So that's about 3.5% of our marketplace. It's a relatively small percent of our marketplace, but it is a very big impact that those people will be feeling with the expiration of those enhanced subsidies. Now for the remaining folks, about 95% of our marketplace is receiving subsidies, and so outside of that 3½% last year that may have been receiving subsidies, the rest of the people on there who are subsidy eligible are going to see the amount that they would be expected to pay for any given plan go up slightly. We're not talking tens of thousands of dollars a year for these folks. We are talking increases more in the tens to hundreds of dollars a month, depending on what kind of plan that you get. So while the expiration or not of those subsidies can impact a wide number of people, the extent to which the impact is felt is going to vary dramatically based on your income level. One of the things that we have noted is that even with the expiration of those enhanced subsidies, is everybody in Texas who makes less than 200% of the federal poverty level is still going to have access to at least one free plan, and a good chunk of the folks who make up to 250% or even slightly higher than that of the federal poverty level, are also going to have access to at least one free plan that tends to vary most significantly by age. It can also vary by region, but perhaps paradoxically or counterintuitively, if you are eligible for subsidies, the older you are, the more likely you are to find a free plan. Plans tend to be more affordable for those who are older because of the complex subsidy dynamics that exist.