Californians brace for increased healthcare premiums if federal subsidies expire

In the last two years, Syd Winlock has had a great load lifted from his surgically repaired shoulder.

Federal subsidies provided as part of a temporary pandemic relief package have slashed his health insurance premiums, allowing the Sacramento-area small business owner to purchase an insurance plan that better covered his shoulder and knee over the past two years as a replacement.

However, those federal subsidies will expire at the end of this year if Congress doesn’t renew the program. His “very manageable” price — about $700 a month for him and his wife — will increase to $2,300, Winlock said.

“Even if we went down to a lower policy, it would still be about $1,800 a month,” said Winlock, 63. “I mean, that’s more than my mortgage.”

About 150,000 low- and middle-income Californians would be similarly left out of coverage by rising premiums if federal subsidies were not renewed, a recent analysis by Covered California estimated.

The federal subsidies were passed in early 2021 as part of the Biden administration’s American Rescue Plan Act, which temporarily helped Americans recover from the economic and health effects of the COVID-19 pandemic.

Under the law, health insurance premiums were capped at 8.5% of household income. This resulted in a significant drop in monthly payments and more consumers enrolling in Covered California, the insurance marketplace created by the Affordable Care Act of 2010 for people of working age who are not covered by a health insurance plan at their place of work .

Entries on the state stock exchange hit a record high of 1.8 million, of which Covered California reported 92% received some form of subsidy.

“These improved subsidies have fundamentally provided affordability and delivered on the promise of the Affordable Care Act in the manner intended,” said Jessica Altman, executive director of Covered California.

“There were a lot of people saying things like, ‘Oh my God, you know, for the first time I can afford my health insurance and my child care…’ That’s especially important given the inflationary environment we’re in in now.”

More than 1 million low-income earners — individuals earning between $17,775 and $32,200 and families of four earning between $36,570 and $66,250 — would more than double their premiums if Congress doesn’t renew the program, according to Covered California Analysis. Monthly premiums for middle earners would increase by an average of $272 per member over the next year.

John Baackes, executive director of LA Care, a health insurance plan for Los Angeles County’s poorest and most vulnerable residents, said although the increased subsidies don’t expire until the end of the year, the window for Congress is shrinking because of its month-long August break. At this point, legislation typically slows in an election year.

Baackes said health plans will take time to send consumers renewal notices with expected rates for the 2023 insurance year, which will be sent out in October.

“That’s why we’re very concerned about it,” said Baackes. “The American Rescue Plan has provided increased subsidies, it’s really a wonderful thing. And many of our members have benefited from it.”

With open registration beginning a week before the Nov. 8 midterm election, Democrats on Capitol Hill are increasingly anxious to prevent consumers from receiving notices of huge increases in insurance premiums before voters go to the polls. But the debate over whether the subsidies should be extended or – as some have called for – made permanent has been paralyzed by arguments over the price and impact on skyrocketing inflation.

Keeping the subsidies in place for three more years would cost $74 billion, while the price to make them permanent is $220 billion over the first 10 years, according to the Congressional Budget Office.

Gov. Gavin Newsom and state lawmakers proposed spending $304 million in separate state health subsidies to ease the burden if the federal program is not renewed. That money, included in a state budget expected to be finalized this month, would offset premium increases for more than 700,000 residents.

However, these state-funded grants will cover only a fraction of the federal premium rebate currently available under the American Rescue Plan, which has provided $1.7 billion in healthcare cost assistance to California in each of the past two years.

“Nearly half of the people in Covered California pay less than $10 a month,” said Anthony Wright, executive director of Health Access California, a consumer group that is urging Congress to make increased federal subsidies permanent. “We live in a state with a high cost of living, so people have to make decisions about how much healthcare they can afford.”

That worries Tuan Nguyen, a caregiver in the Silicon Valley town of Milpitas. After being diagnosed with a rare and painful condition called glossopharyngeal neuropathy six years ago, Nguyen said he had to buy more expensive insurance that would allow him to see certain specialists.

“I need the health plan,” said Nguyen, 44. “I need to see my doctor. i need my treatment These are things that are a necessary part of my life and they are all very expensive and becoming increasingly difficult to afford.”

Reducing the number of uninsured residents in the state is a top priority for Newsom and lawmakers, who passed legislation in 2019 that would impose a fee on anyone who does not have insurance. The individual mandate should encourage younger and healthier individuals to buy Covered California coverage to expand the pool and lower rates overall as Democratic leaders move California closer to universal coverage.

As part of this effort, California has gradually expanded eligibility for Medi-Cal, the state’s health care program for the poor, to certain age groups of low-income people, regardless of immigration status. California’s pending budget would offer Medi-Cal to the last remaining age group in 2024 and open the health care program to residents ages 26 to 49 regardless of immigration status. Newsom said the move will make California “the first state in the country to achieve universal access to health insurance.”

Miranda Dietz, a research and policy fellow at the UC Berkeley Labor Center, said the significant increase in the number of Californians with health insurance over the past two years would be at risk without the federal subsidies. Dietz, in collaboration with the UCLA Center for Health Policy Research, authored a study that projects up to 1 million people in California will be without insurance over the next year when federal subsidies expire.

“That makes it very disheartening to take away these extra subsidies that have been really instrumental in improving affordability for people,” Dietz said. “It’s a real step forward toward that goal of universal coverage and more affordable coverage.”

The added cost of premiums “is going to be a real struggle for people deciding between rent and groceries,” Dietz said.

For Winlock, the small business owner, if the federal subsidies were not renewed, the additional costs would only be temporary. Next year, Winlock and his wife will turn 65 and qualify for Medicare. In the meantime, he would probably look for the cheapest plan and hope for the best.

“We would probably look for alternative ways to get health care,” Winlock said. “We certainly couldn’t afford universal health care. It’s just outside of our budget.”

Times contributor Jennifer Haberkorn in Washington contributed to this report. Californians brace for increased healthcare premiums if federal subsidies expire

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