Affordable Care Act subsidies appear likely to expire

With just a few weeks left in the year, it’s looking increasingly likely that the Affordable Care Act tax credits are going to expire.

Hospitals, health systems and a host of other advocates have implored Congress to extend the credits that help Americans buy coverage. But a measure to extend the credits fell short in the Senate Thursday, and an alternative Senate Republican health plan failed to gain enough votes.

Without congressional action, the tax credits expire at the end of the year. If they lapse, millions of Americans may be unable to afford coverage under the Affordable Care Act, due to rising premiums, or they’ll be paying a lot more for coverage.

Larry Buchson, MD, a former Indiana congressman and senior policy advisor at Holland & Knight, tells Chief Healthcare Executive® that he’s not optimistic that the tax credits will be extended.

“If you asked me three or four months ago, I would say they'll cut a deal,” he says.

Now, he says. “I think it's an uphill climb …. I think it's very possible they'll just expire.”

Families left scrambling

With an extension of the Affordable Care Act proving to be elusive, healthcare leaders are urging lawmakers to come to an agreement on an extension.

Sister Mary Haddad, president and CEO of the Catholic Health Association of the United States, said the inability or unwillingness to extend the Affordable Care Act tax credits “shows a troubling disregard for the needs of working families.”

"Congress has a responsibility to ensure that Americans have access to affordable health insurance,” Haddad said in a statement. “Their inability to work together to extend vital health tax credits means that working families are now left scrambling to figure out how they will afford coverage as their premiums rise, and for many, the only option will be to drop their insurance altogether.”

Haddad says the consequences of the expiration of the tax credits “are real and immediate.”

“People will delay care, families will face impossible financial trade-offs, and communities and hospitals will feel the strain as more people go without the coverage they depend on,” she said.

Charlene MacDonald, executive vice president of public affairs for the Federation of American Hospitals, said that millions could lose coverage if the tax credits lapse.

"As we approach the holidays, millions of Americans living paycheck to paycheck face a disastrous choice: take on debt to afford skyrocketing premiums or risk going without coverage entirely,” MacDonald said in a statement. “Congress cannot leave their constituents in this bind.”

MacDonald said the federation is encouraged that some lawmakers have crafted bipartisan proposals for extensions of the tax credits.

“Now is the time to get a pragmatic solution across the finish line and immediately extend the health care tax credits,” she said.

The American Hospital Association is also encouraging Congress to come up with a bipartisan solution.

“Ensuring that individuals and families have access to affordable coverage and care is essential to the health of our communities,” an association spokesperson said.

Bucshon says he understands the concerns of hospitals and the prospect of caring for more uninsured patients.

“They absolutely will experience higher levels of people who have insufficient insurance or none at all, compared to what they do now,” he says. “And, of course, that means uncompensated care, and that's costly. So, I mean, that's in their best interest to have these extended for that population.”

Falling short

Some members of Congress have crossed party lines for an extension.

U.S. Reps. Brian Fitzpatrick, R-Pa., Jared Golden, D-Maine, and several other House members have sponsored legislation that would extend the Affordable Care Act through 2027.

Bucshon noted the bipartisan efforts to extend the tax credits and didn’t completely dismiss the possibility of passage, but he said he thought it would be tough. Even if the measure passed the House of Representatives, it would still have to clear the Senate.

Many Republicans are concerned about the cost of extending the tax credits, Buchson notes. Democrats are leery of alternatives other than extending the credits, especially since they resisted signing off on a budget bill for weeks during the government shutdown as they sought an extension of the tax credits.

More than 24 million Americans have enrolled for coverage on the Affordable Care Act marketplace, and many would be affected by higher premiums, according to KFF. If the tax credits lapse, premiums would more than double, rising by an average of 114%, KFF has projected. And that may make premiums too expensive for some, analysts say.

Republicans have proposed alternatives to extending the tax credits, such as expanding health savings accounts. U.S. Sens. Mike Crapo, R-Idaho, and Bill Cassidy, MD, R-La., sponsored a bill to expand the health savings accounts. But that plan didn’t gain enough support in the Senate Thursday.

With an extension of the tax credits appearing doubtful, Buchson says he doesn’t expect lawmakers to try to revive them after the beginning of the year if they lapse.

“It becomes more difficult, because then once they're expired, you're trying to renew something that has expired,” he says.

But it’s clear that voters are increasingly concerned about health care costs, far more than they were a year ago, which is why Bucshon says he expected some sort of compromise on the tax credits. Nearly half (47%) of all Americans are worried they won’t be able to afford health care costs, according to a West Health-Gallup poll last month.

“Health care, I think, is coming to the top of concerns that people have out there,” Bucshon says. “I thought they would cut some deal.”