"Schumer-Manchin Deal" protects our hardest-working Americans, while stabilizing healthcare markets
After a year of stops and starts, Congress is poised to pass a major economic package. One under-the-radar provision will have far-reaching, immediate benefits for millions of families and our economy as a whole: the extension of tax credits that reduce the cost of healthcare through the Affordable Care Act (ACA).
If Congress does pass the reported deal, millions of hard-working entrepreneurs and essential workers will avoid skyrocketing health insurance premiums. The tax credits were increased under the American Rescue Plan last year, but are set to expire at the end of this year. Without this deal, the effect would be a major tax increase at the worst possible time.
Three million people could lose their health insurance entirely, and more than ten million would see premium increases – more than $3,000 per year in some cases. With record-high prices on other necessities like gas and groceries, that would be devastating.
In the last two years, these tax credits stabilized health plan premiums and expanded coverage for 14 million Americans who were unable to afford coverage in the original ACA, with families saving an average of $2,400 a year. People across the country noticed and now the vast majority of voters want these credits to stay, including 63% of independents. Even Republican voters support an extension by a 16-point margin.
The stakes are sky-high for working families. My company, Stride Health, connects more than 3 million small business owners and independent workers with healthcare plans and other benefits. We also work with the U.S. Department of Health and Human Services to increase health insurance enrollment among hard to reach populations. After the American Rescue Plan provided new tax credits, we saw a 48% increase in workers enrolling in lower-deductible Silver & Gold tier plans — which dramatically lower the cost of health care — and saw 44% of essential gig workers get covered for less than $1 per month.
Failing to extend these tax credits would create financial pain at every level, from individual families living paycheck-to-paycheck to the small business owners who employ them to the communities they live in. Many of these workers risked their health to keep our economy running during the pandemic, and they need and deserve our support now more than ever.
If lawmakers extend the credits, here’s what will happen:
They would prevent premiums from rising most sharply for people earning the least. More than forty percent of ACA marketplace enrollees earn incomes near the poverty level, and they benefited most from the tax credits because they were able to move to plans that were better quality and more affordable. They could lose those plans, because for families earning $30,000 and below, premiums are projected to more than double without the tax credits. Burdening our most vulnerable workers with higher costs right now is downright cruel, especially when extending this relief would cost less than one one-hundredth of the federal budget. As people increasingly seek healthcare they put off during the pandemic, health insurers are already planning to increase premiums to cover those costs. Retaining these tax credits will insulate millions from those changes – and get the care they need.
Amid recession and inflation concerns, small business owners and employees, freelancers, and self-employed Americans will be protected. The most recent data showed inflation rising 9.1 percent in the past year, the fastest pace in over 40 years. Our economy can't grow if small business owners and entrepreneurs can’t make ends meet. With this deal, they will have a cushion on their healthcare costs.
ACA marketplaces across the country will (continue to) be stabilized. In these marketplaces, premiums are calculated based on assessments of individual medical costs. The larger the risk pool, the more stable the market will be, keeping premiums lower for everyone. This deal avoids a damaging feedback loop, where those with higher premiums see costs jump even further as fellow enrollees were priced out of the market — compounding the financial pain for millions of workers across our country.
The news of this agreement is encouraging, but time is of the essence, and not just because of the legislative calendar. Health insurance rates for 2023 are typically set by the end of August. Delaying action to extend these credits will cause higher rates for those who can still afford plans and less interest in enrolling in the first place – after we achieved record enrollment last year and just yesterday notched a historic low uninsured rate at just 8.0%.
Congress took meaningful action last year to reduce healthcare costs and expand access to care. Reversing that progress is bad politics, worse policy, and most importantly, it would hurt the hard-working families that politicians should be fighting for. It should be a bipartisan imperative to prevent a significant tax increase on millions of Americans by extending these credits immediately.
