Word from Washington
Congress
HFA, bipartisan coalitions urge Congress to extend enhancement to ACA premium tax credits
Congressional Democrats introduced revised legislation last week that would permanently extend enhancements to the Affordable Care Act (ACA) premium tax credits (PTCs) authorized by Congress in 2021. These credits have made ACA Marketplace plans substantially more affordable but are slated to expire after the 2025 plan year.
The Health Care Affordability Act (H.R. 9974), sponsored by Rep. Lauren Underwood, and its Senate counterpart, sponsored by Senators Jeanne Shaheen (D-NH) and Tammy Baldwin (D-WI), is supported by a broad coalition of consumer groups, including HFA. Consumer advocates for HFA urged nearly 60 members of Congress as part of the annual HFA Hill Day to include at least a temporary extension of the PTC enhancements as part of the federal fiscal year 2025 spending legislation that Congress will consider in December.
Vice President Kamala Harris (D) made the permanent extension part of her presidential campaign platform. However, the Congressional Budget Office estimated that a permanent extension would cost $335 billion over the next ten years, making passage highly unlikely even if Democrats control Congress and the White House in 2025. As a result, a short-term extension is more likely (even with Republican control) given the broad support from health insurers, hospitals and other providers, and consumer groups. A KFF poll last May showed that 72 percent of surveyed consumers supported an extension (including most Republican voters.)
Under the ACA, PTCs were initially only available to Marketplace consumers earning 100-400 percent of the federal poverty level. While these subsidies helped make Marketplace plans affordable for millions of eligible Americans, those earning just above 400 percent of FPL (about $60,000 per year) often struggled to find inexpensive coverage.
The American Rescue Plan Act of 2021 significantly enhanced the PTCs, providing more significant
assistance to consumers at every income level (see Washington Wire, November 2021). It not only removed the “subsidy cliff” by making sliding-scale help available to higher-income groups at amounts that limited their premiums to 8.5 percent of their annual income but also allowed those earning only 100 -150 percent of FPL to enroll in benchmark silver-tier plans for zero premiums.
These enhancements were extended by the Inflation Reduction Act (see Word from Washington, August 2022). They helped 92 percent of Marketplace enrollees (or nearly 20 million Americans) receive PTCs (including 9.6 million not previously eligible). According to the Centers for Medicare and Medicaid Services (CMS), they reduced average monthly premiums for Marketplace enrollees by 32 percent since 2021 and saved the average enrollee $800 annually.
These savings have translated to enrollment gains, with record-high Marketplace enrollment from 2022 to 2024. The enhancements have also contributed to greater insurer competition in the Marketplaces (putting downward pressure on premiums). According to an Urban Institute analysis, during the first two open enrollment periods with the enhanced PTCs, the number of participating Marketplace insurers increased by more than 25 percent, according to an Urban Institute analysis.
Without an extension, virtually all Marketplace enrollees will see a spike in premiums. According to the Congressional Budget Office, higher premiums would cause total enrollment to fall from nearly 23 million in 2025 to below 19 million if the enhanced PTCs expire. An Oliver Wyman analysis for the newly-created Keep Americans Covered coalition (comprised of groups representing health plans, providers, and consumers) showed that those earning just above the “subsidy cliff” would be hardest hit (facing premium spikes of nearly 135 percent) as they would lose access to all PTCs.
The National Association of Insurance Commissioners is urging Congress to extend the PTC enhancements early in 2025 before health plans start setting rates for the next plan year. The bipartisan panel warned, “The further into 2025 that action is taken, the more disruption will be seen to marketplace coverage and premiums.”
Federal Agencies
DOJ asks Supreme Court to reverse Braidwood ruling, uphold ACA preventive services mandate
The Department of Justice (DOJ) formally petitioned the U.S. Supreme Court last month to reverse an appellate court decision that could lead to the elimination of the Affordable Care Act (ACA) mandate that insurers cover certain preventive services without cost-sharing.
The initial decision from Judge Reed O’Connor (appointed by President George W. Bush) in the Northern District of Texas declared the ACA mandate to be unenforceable nationwide for those services recommended by the U.S. Preventive Services Task Force (“USPTF”, which he declared unconstitutional because its members were not nominated by the President and confirmed by the Senate). This included screenings for cancer, heart disease, and sexually transmitted diseases, as well as pre-exposure prophylaxis (PrEP) medications taken to reduce the risk of HIV/AIDS infection.
Although the U.S. Fifth Circuit Appeals Court agreed that the USPSTF appointments were flawed, it struck down Judge O’Connor’s nationwide remedy. It applied it solely to six plaintiffs in Braidwood Management v. Becerra (who are Christian-owned businesses in Texas). However, the DOJ insists that the USPSTF is constitutional and that the U.S. Supreme Court should void the entire lower court order.
HFA had joined a press release with 15 other consumer groups expressing concern that the Fifth Circuit also sent much of the case back to Judge O’Connor to consider whether the coverage mandate for other cost-free preventive services (apart from those recommended by USPSTF) should not be voided (see Word from Washington, June 2024). HFA also joined with these groups in their amicus brief supporting the right of patients to receive cost-free and evidence-based preventive services under the ACA (See Word from Washington, February 2024).
CMS extends state deadline for completing Medicaid “unwinding” deficiencies
The Centers for Medicare and Medicaid Services (CMS) has updated guidance sent to states regarding Medicaid “unwinding” redeterminations.
The latest directive requires states to submit a completed “template” to CMS by the end of the year documenting their compliance with federal requirements for Medicaid redeterminations that states are required to conduct for all enrollees following the end of the COVID-19 public health emergency. States must amend these templates every six months and will have until the end of 2026 to correct all deficiencies identified by CMS.
These federal requirements include completing ex parte or automatic renewals (using income data from other state databases when unable to contact enrollees), by which 61 percent of Medicaid enrollees who retained coverage during the “unwinding” were renewed. Other requirements are that states send pre-populated forms and give enrollees at least 30 days to return them, provide enrollees the ability to renew by multiple means (online, in person, and by phone or mail), as well as considering eligibility on all bases before terminating coverage.
CMS’ guidance follows agency testimony to Congress last spring, during which officials insisted they would impose specific deadlines on states to update flaws in Medicaid eligibility and enrollment systems that were contributing to excessive rates of procedural coverage losses for enrollees who may otherwise be eligible but failed to promptly respond to Medicaid verification requests (see Word from Washington, May 2024).
According to KFF, Medicaid/CHIP enrollment in most states is higher than in early 2020. However, total enrollment has fallen below pre-pandemic enrollment in three states (Arkansas, Colorado, and Montana). Child enrollment is lower in a dozen states (losing 25 percent in Texas and even higher in Montana and Utah).
The emergency stabilization program will decrease Medicare Part D premiums for 2025
The Centers for Medicare and Medicaid Services (CMS) have officially released Medicare Part D premium data for 2025 after enacting a voluntary premium stabilization demonstration necessitated by the new $2,000 cap on out-of-pocket (OOP) drug costs.
Part D insurers had responded to the OOP cap (mandated by the Inflation Reduction Act) by increasing 2024 premiums by 21 percent and more than doubling 2025 average premium bids (see Word from Washington, August 2024). To mitigate against these premium spikes during an election year, CMS created a voluntary “premium stabilization demonstration program” for stand-alone Part D plans (which could enhance the money they receive from the ACA’s risk corridor protections against exceptionally high claims) and delayed their announcement of 2025 premiums to allow time for insurers to decide whether to enroll.
CMS announced last week that 792 out of 818 Part D plans have opted into the stabilization program, meaning that about 99 percent of Part D enrollees from 2024 remain enrolled in a stand-alone Part D plan offered by a participating insurer. As a result, the average Part D premium will decrease from $53.95 in 2024 to $46.50 next year. Enrollees can also choose from an average of 15 stand-alone Part D plans per region (although the number of total Part D plans will decline from 709 to 524).
State of the States
California created Rare Disease Advisory Council, which protects consumers from medical debt
California Governor Gavin Newsom (D) signed legislation supported by HFA and member organizations (A.B. 2613), officially making California the 29th state to create a Rare Disease Advisory Council (RDAC) and the second to do so this year (following Mississippi).
The RDAC is authorized through 2028 and will be housed within the California Health and Human Agency (CalHHS). However, Governor Newsom surprisingly vetoed separate legislation requiring state licensure and regulation of PBMs (including disclosure of amounts paid to drug manufacturers). Despite nearly unanimous support, the House and Senate are not expected to override the governor’s veto of S.B. 966 in an election year.
Governor Newsom also signed S.B. 1061, making California the latest state to ban credit reporting agencies and loan applications from including medical debt. Five other states have taken similar action over the past year, while the Biden Administration finalized comparable regulations set to take effect in 2025 (see State of the States, August 2024).
Nineteen states sue to block DACA recipients from enrolling in Marketplace coverage, subsidies
A group of 19 Republican state attorneys general filed a federal lawsuit last month in North Dakota challenging a new federal rule allowing children of undocumented immigrants to enroll in the Affordable Care Act (ACA) Marketplaces for the 2025 open enrollment period.
The lawsuit alleges that the regulations finalized last spring by the Department of Health and Human Services (see Word from Washington, April 2024) violate the federal Administrative Procedures Act (APA). The plaintiffs claim that HHS’ definition of “lawfully present” is “contrary to law and unreasonable, arbitrary, and capricious” because the ACA statute limits Marketplace enrollment to those “lawfully present” (Congress did not define “lawfully present” in the ACA and left it to federal agencies to do so). The plaintiffs also insist that the rule will cause significantly increased enrollment that states could not anticipate, thus unreasonably increasing state costs.
Under the Deferred Action for Childhood Arrivals (DACA) program created in 2012, children brought to the United States by undocumented parents are designated as “lawfully present” for specific purposes. While these purposes did not include enrollment in ACA Marketplaces or Medicaid, the Department of Homeland Security (DHS) considers non-citizens who receive similar “deferred action” eligible for other federal programs. As a result, HHS states that it allows DACA recipients to be Marketplace-eligible to align with DHS policy.
The case was assigned to Trump-appointed Judge Daniel Traynor, who recently issued a decision blocking a 2022 federal law that protected workers seeking time off for in vitro fertilization (IVF) treatments. His decision in this case could ultimately become part of challenges to the DACA program overall, which are expected to be heard next term by the U.S. Supreme Court.
According to KFF, individuals who meet DACA criteria are four times more likely to be uninsured than U.S.-born individuals in their age group. HHS found in a 2022 survey that 48 percent of all DACA recipients experienced a delay in medical care due to their immigration status, while 71 percent were unable to pay their medical expenses.
The final rule also allows DACA recipients (known as “Dreamers”) to enroll in the Basic Health Plan option under the ACA, which Minnesota, New York, and Oregon are using (see State of the States, June 2024). However, HHS has thus far declined to finalize a rule allowing DACA recipients to likewise enroll in state Medicaid and Children’s Health Insurance Programs.
HHS has already granted federal waivers allowing five state-based Marketplaces (California, Colorado, Minnesota, Washington, and the District of Columbia) to enroll DACA recipients (see State of the States, July 2024). However, these waivers did not allow DACA recipients eligible for ACA premium tax credits to purchase Marketplace coverage. (California, Colorado, and Washington provide state-funded subsidies instead).
The final rule did make DACA recipients eligible for ACA premium tax credits for Marketplace coverage nationwide, thus sparing states the need to fund separate state subsidies for this population.
Although there are more than 3.5 million eligible “Dreamers” in the United States, under the final rule, only a small fraction actually enrolled in DACA will be eligible for Marketplace coverage.
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