In early 2021, the American Rescue Plan (ARP) included provisions that increased premium tax credits for individuals enrolled in Affordable Care Act (ACA) marketplace coverage. This allowed people of all income brackets to receive larger tax credits and extended eligibility to those with incomes above 400% of the poverty line for the first time.
The premium tax credits were designed to help uninsured people gain coverage and help the economy recover from the pandemic. They were meant to artificially reduce the cost for health insurance while allowing people to elect a plan that was more affordable through the marketplace. These premium tax credits don’t actually reduce the cost of care or improve the quality of healthcare in America, but it simply allows for taxpayer dollars to make the cost appear lower for qualified individuals.
The healthcare marketplace saw an unprecedented increase in enrollment in January 2022. And although the increased premium tax credits that drove this enrollment were set to expire at the end of this year, originally passed for tax years 2021 and 2022 only, the effect of these increased premium tax credits have signaled that single-payer healthcare could be right around the corner.
Read more: What the Inflation Reduction Act means for employer-provided healthcare plans
The design was successful. In some ways, too successful.
Some businesses have noticed the increased value of higher premium tax credits and discovered that dropping their healthcare plans and allowing employees to purchase health insurance coverage through the exchange has added financial value to their employees as well as their organizations. In this approach, the employer removes themselves from the health insurance purchasing equation and allows the employees to interact directly with the ACA marketplace to secure health insurance coverage (with a forecast of the value of the premium tax credit they will