Forget repeal and replace. Critics of the Affordable Care Act, a.k.a. Obamacare, have a new target: key parts of the law that they say are too costly and provide incentive for fraud.
Topping that list are the ACA’s enhanced subsidies, put in place during the coronavirus pandemic as part of economic recovery legislation and set to expire next year unless Congress acts. The subsidies are credited with enabling more low-income people to qualify for zero-premium coverage and helping boost enrollment to record levels.
If the subsidies expire, millions of Americans will probably see premiums go up, according to a report from KFF. And the Congressional Budget Office (CBO) says the end of the enhanced subsidies could cause ACA enrollment to fall from a projected 22.8 million in 2025 to 18.9 million in 2026.
But the subsidies cost a lot. The CBO recently estimated that making them permanent would add $335 billion to the budget deficit over 10 years, and some Republicans have said that’s simply too much.
Now the subsidies are part of a larger debate about ACA fraud and enrollment schemes.
At issue is whether people are over- or understating their incomes to qualify for the subsidies. In addition, some lawmakers are concerned about reports that consumers are being enrolled in ACA plans or their coverage is being switched — without their consent — by a subset of unscrupulous brokers eager to gain commissions.
House GOP leaders have called on two watchdog agencies to investigate, while Sen. Chuck Grassley (R-Iowa) fired off accountability questions in a recent letter to the Centers for Medicare and Medicaid Services.
The Republican outcry — particularly aimed at the subsidies — goes hand in hand with a controversial recent report from a conservative think tank estimating that millions of people or their brokers may be misstating their incomes to qualify for ACA subsidies.
Still, the enhanced subsidies are unlikely to become talking points in either party’s presidential campaigns.
“It’s too complicated,” said Debbie Curtis, a vice president at consultancy McDermott+. “I see what’s happening right now as laying the groundwork for the big fight next year.”
Any debate about the enhanced subsidies is likely to draw in other issues — including the Trump-era tax cuts, whose extension would add an estimated $4.6 trillion to the deficit over 10 years — and must be addressed next year. Other aspects of the ACA are also potentially in play, including a special year-round enrollment period for low-income consumers and whether zero-premium plans will still be available for that group.
“The fate of the enhanced tax credits is dependent on the Democrats holding some majority in Congress and/or winning the presidency and is also tied inextricably to the Trump tax cut expiration,” said Dean Rosen, a partner at Mehlman Consulting and a former senior Republican congressional staffer. That’s because both sides have incentive to extend all or part of the tax cuts, but each will want some kind of compromise on other issues as well.
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