Tennessee Faces Coverage and Cost Risks Without Extended Health Insurance Tax Credits

In Tennessee, over 642,000 residents obtained health insurance through the Marketplace in the current year, with approximately 95% benefiting from premium tax credits that reduce monthly insurance premiums. These credits function similarly to employer contributions but are crucial for individuals who are self-employed or lack employer-sponsored coverage.

The American Rescue Plan of 2020 enhanced these tax credits, expanding eligibility and capping family contributions at 8.5% of income, which led to an average premium reduction of about 44%. However, unless new federal legislation extends these provisions, many families are poised to lose these financial supports at year-end, risking significant coverage losses. The impact is expected to be particularly acute in Tennessee due to its lower average incomes, potentially affecting over 265,000 residents who could lose their premium tax credits. Loss of coverage often leads to deferred medical care, resulting in more expensive emergency treatments and heightened risk for those with chronic or critical health conditions.

This scenario could increase financial pressures on insured individuals as a shrinking risk pool may drive up premiums for all, including those maintaining coverage. Health care providers, especially in Tennessee's rural areas, face potential revenue losses surpassing $837 million paid last year for Marketplace members' care, exacerbating existing financial challenges. Maintaining robust coverage not only improves health outcomes but also supports workforce productivity and economic stability. The continuation of premium tax credits remains a pivotal factor in sustaining access to affordable health care and ensuring the financial viability of both individuals and providers in Tennessee.