Pennsylvania ACA Premiums Could Jump 300% Without Subsidy Extension
Premiums on Pennsylvania's ACA health insurance exchange, Pennie, are projected to increase substantially if the enhanced premium tax credit (PTC) is allowed to expire at the end of the year. Some enrollees could face monthly premium hikes of up to 300%, with the average increase around 82%. This potential change impacts roughly 450,000 users out of Pennie's 500,000, possibly leading to an estimated 150,000 dropping coverage due to cost concerns.
The enhanced PTC, introduced through the 2021 American Rescue Plan and extended by the 2022 Inflation Reduction Act, raised subsidy levels to increase affordability for individuals earning roughly between $15,000 and $60,000 annually. It caps premiums at 8.5% of income for higher earners within this group. This subsidy expansion has driven record ACA enrollment nationally and in Pennsylvania.
Without congressional action to extend the subsidy through upcoming federal funding legislation expected by September, Pennie has begun alerting consumers about possible decreased or lost subsidies. A majority of the public supports continuing the enhanced credit, but congressional Republicans are divided owing partly to the projected $383 billion cost over the next decade.
Loss of these enhancements could mean nearly all Pennie enrollees will face subsidy reductions; about 10% may lose the credit entirely while 80% will see diminished assistance. This could result in 150,000 people foregoing ACA plans, and insurers anticipate premium increases averaging 19% for individual insurance buyers and 13% for small businesses.
Such premium spikes are expected to influence market risk pools negatively by driving healthier and younger individuals out, leaving an older, sicker population insured, which tends to increase overall costs. Insurers like Highmark and UPMC support subsidy extensions, citing their role in enabling more affordable coverage access.
Some state legislators have authorized Pennie to create a state-funded affordability program limiting eligibility to those earning up to approximately $45,000 annually. However, no current funding exists for this initiative, and legislative budget proposals for 2024 do not allocate resources toward it. Even with funding, the state's contribution would be limited to $50 million annually, far below the current federal subsidy level of about $600 million for Pennsylvania residents.
New federal legislation requires ACA enrollees to annually update income and immigration information to maintain eligibility and shortens open enrollment periods, adding administrative complexity.
Many Pennie users comprise gig workers, small business employees, or others without access to employer-sponsored insurance or public programs like Medicaid or Medicare. The enhanced PTC has also shifted enrollment toward plans with better coverage tiers, reflecting increased purchasing power.
If Congress does not act, Pennie plans to provide personalized notices to enrollees before the open enrollment period starting November 1, detailing their projected premium increases and subsidy reductions.
This developing subsidy landscape highlights challenges in maintaining affordable ACA coverage amid divided federal policy and limited state support. The potential premium and enrollment shifts will be of particular interest to insurers, state regulators, and healthcare access advocates focused on market stability and consumer protection in Pennsylvania and similar states.