CBO explains the effects of making permanent the enhanced premium tax credit structure provided in the American Rescue Plan Act of 2021 and finalizing a proposed regulation concerning the affordability of employment-based coverage.
This letter responds to a request from Senator Richard Burr, Senator Mike Crapo, and Senator Lindsay Graham to explain the effects of making permanent the enhanced premium tax credit structure provided in section 9661 of the American Rescue Plan Act of 2021 (ARPA). As you requested, the responses in this letter are based on CBO’s May 2022 baseline budget projections.
The senators asked for information in several specific areas: How would a permanent enhancement affect federal deficits and sources of health insurance coverage?
What is the projected income distribution among new enrollees whose income is above 400 percent of the federal poverty level (FPL) in the health insurance marketplaces established by the Affordable Care Act, and what are the estimated costs of federal subsidies for their insurance coverage?
What is the average federal subsidy under the permanent enhancement for new marketplace enrollees, and what is the average federal subsidy under current law for people who would be expected not to enroll in employment-based coverage because of the permanent enhancement?
The senators also asked CBO and JCT to estimate the full effects of finalizing a proposed regulation concerning the affordability of employment-based coverage for family members.