The Effects of Permanently Extending the Expansion of the Premium Tax Credit and the Costs of that Credit for Deferred Action for Childhood Arrivals Recipients
Report
CBO provides information about the effects on the budget and on health insurance coverage of permanently extending the expanded premium tax credit and about the costs of that credit for Deferred Action for Childhood Arrivals recipients.
Chairman Arrington and Chairman Smith have asked the Congressional Budget Office and the staff of the Joint Committee on Taxation (JCT) to provide information about the effects of making permanent the expanded premium tax credit structure that was provided in the American Rescue Plan Act of 2021 (ARPA, Public Law 117-2) and later extended through calendar year 2025 in the 2022 reconciliation act (P.L. 117-169).
ARPA reduced the maximum amount that eligible enrollees must contribute toward premiums for health insurance purchased through the marketplaces established by the Affordable Care Act (ACA). ARPA also extended eligibility to people whose income is above 400 percent of the federal poverty level (FPL).
We were asked to provide information in several areas:
How would a permanent extension affect federal deficits and sources of health insurance coverage?
What would be the average federal subsidy for people who enrolled in marketplace coverage because of a permanent extension, and what is the average subsidy under current law for people who, because of that extension, would be expected not to enroll in employment-based coverage?
What is the projected income distribution among people with income above 400 percent of the FPL who would enroll in marketplace coverage because of a permanent extension, and what are the estimated costs of federal subsidies for their coverage?
How many people would be expected to enroll in fully subsidized plans under the extension and what percentage of all marketplace enrollees would that group constitute?
CBO and JCT were also asked to estimate the budgetary effects, including additional debt-service costs, of the policy for Deferred Action for Childhood Arrivals (DACA) recipients should the expanded premium tax credit structure be made permanent.
