If Congress lets the subsidy increases expire next year, Arkansans who buy insurance through the health insurance marketplace could see their health insurance payments increase by 84% on average, or $828, from $984 to $1,812 per year, according to a new analysis by KFF.
Enhanced subsidies, provisionally authorized for two years during the COVID-19 public health emergency by the American Plan Relief Act of 2021, were extended by Congress for three years through the Inflation Reduction Act of 2022. The health insurance marketplaces, created by the Patient Protection and Affordable Care Act of 2010 and launched in 2014, provide subsidies or prepaid premium tax credits to individuals with household incomes up to four times the poverty level ($103,280 for a family of three) to help them purchase health insurance. Some individuals also receive cost-sharing assistance when obtaining services provided by their health insurance plans.
Thanks in part to increased IRA subsidies and broader outreach, health insurance marketplace enrollment hit a record high of more than 21 million people nationwide in early 2024, nearly double the number of enrollments in 2020. In Arkansas’ health insurance marketplace, enrollment reached an all-time high of 152,616 people in March 2024, more than double the 2020 average enrollment of about 60,000 people.
The increase in enrollment in the health insurance marketplaces nationwide and in Arkansas coincides with withdrawals from state Medicaid programs as part of the “wind-down” process. During the COVID-19 public health emergency, states were prohibited from removing individuals from Medicaid (except in limited circumstances) in exchange for increased federal funding. In April 2023, states resumed eligibility screening of Medicaid enrollees and were permitted to remove those who had lost eligibility or had not completed the renewal process.
In Arkansas, Medicaid dissolution caused the number of Medicaid enrollees to fall from 1,151,347 to 868,059, about 5% lower than the average enrollment in 2019. The simultaneous increase in Arkansas Marketplace enrollment suggests that some of those who dropped out of Medicaid moved into subsidized plans purchased through the Marketplace.
The Congressional Budget Office (CBO) projects that if Congress allows the enhanced subsidies to lapse, marketplace enrollment would fall to about 15 million people nationwide by 2030. CBO projects that extending the enhanced subsidies for 10 years would cost $335 billion.
If the Legislature does not act by next summer to extend the subsidy increases, insurers will be in a tough spot because they must finalize their 2026 marketplace premium rates by August 2025. Arkansas insurers are proposing to increase their 2025 marketplace premium rates by an average of 4.2%.
