Opinion | Democrats are facing a ticking time bomb on health-care costs

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You might call it a disastrous “October surprise” for Democrats in this year’s crucial midterm campaign — except it wouldn’t be a surprise at all, and it is completely avoidable.

The governing party’s inability thus far to reach some kind of agreement on a scaled-back version of President Biden’s Build Back Better legislation is raising a real possibility that millions of middle-class Americans will see their health insurance costs go up by hundreds of dollars per month next year. And if it happens, they will hear the news about it just weeks before Election Day.

That’s because the temporary subsidies for people who buy their coverage through the Affordable Care Act exchanges — assistance that was provided in last year’s massive covid-19 relief package — are scheduled to expire at the end of 2022. The stalled BBB legislation would provide an extension of the subsidies.

The exchanges were set up for people who do not receive health insurance through their jobs or government programs such as Medicare and Medicaid. They include early retirees, gig workers and others who are self-employed, as well as people employed by small businesses that do not offer group coverage. In its original version, the 2010 health-care law provided premium assistance only to households earning between 100 percent and 400 percent of the poverty level.

In 2021, the American Rescue Plan Act made temporary premium assistance available to an estimated 3.7 million additional people, mostly with incomes between four and six times the poverty level, according to the Kaiser Family Foundation. This new help for those whose incomes previously were too high to qualify for assistance is a major reason that a record 14.5 million Americans signed up to get health coverage this year through Obamacare marketplaces, passing the previous peak by nearly 2 million.

How much benefit have people been receiving from those subsidies? Again, some figures from Kaiser: They are enough to cover more than half the annual $11,000 premiums for a relatively low-deductible “silver” plan for a 60-year-old making just over $51,000, or about four times the poverty level. Without the assistance, the monthly premium paid this year by a couple over the age of 50 earning $75,000 would go up by close to $700, bringing their plan’s total cost to more than $1,200 a month.

So losing those subsidies would be a big hit for people who make a living wage but are far from wealthy. And that is not all they are likely to face when the annual signup for the Obamacare exchanges rolls around. Because hospitals are paying significantly higher labor and other costs, insurance premiums are expected to rise by double digits next year.

That kind of sticker shock will force many people to buy plans with lower coverage or higher deductibles and other out-of-pocket costs. They might be priced out of the health insurance market entirely.

All of this should add some urgency to the seemingly moribund negotiations between the White House and Democrats on Capitol Hill to figure out which parts of the president’s original multitrillion-dollar proposal to transform the U.S. economy might still be salvageable. (The Congressional Budget Office estimates that extending the temporary subsidies for people who purchase insurance on the health-care exchanges would cost about $210 billion over the next decade.)

Time is running out, and Democrats may not get a second chance if they blow this opportunity. Republicans, should they take over one or both chambers after this fall’s elections, are unlikely to shore up the ACA, which they detest. “Members of Congress — particularly Democrats — are not acting like this is a crisis. They can fix this,” Chris Jennings, who was a top health-care adviser in both the Clinton and Obama administrations, told me.

Extending the subsidies would require a simple majority under the Senate’s budget reconciliation rules. The frustratingly opaque Sen. Joe Manchin III (D-W.Va.) remains the pivotal vote, but there is reason to believe he would not be an obstacle. He has been a supporter of the Affordable Care Act and generally expressed openness to measures that would lower health-care costs, including by allowing Medicare to negotiate prescription drug prices, which is another provision of the Biden agenda and something Democrats have promised for many years.

Democrats, even with their narrow majorities in the House and Senate, can still get a few things over the finish line. Preventing an entirely foreseeable explosion in health-care costs should be one of them.