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Changes to the Affordable Care Act prompted more people to sign up for health care insurance through the federal exchange during open enrollment which ended Jan. 16. (File/Getty Images)
Over 386,000 Alabamians chose a health insurance plan through the federally-run marketplace this winter, according to a final report from the Centers for Medicare and Medicaid services.
That was an increase of about 128,000 people from the previous year — a near 50% jump — when around 258,000 Alabamians selected a plan through the federally-run marketplace.
Krutika Amin, associate director for KFF’s program on the Affordable Care Act (ACA), said the key factor was enhanced subsidies for the ACA plans introduced in 2021 that made those plans more affordable, or offered plans at no charge for those who qualify.
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The American Rescue Plan Act (ARPA), passed in March 2021 as part of a program of COVID-19 relief, expanded eligibility for ACA health insurance subsidies to those purchasing their own health care through the marketplace. Those who earn more than 400% of the federal poverty level, about $58,000 or more for an individual, have their health plan costs capped at 8.5% of income.
The statute also increased the amount of financial support for those with lower incomes already qualified under the ACA. The Inflation Reduction Act, enacted in 2022, extended the subsidies through 2025.
“President Biden ran on building on the ACA, and he followed through that promise by enhancing marketplace subsidies,” Amin said.
Alabama’s overall ACA enrollment went from about 97,000 in 2014 to 195,000 in 2016 before sliding in the administration of President Donald Trump, landing at about 160,000 in 2020. Since Biden took office, enrollment has surged.
Before the ARPA passage, ACA subsidies maxed out at 400% of the poverty level, and that group only made up about 1% of all people eligible for ACA subsidies. Before the passage of ARPA, about 57% of Americans without insurance qualified for subsidies under the ACA. With the passage of ARPA, that number jumped up to 63%.
In addition, people earning less than 150% of the federal poverty line will now have zero-dollar premiums for silver plans, as well as significant reductions in out-of-pocket expenses.
The administration also made changes to subsidy eligibility, allowing more people with unaffordable employer coverage to qualify for a subsidized plan. For example, if an employee cannot afford to buy health insurance for their family through their employer, the family would still not qualify for a health insurance plan through the marketplace. This was called the “family glitch” in which the employer plan would have been considered to be an affordable offer, preventing them from getting a marketplace subsidy.
“One thing's for sure, though, that the enhanced subsidies are making marketplace plans a lot more attractive to people and affordable to sign up,” Amin said.
Other factors may also contribute. As rules created early in the COVID-19 pandemic expire and people are disenrolled from Medicaid, Amin said many are being referred to marketplace coverage in other states. But those losing coverage may not necessarily qualify for the enhanced subsidies in Alabama.
Those disenrolled because of procedural reasons, such as not receiving or returning paperwork, are not referred as they may still be qualified for Medicaid. Alabamians who lost Medicaid coverage may not qualify if their income is not high enough.
Because Alabama has not expanded Medicaid, the subsidies for ACA plans are unavailable for Alabamians living in the coverage gap, or those making less than $15,060 for an individual or $25,820 for a household of three — or 100% federal poverty level.
“Because people who fall in that coverage gap won’t get any marketplace subsidies and Marketplace plans. Those people are making just under $15,000 a year and marketplace plans can be expensive without the subsidies,” Amin said.
People who make enough to qualify for the subsidies are “flocking” to the marketplace, she said.
Laura Hawker, a senior health policy analyst at the Center on Budget Policy and Priorities, a left-leaning nonprofit based in Washington, said that while these enhanced subsidies are a significant factor in the increased enrollment, they are temporary.
“The goal would be to make those increases permanent given the success of the subsidies and reducing folks’ premiums. Many people found zero-premium plans, where they may not have been able to find those types of plans before,” Hawker said.
If Congress allows the subsidies to expire at the end of 2025, Hawker said, many could see their premiums go up.
“That could really undo a lot of the progress and cause people to have to drop their coverage, so it could really be damaging in that regard,” she said.
Nationwide, 21.3 million people enrolled in a health plan through the federal or a state-based marketplace in the open enrollment period that started on Nov. 1, 2023 and ended on Jan. 16, 2024 — a 30% increase from the previous record-breaking year when 16 million people enrolled in a health plan.
Hawker said that there wasn’t a correlation between Medicaid-expansion status and the volume of new enrollments between states. But Alabamians living under the federal poverty line, she said, are “locked out of coverage”
“You don't have access to these subsidies that others in the state have been able to benefit from, to just further build on the success and people getting enrolled in Alabama,” Hawker said.
This story was updated on Jan. 31 at 9:49 a.m. to clarify that subsidies for ACA plans start at 100% of the federal poverty level in Alabama. Subsidies start at 138% in states that have expanded Medicaid.
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