Californians benefited greatly from the improved subsidy system put in place by the federal government as part of the American Rescue Plan Act (ARPA), which passed in early 2021. The new method of calculating eligibility finally took into account the fact that it costs a lot more to live in California than most other places in the United States. Thousands of Californians who were previously ineligible for a subsidy became eligible, reflecting both the higher incomes needed to live here and the higher cost of health insurance.
But under ARPA, that new system was only put in place for 2021 and 2022, leveraging the COVID-19 crisis to make a long-awaited improvement to the Affordable Care Act (ACA). Democrats were planning to extend the subsidies another three years under the Build Back Better (BBB) bill introduced earlier this year, but as you may have heard, politics has gotten in the way and now that bill is stalled in Congress.
Without passage of the BBB or some other legislation by the end of this year, the old, harsh system of doling out subsidies will return in 2023 and beyond, screwing Californians out of federal support they desperately need and deserve, at least as much as residents of (cough) lower-cost states.
The National Academy for State Health policy surveyed the country to assess the potential damage, and as you can imagine, it’s bad. Here’s a chart of what Covered California reported:
*FPL stands for Federal Poverty Line. For a single person, the 2022 FPL is $12,880, so 250% = $32,150 and 400% = $51,520.
Cross your fingers, light a smudge stick, drop to your knees and pray – whatever works for you. Californians are virtually powerless to influence the process in Washington, because our representatives are the Democrats who sponsored the BBB and want to see the improved subsidies continue. We will keep you posted.