Government shutdown puts Louisiana health coverage costs on the line

The federal government shut down last week, and at the heart of the standoff is a fight over the health insurance subsidies that keep coverage affordable for hundreds of thousands of Louisianans.

These enhanced premium tax credits lower the monthly cost of health insurance for people who buy coverage through the Affordable Care Act marketplace. The enhanced subsidies were first introduced during the pandemic under the American Rescue Plan Act and later extended through 2025. They allow some low-income enrollees to pay no monthly premiums and cap costs for middle-income households at 8.5% of their income.

Louisiana stands to lose the most

If the subsidies expire at the end of the year, Louisiana would be hit harder than any other state, according to a new analysis from the Urban Institute. The state is projected to see the steepest decline in subsidized marketplace enrollment nationwide — a 61% drop, representing roughly 85,000 people losing coverage.

Many people who lost Medicaid coverage during the recent unwinding qualified for marketplace subsidies, making it an easy transition, said Kevin Callison, a health care economist at Tulane University. Louisiana's marketplace enrollment has grown from about 120,000 residents in 2023 to nearly 300,000 today.

Already, people who have access to health insurance through their employers generally aren't eligible for the marketplace subsidies. That leaves many with few alternatives.

"There's no real other option at that point," Callison said. "If you can't afford the premium on the exchange, you probably then just become uninsured."

Costs could climb

The potential cost difference is significant.

Two 60-year-olds in Louisiana with a household income of $85,000, for example, would see insurance costs rise from around $600 to $2,000 per month, according to a cost calculator from the non-partisan Kaiser Family Foundation. A family of four with two adults in their 50s earning $90,000 would see costs increase from about $390 to $700 a month.

What happens if it expires?

If the credits expire, the Affordable Care Act's original, pre-pandemic subsidy structure would remain in place, but it offers much less help.

In Louisiana, people earning between about 138% and 400% of the federal poverty level — roughly $21,600 to $62,600 for an individual — are technically eligible for marketplace tax credits if the enhanced subsidies expire, but that is dependent on the cost of premiums in their area.

With the average benchmark silver plan premium for a 40-year-old enrollee about $540 per month, according to KFF, that would mean a single person earning around $50,000 could pay roughly $415 a month in premiums instead of about $270 under the current enhanced subsidies.

Those earning above 400% of the poverty level would no longer qualify for any federal assistance, leaving them responsible for the full premium cost.

Extending the subsidies would cost the federal government around $23 billion next year and about $350 billion over the next decade, according to estimates from the Congressional Budget Office.

With the shutdown dragging on with no end in sight, frustration spilled onto the Senate floor on Friday.

"This shutdown is bone-deep, down-to-the-marrow, stupid," said U.S. Senator John Kennedy, R-Madisonville. "The pandemic is over, and that's why the Democrats, when they passed the bill, put in a provision that says, at the end of this year, those extra subsidies are going to end."

Rising costs and more uninsured

But at the same time, the cost of health insurance has climbed steadily over the past several years, up roughly 35% in Louisiana since 2018, according to federal marketplace data, from about $560 per month in 2018 to roughly $755 in 2023.

Supporters of extending the subsidies point out that they've significantly reduced the number of uninsured people in Louisiana and enticed young, healthy people to the insurance pool, which is needed to keep the marketplace sustainable.

"These premium tax credits are what finally put the affordable into the Affordable Care Act," said Jan Moller, director of Invest Louisiana. "We should not think about this as just a COVID thing that expired."

If premiums rise, Moller said, some may feel they can't afford insurance.

"Their first obligation is to pay the rent, pay the light bill, put food on the table, put gas in the car, and health care is very important, but it comes after that, especially if you're a healthy person," Moller said. People who have chronic health conditions will have little choice but to absorb the higher costs.

Open enrollment for ACA plans begins November 1, and insurers will be finalizing their plans assuming the credits will not continue, said Callison. Louisiana residents enrolled through the marketplace – many of them small-business owners, self-employed workers, or people without employer-sponsored coverage – will be most affected.

"A lot of people won't know about it until they get their renewal letter in the mail from their exchange plan that says their premiums going from $300 a month to $900 a month or whatever it is," Callison said.