Texas law may blunt ACA premium spikes

Americans who receive health insurance through the Affordable Care Act are bracing for steep premium spikes because of Republicans' decision not to extend subsidies. But the effects may not be as dramatic in Texas, thanks to a four-year-old state law that gives the state's insurance department more control over pricing.

Public health experts say the little-known state law has resulted in lower premiums on some of the Texas plans sold on Healthcare.gov and could help people maintain their health insurance at close to what they're spending now.

For instance, in Harris County, a 40-year-old single adult earning $37,500 a year who is enrolled in a mid-level silver plan is set to see the premium more than double to $252 a month next year after tax credits have been applied. But they have the option to switch to a gold plan with better coverage for just $164 per month, or a bronze plan with a higher deductible and lower-cost sharing for $37 a month, according to analysis by the non-profit Texas 2036.

"Sticker prices get the headlines but the prices people pay are staying relatively stable," said Alex Mendoza, a policy adviser at Texas 2036. "There are zero or low cost plans for a lot of Texans."

Early data suggests Texas customers could already be figuring out how to maintain an affordable plan.

According to data released by the Centers for Medicare and Medicaid Services, 17% more Texans signed up for Affordable Care Act plans this year through the first month of enrollment, which began Nov. 1. That's compared to an increase of 7% nationwide, according to analysis by the health news service Becker's Hospital Review.

Still, with most enrollees typically waiting until December or even January to sign up for health insurance, it's unclear if the jump in Texas enrollment is just a blip, said Larry Levitt, executive vice president of health policy at the to the public health non-profit KFF. And it's not clear to what degree people are signing up for or switching to bronze plans, with higher deductibles, in order to keep their premiums low.

"What will really matter is if people actually pay their first month's premiums to make their coverage effective, particularly people who auto renew," Levitt said. "We won't know for a while how many people still have coverage."

Public health advocates are warning that Republicans' decision to let what are known as enhanced premium tax credits expire this year will lead many families to opt out of health insurance, assuming it's too expensive.

Those enhanced credits were created during the COVID-19 pandemic to increase assistance to low-income families while also providing a subsidy to working-class families who had not qualified for assistance when the original Affordable Care Act passed in 2010. Their expiration will result in the average enrollee's premium increasing 114% from last year, according to KFF.

However, the Texas Legislature's decision to take control of the state's Affordable Care Act marketplace in 2021, as many states had already done but Texas Republicans long resisted, allowed state officials to keep premiums on many plans down through a strategy known as "silver loading."

In essence, state officials allowed insurance companies to raise the cost of mid-level silver plans, knowing the size of enhanced premium tax credit would increase in kind to keep consumers' costs level. But in exchange they forced insurance companies to keep down prices on bronze and gold plans -- increasing federal funding for health care at no additional cost to the state.

Texas 2036 estimates more than 75% of the almost 4 million Texans enrolled in Affordable Care Act plans could stay insured for a relatively small increase in premiums by using a gold or bronze plan.

Still, those opting to switch from silver to bronze plans are likely to see higher out-of pocket costs for medical treatment -- even if their monthly premiums go down. And people earning over 400% of the federal poverty level -- or $128,600 for a family of four -- are stuck with higher costs no matter what they do, with the system no longer subsidizing health insurance for anyone in that income bracket.

A family earning that amount in Harris County, which would have been paying $445 a month for silver plan would have to pay $1,197 for a bronze plan with worse coverage, according to analysis by KFF.