For months now, West Virginia Sen. Joe Manchin, a Democrat, has been fighting President Joe Biden’s agenda because he wrongly insists that those Democratic policies and priorities, if enacted, would cause more inflation. Never mind that all the economists worth their salt disagree: That’s his story and he’s sticking to it.
Ironically, Manchin is setting up a scenario for very real inflation—and some big pain for Democrats—in the weeks just before the November midterm elections.
When the Democrats passed the American Rescue Plan Act (ARPA) last year, they did a good and smart thing in increasing the subsidies people could get in order to purchase Obamacare health insurance. This was a pandemic measure, and is set to expire at the end of this year.
Democrats had every reason to believe that they could make that more generous subsidy schedule permanent, and in fact included it in the Build Black Better (BBB) package that Manchin has since sunk.
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While the enhanced subsidies last through the calendar year, the notices that insurance companies send out announcing the next year’s premiums will go out in the fall, making for an ugly October surprise. The Kaiser Family Foundation (KFF) analyzed the potential impact last fall. If the ARPA subsidies are not continued, “premium payments will rise sharply for nearly all marketplace enrollees,” KFF said.
How sharply? “According to HHS, the 8 million marketplace enrollees who signed up before the ARPA subsidies were enacted are now paying $68 per month, after accounting for an average monthly premium savings due to the ARPA of $67,” KFF found. “Without the ARPA subsidies, premiums would double on average for these enrollees and they would pay an average of $800 per year more if enrolled for the full year.”
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The steepest increase will be for the lowest-income enrollees, as usual. Under ARPA, about 42% of enrollees now pay nothing or very little for a monthly premium for generous silver-level plans. That’s a big chunk of people. They also have annual deductibles under $200. To get premiums that are as affordable without the ARPA subsidies, they would need to switch to a bronze-level plan, which could have a deductible of $7,000 or more. But middle- and upper-income people will potentially lose subsidy eligibility as well.
They give an example: “A 48-year-old making $60,000 per year would see their monthly premium payments increase by 36% if they lost subsidy eligibility, and that doesn’t account for any additional increase in the sticker price of premiums. Families and older enrollees would see even larger premium increases.”
KFF also gives a warning about the political implications: “In the event ARPA subsidies are allowed to expire, the timing of the resulting impact on insurance affordability could become an election issue. The ARPA premium subsidy enhancements are set to expire at the end of 2022. Open enrollment begins on November 1, just one week before the midterm election is held on November 8, 2022.”
That could be fixed in the reconciliation bill that is potentially rising out of the ashes of BBB. In fact, that will be the only way to fix it—reconciliation bills can’t be filibustered, so only Democrats’ votes are needed. Which is where, once again, Joe Manchin raises his ugly head.
Last week, Manchin attended a closed-door dinner hosted by the American Clean Power Association, the trade association for the renewable energy industry. According to Axios, sources who were in the meeting said that Manchin was not “indicating any support for universal preschool or any of the other care-economy proposals that were included in Biden’s initial ‘human infrastructure’ package.” It’s unclear where the key Obamacare enhancements from ARPA fit in.
Nor is it clear if Manchin is negotiating in any kind of good faith to get some version of Biden’s agenda passed.
So unless Democrats can break through Manchin’s blockade, inflation is really going to be a problem for people buying their health insurance on the Obamacare/ACA marketplaces. That’s one bit of inflation that is entirely in Manchin’s hands.
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