As premiums climb and federal subsidies expire, many Texans are facing tough decisions about their health insurance. At the Prosper Health Coverage Center in South Austin, specialists and volunteers are assisting people through the enrollment process for health insurance via the Affordable Care Act (ACA) marketplace throughout November.
Approximately 4 million Texans are currently enrolled in ACA marketplace plans, many of whom are self-employed or work for small employers that don’t offer insurance. This year, however, a large number of these individuals, like Britta Lee, are confronting significantly higher premiums.
“We had to scramble to find a plan that would offer me close to the coverage I had before, but now I won’t be able to see half my current doctors,” Lee said after her meeting at Prosper Health.
Lee’s 2025 plan is no longer affordable, forcing her to search for a new one. With premium assistance, thanks to her residence in affordable housing, she found a more affordable plan but still faces a higher monthly payment. As a result, she’s had to tighten her household budget, cutting back on everything from meals to entertainment. “Anything fun we want to do has to be free, and we can’t travel at all,” she added.
Expiring Federal Subsidies
Lee’s predicament reflects a broader trend. In Texas and other states using healthcare.gov, insurers are increasing premiums by around 30% next year, according to analysis from KFF, a nonpartisan health policy organisation. Many Americans rely on federal subsidies, known as premium tax credits, to reduce their insurance costs, with the amount based on household income.
However, enhanced subsidies, introduced in 2021 as part of pandemic relief efforts, will expire in January 2024, leading to steep price hikes for many. For some, costs could more than double.
Erika Leos, Director of Prosper Programs at Foundation Communities, said clients have been anxious about these changes. “People were worried and just had questions, like, ‘How does this affect my plan and my situation?’” she explained.
The answer, Leos noted, depends on individual circumstances. While many will still receive some level of tax credit, clients earning more than 400% of the federal poverty level will no longer qualify. The average Central Texas resident will see an increase of around $100 per month.
Higher Premiums or Higher Deductibles?
Ashley Velasquez, a self-employed consultant in Austin, has been buying marketplace insurance for her family of five since 2020. For 2024, her premiums would increase by around $1,000 per month, reaching a total of more than $1,700 a month. “I don’t see how we could do that. It’s more than our mortgage,” she said.
While searching for more affordable plans, Velasquez found some cheaper options were not accepted by her primary care provider or her children’s pediatrician. With previous long waits to establish care with a new doctor, she is reluctant to switch providers.
Some lower-cost plans offered premiums under $100, but they come with high out-of-pocket costs, including a $20,000 maximum deductible. “When you start looking at the total cost, it’s hard to compare apples to apples,” she noted.
Velasquez is now considering a plan that costs just under $1,000 per month. While it’s around $200 more than what she’s used to, it would offer similar coverage to her current plan, giving her peace of mind should one of her children need emergency care.
Ongoing Federal Uncertainty
There is still hope that Congress could extend the enhanced premium tax credits in December, as part of a deal to prevent a federal government shutdown. However, many Republicans are resistant to the proposal, citing concerns over the $350 billion cost to the national deficit over the next decade.
As open enrolment season continues, Leos expressed concern that the uncertainty over federal subsidies might lead some Texans to forgo health insurance altogether. According to researchers at Texas A&M, hundreds of thousands of Texans could opt out of coverage.
“So far, most of our clients at Prosper Health are still choosing a plan, even if it means stretching their budgets,” said Leos. The centre has already helped 1,370 people enroll, with a goal of enrolling at least 5,000 by the end of the open enrolment period. Texans have until January 15 to sign up, but must do so by December 15 if they want their benefits to begin on January 1.