What the Inflation Reduction Act means for health care coverage

The health insurance measures in the Inflation Reduction Act (IRA) will allow millions of Affordable Care Act (ACA), commonly known as Obamacare, enrollees to keep their coverage — for now. That’s good. But the IRA is the latest chapter in the turbulent 12-year saga of the ACA. As such, it represents another incremental step in the long slog to stabilize and expand health coverage in the U.S. — the only wealthy nation on Earth that doesn’t guarantee its citizens some form of universal health insurance.

About two-thirds of Americans now support such a guarantee, and the time has come to make it happen.

The pandemic was the shot across the bow on this. While humanity’s response to coronavirus remains a mixed bag, the U.S. government did step up. Indeed, preserving coverage became a centerpiece of pandemic policies. I present the relevant facts below.

But first this: the disruption the pandemic triggered — economic, social and political — will be dwarfed by climate change. It’s already upon us. One study out this month, for example, found that many infectious diseases — including Lyme, HIV, malaria and influenza — are exacerbated by extreme heat waves, drought, storms, precipitation, floods and other impacts.

A second study out this month — just to cite the latest research — concluded that the cascading affects of extreme weather patterns will likely destabilize entire socioeconomic systems, including public health, energy and food production.

But you don’t need research to sense the danger. Just turn on the news. Thousands of people now die each year in heat waves. Intense storms and tornados upend whole communities. And, beyond climate change, other health crises are accelerating — opioid addiction; the teen mental health crisis; the rise in gun violence; as well as reduced access to abortion and reproductive care to name a few.

Amid these challenges, stable health insurance that encompasses everyone becomes essential. In turn, universal coverage stabilizes care delivery systems. The pandemic response has important lessons in this context.

Unprecedented gains in coverage started in the spring of 2020 with full Republican support. On March 14 of that year, the Senate passed the Families First Coronavirus Response Act by a vote of 363-to-40. Four days later the Senate passed it 90-to-8. President Donald Trump signed the bill and it went into effect on April 2, 2020. This law required states to keep people continuously enrolled in Medicaid in exchange for enhanced federal funds (using a structure set up by the ACA). Much as Republicans often rail against Medicaid, they well know that it’s indispensable. And in a crisis, they realized it had to be used, to assure people were covered and got care, as well as hospitals staying open with doctors and nurses on the job.  

This single provision proved profoundly successful. It preserved and expanded Medicaid coverage as people lost jobs en mass at the beginning of the pandemic. And today, in 2022, 17 million more low-income people are enrolled in Medicaid or the Children’s Health Insurance Program (CHIP) compared to February 2020 — 88.3 million in all, one in four Americans. (The vast majority of that growth has been in Medicaid; CHIP enrollment in 2022 stands at 7.1 million.)

The Medicaid measure saved families billions of dollars in out-of-pocket health expenses, including for COVID-19 care and hospitalization. And it unquestionably saved tens of thousands of lives, and jobs.

Unfortunately, this bipartisan effort dissipated when President Joe Biden was elected, and control of the Senate shifted (although barely) to Democrats. The Biden administration insisted, appropriately, on doing more to help families, including by further stabilizing coverage. Republicans balked. A Democrat-led Congress in March 2021 passed, with no Republican support, the $1.9-trillion American Rescue Plan.

This law expanded government subsidies to ACA enrollees — to purchase coverage — as the pandemic continued to disrupt the economy, job stability, hospitals and public health. The measure led some 3 million people to newly enroll and millions of others to retain their ACA coverage. Today, 14.5 million low- and middle-income people get coverage through the exchanges — with the biggest share in Florida and Texas followed by California. That’s up from 11.4 million in 2019 and 8 million in 2014, the first year of ACA enrollment.

All together, according to a new government report, the emergency pandemic laws took the U.S. uninsured rate to an all-time low of 11.8 percent in early 2022 for those ages 18 to 64, down from 17.8 percent in 2010 (when the ACA became law) and 14.5 percent in 2020. In absolute numbers, that computes to about 27 million uninsured people under age 65 today, down from 46.5 million in 2010.

Fast forward to summer 2022. The IRA extends for three years only (through 2025) the extra government subsidies for ACA coverage. The subsidies were due to sunset at the end of this year. At the same time, the Families First Medicaid provision hangs by a thread. It exists only as long as COVID-19 remains an official public health emergency, as designated by the president. If Biden, in 2023 or 2024, or a future president thereafter, terminates the COVID-19 public health emergency, the Congressional Budget Office estimates that Medicaid enrollment will decline by 12 million people over three years.

Likewise, if the three-year ACA subsidy extension is allowed to sunset in 2025, or is repealed by a Republican president and Congress after the 2024 election, the Urban Institute estimates as many as 3 million Americans would loss coverage in the first year and more thereafter.

We cannot let these things happen. Health insurance must become one of those issues — like national defense, infrastructure and technological advancement — that Democrats and Republicans can reach accord and compromise on — consistently. It won’t be easy, and many readers will wonder what I’ve been smoking given the ACA wars.  

As a start, the left-wing of the Democratic Party needs to acknowledge that, for the foreseeable future, a government-run health insurance system such as Medicare-for-all is not in the cards. For their part, Republicans need to acknowledge, at long last, that the ACA was never the bête noir they claimed, that its structure as a public-private sector collaboration has worked, and that they lost that fight.

Both parties also need to rally around a cause they already agree on: tackling ever-rising health care costs. With serious efforts in that realm, universal coverage and other health system reforms will become harder and harder.

Steven Findlay, MPH, is an independent health policy analyst and journalist. He previously worked as a senior health policy analyst at Consumers Union, as well as director of research and policy at the National Institute for Health Care Management.