New lines of attack emerge against the Affordable Care Act • New Hampshire Bulletin

The Affordable Care Act is under fire again, not in the same way as in the repeal and replace debates of old, but in a newer form from Republican lawmakers who say key parts of the ACA cost taxpayers too much and provide incentives for fraud.

Several leading Republicans in the House of Representatives called on two regulators to investigate the incident, and Sen. Chuck Grassley (R-Iowa) fired off more than half a dozen questions in a recent letter to the Centers for Medicare & Medicaid Services.

At issue are the ACA's increased subsidies, which were introduced during the Covid-19 pandemic as part of economic recovery legislation. Grassley said in a recent press release that the subsidies “left Obamacare, a program already plagued with problems, wide open to new waste, fraud and abuse.”

While potential fraud in government programs has always been a rallying cry of conservatives, the latest criticism is a renewed attack on the ACA because its repeal is unlikely, with more than 21 million people enrolled in marketplace plans this year.

“I see what's happening right now as the foundation for the big fight next year,” said Debbie Curtis, vice president of consulting firm McDermott+.

The increased subsidies expire at the end of 2025. Without them, millions of Americans would likely see an increase in their premiums.

But the debate is likely to touch on other issues, including the Trump-era tax cuts, which will also need to be addressed next year. Other aspects of the ACA may also be at stake, including a special year-round enrollment period and zero-premium plans for low-income consumers.

What ultimately happens will depend in many ways on the composition of the Senate and the House of Representatives, as well as the majority in the White House after the November elections.

“The fate of the enhanced tax credits depends on whether Democrats have some majority in Congress and/or win the presidency, and is also inextricably tied to the expiration of the Trump tax cuts,” said Dean Rosen, a partner at Mehlman Consulting and a former senior Republican congressional staffer. That's because both sides have an interest in extending all or part of the tax cuts, but each will also seek compromise on other issues.

The growing Republican outcry against the subsidies coincides with a recent, controversial report from a conservative think tank that estimates that millions of people — or their brokers — may be misreporting their income and still receiving the most generous ACA subsidies.

The Paragon Health Institute report projects that the number of people who signed up for ACA insurance this year and are expected to earn between 100 and 150 percent of the federal poverty level – amounts that qualify them for zero-premium plans and lower deductibles – likely exceeds the number of people at that income level, particularly in nine states.

It recommends several changes to the ACA, including phasing out the increased subsidies, increasing repayment amounts for people who don't accurately project their income, and ending the Biden-backed initiative that allows very low-income people to enroll in ACA coverage year-round instead of having to wait for the once-a-year general open enrollment period.

The Paragon report was cited by both Grassley and House Republicans in their letters to the government watchdog, which also points to a problem they see as related: the ongoing problems of unscrupulous, commission-hungry brokers who enroll people in ACA coverage or switch plans without their permission, often to heavily subsidized plans. KFF Health News uncovered the enrollment and switching schemes in the spring.

However, some critics question the conduct of the Paragon analysis.

For example, Paragon's results are based on two independent data sets from different years. Combining these data sets makes many people who would be eligible for subsidies appear ineligible, says Gideon Lukens, senior fellow and research director at the Center on Budget and Policy Priorities. “The analytical approach is not thorough or sophisticated enough to produce accurate or even meaningful results.”

Paragon President Brian Blase, a former senior Trump administration official and co-author of the report, said it used publicly available data that others could use to confirm the findings.

Paragon’s recommendations also elicited mixed reactions.

Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University, said they would “make health insurance less affordable, which would disproportionately affect low-income people, and that is the opposite of the goals of the ACA.”

Another ACA expert, Joseph Antos of the conservative American Enterprise Institute, agrees with one of the recommended solutions: the subsidy structure must be changed to limit the number of zero-premium plans.

“The problem is giving away health insurance,” says Antos. He says this probably contributes to unauthorized insurance switching by rogue brokers who know that if they sign someone up for a free plan without their permission, they won't get caught at first because the person won't receive monthly bills.

Another possible solution for people who misreport their income is for “the seven or eight states that have not yet expanded Medicaid to do so,” Antos said. Expansion would open Medicaid eligibility to more people earning less than the poverty level and reduce the incentive to overstate their income to qualify for ACA subsidies.

Among other things, subsidies for low-income policyholders are now higher. For example, families living at or just above the poverty line ($30,000 to $45,000 for a family of four) can now get insurance with no monthly premium, whereas previously they would have had to pay 2 to 4 percent of their annual income for such a plan.

President Joe Biden is pushing to make the subsidies permanent and has often touted the record numbers of ACA plans enrolled under his administration. Across all income groups, nearly 20 million of the 21 million ACA enrollees received at least some subsidy this year, a KFF report said.

Subsidies, also called premium tax credits, are generally paid directly to health insurers, and to qualify, applicants must estimate their income for the coming year.

Anyone who incorrectly forecasts their income – for example because they work irregular hours in retail, are self-employed and only estimate their business development at random, or receive an unexpected pay rise or a new job – must pay back the grant in whole or in part. The amount of the grant depends on income.

The cost of the increased subsidies has drawn sharp criticism from some Republican politicians after the Congressional Budget Office recently estimated that making them permanent would increase the federal budget deficit by $335 billion over ten years.

Democrats pointed to another recent report from the Federal Reserve Bank of New York, which said extending the Trump-era tax cuts would increase the budget deficit by $4.6 trillion over the next decade.

The increased subsidies “cost a lot less and actually help people,” Curtis said.

Ultimately, “every health care debate comes down to money,” says Larry Levitt, executive vice president for health policy at KFF, a nonprofit health information organization that includes KFF Health News. “There's a trade-off here. Millions of people have received coverage and lower premiums thanks to these increased subsidies, but expanding those subsidies would cost the government a lot of money.”

Although some Republican lawmakers are paying attention to the fraud allegations, many political observers believe they will not play a direct role in either party's election campaign.

“Republicans will stay out of health care reform. It's not a winning campaign issue for them,” Curtis said. “In Harris' campaign, we'll see that efforts to ensure affordable health insurance, particularly drug costs, remain a focus. You won't hear much from either party about the importance of extending the increased subsidies. It's too complicated.”

KFF Health News is a national newsroom that produces in-depth coverage of health issues and is one of the core operating programs of KFF – an independent source of health policy research, polling and journalism. Learn more about KFF.