Analysis: A Proposal Like Biden’s Health Plan Would Lower the Cost of ACA Marketplace Coverage for Nearly All Potential Enrollees and Lower Premiums for Over 12 Million Workers With Employer Coverage

A new KFF analysis finds that expanding Affordable Care Act (ACA) premium subsidies like Democratic presidential nominee Joe Biden has proposed would lower the cost of Marketplace coverage for nearly all potential enrollees, including the uninsured and others currently priced out of the Marketplace.

While the former Vice President’s plan to create a public option has received substantial public attention, his companion proposal to expand ACA marketplace subsidies has been less discussed, even as it has the potential to affect the affordability of health insurance for many Americans. The plan is also projected to more than double federal marketplace spending, according to Biden campaign officials.

Premium savings would be greatest for older people with incomes just above $400% of poverty, where current subsidy eligibility cuts off. A 60-year-old making $50,000 would go from paying $1,029 on average per month for the second-lowest cost gold plan to paying $354 per month under a Biden-like proposal, a savings of $675 (or 66%) per month.

The cost savings would be even more substantial for people living in rural areas, where premiums are often higher. Currently, a 60-year-old making $50,000 in Floyd County, Georgia would pay $1,903 per month (45.7% of income) for the second-lowest-cost gold plan; a Biden-like proposal would reduce his monthly costs to $354 for the same level of coverage (8.5% of income).

Under the current law, the maximum premium contribution is capped at just under 10% of income and is benchmarked to a mid-level silver plan. Biden’s plan caps premium contributions at 8.5% of an enrollee’s income for a benchmark gold plan, making lower-deductible plans more affordable for consumers. The proposal also removes the upper income limit on premium subsidies, eliminating the so-called “subsidy cliff,” after which people making more than 400% of poverty ($49,960 for an individual, or $103,000 for a family of four) must pay the full price for their coverage.

The analysis focuses on Biden’s plan to enhance premium subsidies under the ACA. His plan also includes a new public option, available through the Marketplace and administered by Medicare, which would provide zero-premium coverage to adults in the Medicaid coverage gap – those with incomes below 138% of poverty, but living in states that have not expanded Medicaid under the ACA.

Additionally, people with employer-based coverage would be allowed to buy into the public option or enroll in another Marketplace plan if the cost of the coverage offered by their employer exceeds Biden’s proposed premium cap of 8.5% of household income. KFF estimates that 12.3 million people could save money by switching to a Marketplace plan under a proposal like Biden’s plan.

The issue brief includes interactive maps that allow users to see the most and least affordable ACA premiums by county in 2020, and how premiums would be projected to change if Biden’s proposed reforms were implemented. The analysis does not account for how the creation of a public option may impact pricing across the Marketplace, including Marketplace subsidies or the net cost of non-benchmark plans, nor does it estimate the increase in federal spending necessary to fund Biden’s plan.