How did ARP subsidies increase ACA marketplace enrollment?
Executive summary
The American Rescue Plan Act (ARPA) and its extension in the Inflation Reduction Act (IRA) increased ACA marketplace enrollment by expanding eligibility above 400% of the federal poverty level (FPL) and by sharply increasing premium tax credits so consumers paid a much smaller share of income for benchmark plans; analysts attribute the surge from about 11–12 million in 2020–2021 to roughly 21–24 million in 2024–2025 largely to those enhanced subsidies [1] [2] [3]. Multiple nonpartisan estimates show enrollment rose with the more generous credits and would fall if the enhancements expire after 2025 [4] [2].
1. How the math changed and why people signed up
ARPA temporarily removed the 400% FPL cutoff and lowered the percentage of income households must pay for the benchmark (second‑lowest‑cost Silver) plan, creating larger advance premium tax credits and even $0 premiums for some low‑income enrollees [5] [6]. The IRA extended those rules through 2025, and analysts link those policy changes directly to record marketplace growth: subsidized enrollment rose sharply and average subsidies cut premiums by roughly 44% since 2020, helping push total enrollment to historic highs [1] [2].
2. The enrollment numbers and the counterfactual
Independent and government‑linked projections show big gains. CMS, KFF, CBO and other analysts reported marketplace enrollment roughly doubled from pre‑ARP levels — for example, from about 11–12 million in 2020/2021 to roughly 21–24 million by 2024–2025 — with most enrollees receiving subsidies [1] [3]. CBO and KFF modelers also estimate that without the enhanced credits, enrollment would be materially lower and federal subsidy outlays less — a finding underscoring that the credit enhancements were the primary driver of the enrollment jump [4] [2].
3. Who benefited most: age, income, and geography
Enhanced credits helped two groups especially: middle‑income households above the old 400% FPL cutoff who became newly eligible, and lower‑income households whose monthly premiums were pushed down — in many places to very low or zero monthly payments [7] [8]. States and local markets with high pre‑subsidy premiums and older enrollee populations saw larger dollar savings; analyses show that in several states a significant share of market enrollees would be hit if the enhancements lapse [5] [9].
4. Mechanisms beyond just numbers — behavior and access
Analysts link the larger subsidies to increased take‑up of preventive and primary care and reduced cost barriers, not only to sticker‑price affordability. Early ARPA‑period surveys and utilization studies found improved access to routine services and more people choosing marketplace coverage rather than going uninsured or remaining dependent on employer or non‑group options [10]. That behavioral channel amplifies enrollment effects: cheaper premiums translate into more people signing up and using care, which becomes visible in administrative enrollment totals [10] [2].
5. The policy tradeoffs and political context
Congress extended the ARPA enhancements via the IRA through 2025, but lawmakers left the changes time‑limited; analysts warn the so‑called “subsidy cliff” would return in 2026 if enhancements expire, eliminating subsidies for many above 400% FPL and shrinking subsidies for other income groups — a change modeled to reduce enrollment and raise consumer premium payments substantially [4] [11] [2]. Political actors frame this tradeoff differently: proponents emphasize coverage and affordability gains, while opponents emphasize budgetary cost and long‑term fiscal implications [1] [12].
6. What the models say would happen if enhancements expire
Multiple credible analyses forecast sizable enrollment declines and big premium payment increases for subsidized enrollees if ARPA/IRA enhancements lapse: CBO and KFF estimate fewer subsidized enrollees and higher average out‑of‑pocket premiums — KFF, for example, projects average annual premium payments could more than double in states analyzed [4] [7] [2]. Those projections are the principal basis for warnings that hundreds of thousands (or millions) could lose coverage or face steep cost increases [2].
7. Limits and open questions in the available reporting
Sources converge on the core causal claim — larger, more inclusive subsidies drove higher enrollment — but differ on magnitude estimates and on longer‑run behavioral offsets (employer‑sponsored coverage shifts, insurer pricing responses) [13] [10]. Available sources do not mention specific microdata linking each newly enrolled individual to a particular subsidy change, and they vary in point estimates of total enrollment [3] [2]. These are the empirical gaps policymakers must weigh.
Conclusion: The enhancement of premium tax credits under ARPA (and extended by the IRA through 2025) is the central, well‑documented driver of the marketplace enrollment surge; independent budget and health analysts uniformly project that letting those enhancements expire would shrink enrollment and raise consumer premium burdens [1] [2] [4].