What Will Happen to Healthcare Spending if the American Rescue Plan Act Premium Tax Credits Expire?

Healthcare spending is expected to decline by $11.4 billion if ARPA Tax Credits expire.

The Issue

The end of the American Rescue Plan Act’s Premium Tax Credits would leave more than 3 million people uninsured and less likely to access healthcare.

Key Findings

• Hospital spending would decline by $3.8 billion.
• Prescription drug spending would decline by $3.4 billion.
• Spending on services provided outside of hospitals and physician offices would decline by $2.8 billion.
• Spending on physician practice services would decline by $1.3 billion.
• Florida, Georgia, North Carolina, South Carolina, and Texas would experience the largest decline in total healthcare spending, ranging from 1.3 percent  to 1.9 percent.

Conclusion

The end of the enhanced premium tax credits will lead to a massive decline in health spending because uninsured people are less likely to access medical care.

About the Urban Institute

The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Visit the Urban Institute’s Health Policy Center for more information specific to its staff and its recent research.