WASHINGTON — As partisan disagreements over extending pandemic-era premium tax credits (PTC) threaten a government shutdown next week, the Progressive Policy Institute (PPI) today released a pragmatic plan to protect families from steep premium hikes while reining in unsustainable federal spending on health care.
“A Pragmatic Path Forward on Premium Tax Credits,” authored by Tim Sprunt, Policy Analyst at PPI’s Center for Funding America’s Future, and Ben Ritz, PPI’s Vice President of Policy Development and Director of the Center for Funding America’s Future, charts a fiscally responsible middle path between Democrats who want to make pandemic-era subsidy expansions permanent and Republicans who want to let them expire abruptly.
PPI’s analysis finds the 2021 expansion of the Affordable Care Act (ACA) premium tax credits provided critical benefits during the COVID-19 pandemic and corrected structural problems with the original design, such as a “benefit cliff” that discouraged work among upper-middle-income households. However, the expansion also made the ACA significantly more regressive and would cost $380 billion if continued for the next decade, showering unnecessary benefits to high-income households while doing nothing to address the underlying drivers of rising health-care costs.
“Democrats must stop reflexively seeking to extend every Biden-era fiscal policy, no matter how poorly designed, and Republicans must stop seeking to cut support for American health care at every available opportunity,” said Sprunt. “PPI’s proposal offers a pragmatic path between the two extremes.”
Specifically, PPI proposes to gradually move from the pandemic PTC structure to one that splits the difference between it and the structure originally established by the ACA. Free coverage would be permanently preserved for families at or below 100% of the federal poverty level, while higher-income households would eventually be required to pay premiums roughly halfway between the pandemic-era expansion and the original ACA. This structure would also permanently smooth the benefit cliff that significantly increased premiums for anyone just outside the original PTC’s eligibility range.
PPI’s proposed PTC would cost roughly half as much as a permanent expansion of the pandemic PTC. But crucially, PPI’s proposal would fully pay for these targeted subsidies by pairing them with real reforms to attack the drivers of rising health-care prices. These reforms include:
“PPI’s proposal shows pragmatic Democrats are serious about cutting medical costs rather than simply increasing government spending,” said Ritz.
Read and download the new proposal here.
Launched in 2018, the Progressive Policy Institute’s Center for Funding America’s Future works to promote a fiscally responsible public investment agenda that fosters robust and inclusive economic growth. To that end, the Center develops fiscally responsible policy proposals to strengthen public investments in the foundation of our economy, modernize health and retirement programs to reflect an aging society, transform our tax code to reward work over wealth, and put the national debt on a downward trajectory.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
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Media Contact: Ian O’Keefe – iokeefe@ppionline.org
