Government Shutdown Looms as Funding Debates Heat Up
As the deadline for a government shutdown approaches on October 1, Republicans and Democrats are finding themselves at odds over federal funding. Republicans are advocating for a comprehensive extension of federal funding, while Democrats are pushing to extend Affordable Care Act subsidies that are about to expire.
In an interview on CBS’s “Face the Nation” on September 28, just three days before funding was set to run out, Senator Amy Klobuchar from Minnesota expressed concern that many Americans would face significant increases in their out-of-pocket health insurance costs if Republicans do not support the extension of these crucial subsidies.
Klobuchar noted that rural Americans, especially farmers, would bear the brunt of these changes.
“Republicans created the health care crisis,” Klobuchar claimed. “My constituents, like many Americans, are facing a cliff with looming premium increases. That’s why Democrats are coming together to address this issue before it’s too late. Starting November 1, premiums could rise by 75% for small business owners and farmers, and they might even double in rural areas.”
Earlier estimates indicated a 75% increase in costs, although that figure has since been revised to around 114%.
Klobuchar’s assertion about doubling costs can be seen in a few different lights. Her office clarified that they meant rural enrollees would face, perhaps, a doubling of their out-of-pocket expenses compared to what they’d pay if the enhanced subsidies continue.
What are Enhanced Affordable Care Act Subsidies?
The Affordable Care Act Marketplace allows individuals to purchase health insurance from various providers, generally with some level of subsidy, as long as their income meets certain criteria.
Back in 2021, President Biden signed a law that made these subsidies more accessible and beneficial. It reduced the maximum cost of coverage and allowed households with incomes above 400% of the federal poverty level to qualify for assistance. For 2024, the threshold for a single-person household will be $60,240, with higher limits for larger families.
These enhanced subsidies, which were initially extended through 2025, are now approaching expiration.
Interestingly, the popularity of these subsidies has surged, with enrollments projected to rise from 12 million in 2021 to about 21.4 million by 2024, based on data analyzed by the medical research organization KFF.
Where Did the 75% Figure Come From?
KFF used federal data to calculate the average annual premium for participants receiving enhanced subsidies. Initially, the government covered $5,727 of the total premium, while beneficiaries contributed about $888. The enhanced subsidy covered an additional $705, amounting to a total out-of-pocket cost of $1,593 if the enhanced subsidies expired. That would reflect a nearly 79% increase, aligning somewhat with Klobuchar’s 75% claim.
On September 30, just after Klobuchar’s comments, KFF released estimates showing an even steeper rise in out-of-pocket costs, suggesting a 114% increase if the subsidies are allowed to lapse.
Is It Accurate to Say Costs Will “Double”?
Klobuchar’s remarks can be interpreted in several ways. One interpretation is that she is comparing costs with what local enrollees would face versus their previous expenses.
Her office informed PolitiFact that the senator was indicating out-of-pocket costs for rural enrollees would essentially double if enhanced subsidies are not renewed. This aligns with her previous statements.
An analysis by the Century Foundation concluded that out-of-pocket costs for premiums in rural areas could increase from an average of $713 to $1,473, representing about a 107% hike, whereas urban areas might experience an increase of about 89%.
While this suggests a significant impact on rural enrollees, it lacks support for the view that they would face double the burden compared to those in urban settings. The Century Foundation’s analysis suggested that rural enrollees might see an increase of $760 versus $624 for all counties, and $593 for urban areas. So, while rural costs increase more, it won’t necessarily double.
Our Verdict
Klobuchar stated that without extending enhanced subsidies, individuals with Affordable Care Act insurance could see their premiums rise by “75% starting November 1st,” asserting that “people on rural farms could see costs twice as much.”
KFF’s findings indicated an average out-of-pocket medical cost increase of 79%, which is somewhat close to Klobuchar’s claim of 75% (though they later updated that estimate to 114%).
A Century Foundation analysis found that while rural enrollees won’t exactly face double increases compared to their urban counterparts, they will see costs rise more significantly—an increase of 22% compared to overall enrollment growth and 28% compared to urban areas.
However, the claim suggesting rural enrollees would pay double in out-of-pocket expenses maintains some truth, as data reveals costs in rural regions might rise by 107%. So, while Klobuchar’s statement is accurate, it does require some elaboration, leading us to rate it as “Mostly true.”
