The American Rescue Plan Act’s increased premium tax credits for Affordable Care Act policyholders could lead to greater equity in insurance premiums in 2025, but only if Congress extends those credits before they expire next year, according to a report from the Urban Institute.

Using the Urban Institute’s Health Insurance Policy Simulation Model (HIPSM), researchers assessed the policy’s impact on household spending and health insurance coverage for older adult Americans. They used the model to project the impact on coverage rates if the increased premium tax credits (PTCs) remained in effect or expired.

“As a result of the improved PTCs, we project that blacks and Hispanics will make up a larger share of nongroup enrollees in 2025, while the share of whites will be smaller,” the report said.

Under the expanded PTC policy, enrollment in nongroup-based plans for the elderly nationally would increase by 79% for the black, non-Hispanic population; by 61% for Hispanics; and by 42% for the white, non-Hispanic population. In addition, with expanded PTCs, the uninsurance rate among the black population would be 9.7%, compared to 11.9% without the tax credits.

The higher enrollment rates were also seen in the 10 states that did not implement Medicaid expansion. In these states, 116% more blacks would enroll in nongroup plans because of the expanded PTCs, along with 104% of Hispanics and 78% of whites. With expanded PTCs, black enrollees would make up 20% of nongroup enrollment of the nonelderly in nongroup plans in states without expansion, but without the tax credits, their share would be 18%.

The researchers predicted that the number of uninsured will rise in states without expanded PTCs, particularly among the Hispanic population. When expanded PTCs expire, the number of uninsured among Hispanics in these states will rise from 24.2% to 28.4%. These results are consistent with previous research that found that a full expansion of Medicaid could improve both health equity and uninsured rates.

However, in the expansion states, the changes in uninsurance will not be incredible. The biggest losses will be suffered by black populations, where uninsurance will rise from 8.4% to 9.4%.

The expanded PTCs expire in 2025. If lawmakers let the rule expire without renewing it, those enrollment gains will be reversed, Urban Institute experts warned.

“We expect that large and meaningful disparities in rates of uninsurance by race and ethnicity will continue to exist within the non-elderly population in 2025. We also expect that improved PTCs will play a role in reducing these disparities by disproportionately increasing marketplace use and reducing the number of uninsured individuals among blacks and Hispanics,” they concluded.

They added that the enhanced PTCs are not aimed at reducing the number of uninsured in specific populations. However, black and Hispanic populations are disproportionately represented in the low-income bracket, so the enhanced PTCs may be particularly effective in reducing racial disparities in care.

Given these results, the number of Americans receiving subsidized Marketplace insurance is expected to increase by 7.2 million in 2025. In addition, the number of uninsured could decrease by 4.0 million if the enhanced PTCs remain in place. These results are consistent with policy outcomes in 2021, when American Rescue Plan Act subsidies reduced state premiums by 40% and were credited with higher enrollment rates and lower uninsurance. However, without these credits, the number of uninsured could increase and opportunities for subsidized insurance would shrink.

Kelsey Waddill is editor-in-chief of Healthcare Payers and has been covering health insurance news since 2019.