TDI proposes rule change to improve affordability of ACA plans

At Texas 2036, we believe all Texans should have access to quality, affordable health care. That’s why we’ve worked diligently over the past few years to educate stakeholders about policy options that expand coverage and affordability. One of the Legislature’s key successes was passing Senate Bill 1296 in 2021.

SB 1296 directed the Texas Department of Insurance (TDI) to optimize the federal subsidies available for individual health plans offered through the Affordable Care Act (ACA) marketplace. The agency achieved that optimization by aligning premiums across different levels of coverage.

The result? More Texans enrolled in affordable health plans! A soon-to-be-published academic study estimates that SB 1296 directly led to an increase of 250,000 Texans enrolling in affordable health plans in 2023 alone.

TDI recently proposed changes to the rules implementing SB 1296, and we believe this is a positive step. The proposed change would update the cost-sharing reduction (CSR) factor used to calculate premium rates for ACA plans. The CSR factor ensures that premiums for silver plans (the benchmark for subsidies) are sufficient to cover the cost of reductions in deductibles and co-pays for lower-income enrollees.

The proposed CSR factor increase from 1.35 to 1.40 will result in higher premium tax credits for Texans who qualify, further reducing the net premium price for coverage. TDI estimates that the new factor, based on updated enrollment data, will more accurately reflect the costs associated with providing CSRs.

Texas 2036’s analysis indicates that this proposed rule change, if finalized, will result in more Texans being able to find affordable coverage. This adjustment will make ACA plans more affordable for many Texans, leading to increased coverage and access to essential health care services.

The rule proposal remains open for public comment until Dec. 9, 2024.