Report on the Role of Affordable Care Act Subsidies in Advancing Sustainable Development Goals

Introduction and Alignment with Global Objectives

This report analyzes the premium tax credits, or subsidies, established by the Affordable Care Act (ACA) and subsequently enhanced by the American Rescue Plan (ARP) and Inflation Reduction Act (IRA). These subsidies are a cornerstone of United States policy aimed at advancing key United-Nations Sustainable Development Goals (SDGs). The primary objective of this framework is to make health insurance accessible and affordable, directly supporting SDG 3: Good Health and Well-being, particularly Target 3.8 concerning universal health coverage. By mitigating the financial burden of healthcare, these subsidies also contribute to SDG 1: No Poverty, preventing catastrophic health expenditures that can push households into poverty. Furthermore, the program is a critical tool for advancing SDG 10: Reduced Inequalities, by ensuring that access to healthcare is not determined by income, age, or location.

Framework of the Premium Tax Credit System

Legislative Foundations and Enhancements

The ACA created a system of premium tax credits available through state-level Health Insurance Marketplaces. Subsequent legislation, including the American Rescue Plan of 2021 and the Inflation Reduction Act of 2022, temporarily expanded the scope and scale of these subsidies through 2025. These enhancements represent a concerted effort to strengthen social protection systems and promote health equity, aligning with the principles of SDG 3 and SDG 10 by making coverage more affordable for a broader segment of the population.

Enrollment and Accessibility

Access to these subsidies is facilitated through the Health Insurance Marketplace during a designated open enrollment period, typically from November 1 to January 15 in most states. Special Enrollment Periods are available for individuals experiencing qualifying life events. This structured access is a critical piece of infrastructure for achieving universal health coverage, ensuring that individuals can obtain necessary health services without financial hardship.

Eligibility Criteria and Impact on Inequality (SDG 10)

Income-Based Eligibility and Poverty Reduction (SDG 1)

Subsidy eligibility is primarily determined by a household’s Modified Adjusted Gross Income (MAGI) relative to the Federal Poverty Level (FPL). Key provisions impacting SDGs include:

• Income Thresholds: To qualify, a household’s income must generally be at least 100% of the FPL (or 138% in states that have expanded Medicaid).
• Elimination of the “Subsidy Cliff”: From 2021 through 2025, the ARP and IRA eliminated the upper income limit for subsidy eligibility (previously 400% of FPL). This policy directly addresses SDG 10 by ensuring that no one pays more than 8.5% of their income for a benchmark plan, reducing inequality for middle- and higher-income earners in high-cost areas. The scheduled return of this “subsidy cliff” in 2026 poses a significant risk to continued progress on SDG 10.
• Enhanced Support for Lower Incomes: Individuals with incomes up to 150% of the FPL are eligible for benchmark plans with zero premiums, a powerful measure supporting both SDG 1 and SDG 3 by removing cost barriers for the most vulnerable.

Interaction with Other Coverage Systems

Eligibility for ACA subsidies is contingent on an individual’s access to other forms of health coverage, highlighting the complex interplay of social safety nets.

• Employer-Sponsored Insurance: Individuals offered coverage by an employer that is deemed affordable and provides minimum value are ineligible for subsidies. The recent “family glitch” fix, however, expanded eligibility for families, representing a positive step toward reducing inequalities (SDG 10).
• Medicaid and CHIP: Individuals eligible for Medicaid or the Children’s Health Insurance Program (CHIP) cannot receive premium subsidies. These programs serve as the primary vehicle for achieving SDG 3 for the lowest-income populations. However, the failure of some states to expand Medicaid has created a “coverage gap,” leaving millions of adults in poverty without access to either Medicaid or subsidized Marketplace coverage—a significant barrier to achieving SDG 3 and SDG 10 in those regions.

Demographic and Status-Based Eligibility

• Age: There is no upper age limit for subsidy eligibility. However, eligibility typically ceases at age 65 upon qualification for premium-free Medicare Part A. This framework supports lifelong access to health services as envisioned in SDG 3.
• Immigration Status: Subsidies are available to lawfully present immigrants, a policy that promotes inclusion and reduces health disparities (SDG 10). From 2014 through 2025, recent immigrants with incomes below the poverty level were eligible for subsidies to bridge the five-year waiting period for Medicaid. The scheduled termination of this provision in 2026 could reintroduce a coverage gap for this vulnerable population, undermining progress on SDG 10. Policies regarding DACA recipients and state-level initiatives for undocumented immigrants further illustrate the evolving landscape of health equity.

Quantifying the Impact on Health and Well-being (SDG 3)

Subsidy Calculation Mechanism

The subsidy amount is calculated to bridge the gap between the full cost of a benchmark health plan (the second-lowest-cost Silver plan in a specific geographic area) and an affordable contribution amount determined by the enrollee’s income. This mechanism ensures a baseline of affordable, quality coverage is available to all eligible individuals, operationalizing the goals of SDG 3.

The calculation process is as follows:

1. Determine the household’s projected ACA-specific Modified Adjusted Gross Income (MAGI) for the coverage year.
2. Compare this income to the prior year’s Federal Poverty Level (FPL) guidelines to determine the household’s FPL percentage.
3. Consult the applicable contribution table to identify the percentage of income the household is expected to contribute towards the benchmark plan’s premium. For 2021-2025, this ranges from 0% to 8.5%.
4. Identify the full monthly premium of the second-lowest-cost Silver (benchmark) plan available to the household in their local market.
5. Subtract the household’s expected monthly contribution from the full benchmark premium. The resulting difference is the monthly premium tax credit (subsidy).

Statistical Evidence of Progress

The impact of these subsidies on achieving universal health coverage is substantial. Data from the 2025 open enrollment period demonstrates significant progress toward SDG 3:

• Over 22 million of the 24.3 million Marketplace enrollees received premium subsidies.
• The average monthly subsidy was $550, covering the vast majority of the average full premium of $619.
• The availability of large subsidies has resulted in zero-premium Bronze and even Gold plans for millions of eligible Americans, effectively removing financial barriers to access for low-income households and advancing SDG 1 and SDG 10.

Future Outlook and Sustaining Progress on SDGs

Policy Risks and Potential Setbacks

The progress made toward SDGs 1, 3, and 10 is at risk due to the scheduled expiration of key policies at the end of 2025. The return of the “subsidy cliff” for those with incomes above 400% FPL threatens to make coverage unaffordable for millions, reversing gains in health equity. Similarly, the planned elimination of caps on the repayment of excess advance premium tax credits could impose significant financial hardship on households whose income fluctuates, undermining the goal of poverty reduction.

Conclusion: The Imperative for Sustained Policy Commitment

The ACA’s premium subsidy system has proven to be a powerful instrument for advancing the Sustainable Development Goals in the United States, particularly in promoting good health, reducing poverty, and mitigating inequality. The significant uptake and financial relief provided underscore its importance as a social safety net. However, the temporary nature of recent enhancements highlights the fragility of this progress. Sustained policy commitment and legislative action are imperative to maintain the affordability and accessibility of health coverage, thereby solidifying the nation’s long-term commitment to achieving universal health coverage and the broader 2030 Agenda for Sustainable Development.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 3: Good Health and Well-being: The article’s central theme is the affordability and accessibility of health insurance through the Affordable Care Act (ACA), which directly relates to ensuring healthy lives and promoting well-being.
• SDG 1: No Poverty: The subsidy system described is a social protection measure directly tied to the Federal Poverty Level (FPL). It aims to reduce the financial burden of healthcare on low-income individuals and families, preventing them from falling into poverty due to health expenses.
• SDG 10: Reduced Inequalities: The article discusses how policies like the ACA, the American Rescue Plan, and the Inflation Reduction Act aim to reduce inequalities in access to healthcare based on income, age, and location. It also touches upon inclusion and exclusion criteria for immigrants.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 3: Good Health and Well-being

   • Target 3.8: Achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all.

     The article is entirely focused on this target. It explains the mechanisms of the ACA, specifically “premium tax credits (premium subsidies),” designed to provide “financial risk protection” and make health insurance “more accessible and affordable.” The text details how these subsidies reduce the cost of coverage, preventing high financial burdens on households. It mentions that “the subsidies are a significant part of the ‘affordable’ portion of the Affordable Care Act.”

2. SDG 1: No Poverty

   • Target 1.3: Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable.

     The ACA’s subsidy system is a “nationally appropriate social protection system.” The article’s detailed explanation of eligibility based on the “federal poverty level (FPL)” demonstrates this. For instance, it notes that for people with income that “doesn’t exceed 150% of the poverty level,” the benchmark plan can cost as low as “$0.” This system is designed to provide “substantial coverage of the poor and the vulnerable” by making health insurance affordable for those who might otherwise forgo it due to cost.

3. SDG 10: Reduced Inequalities

   • Target 10.2: By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.

     The article explains how subsidies are structured to reduce inequality. It states, “The idea behind the subsidies is to level the playing field and bring average premiums to a middle ground for everyone who has the same general level of income (MAGI).” It addresses inclusion based on age (“There’s no upper age limit for subsidy eligibility”), economic status (the entire income-based framework), and origin (rules for “lawfully present” immigrants and DACA recipients).

   • Target 10.3: Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies and practices and promoting appropriate legislation, policies and action in this regard.

     The article discusses specific legislative actions aimed at reducing inequality. The American Rescue Plan (ARP) and Inflation Reduction Act (IRA) are cited as policies that “increased the size of premium tax credits and eliminated the upper income limit for subsidy eligibility” to ensure affordability for more people. Furthermore, it highlights the correction of the “family glitch,” an administrative action by the IRS that “fixed the glitch… meaning that some families became newly eligible for Marketplace subsidies in 2023,” thereby promoting more equal opportunity for families.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. SDG 3: Good Health and Well-being

   • Target 3.8: Achieve universal health coverage…
     • Indicator 3.8.2: Proportion of population with large household expenditures on health as a share of total household expenditure or income.

       The article provides direct data for this indicator. It states that from 2021-2025, “nobody purchasing coverage through the Marketplace has to pay more than 8.5% of their household income for the benchmark silver plan.” It also gives concrete examples of reduced financial burden: “The average full-price premium was $619/month, and the average premium subsidy was $550/month. The overall average after-subsidy premium… was just $113/month.” This shows a measurable reduction in household expenditure on health.

2. SDG 1: No Poverty

   • Target 1.3: Implement nationally appropriate social protection systems…
     • Indicator 1.3.1: Proportion of population covered by social protection floors/systems…

       The article provides a direct measure of the population covered by this social protection system. It states, “More than 24.3 million people enrolled in Marketplace plans during the open enrollment period for 2025 coverage, and more than 22 million of them were receiving premium subsidies.” This number serves as a key indicator of the system’s reach.

3. SDG 10: Reduced Inequalities

   • Target 10.2: …empower and promote the social, economic and political inclusion of all…

     The article implies indicators by discussing eligibility rules for different groups. The number of people gaining eligibility through policy changes serves as an indicator of inclusion. For example, it mentions that “100,000 ‘Dreamers’ become eligible for Marketplace health insurance” due to a rule change for DACA recipients, providing a quantifiable measure of increased inclusion for a specific group.

   • Target 10.3: Ensure equal opportunity and reduce inequalities of outcome…

     The article implies indicators by referencing the impact of policy changes. The fixing of the “family glitch” is noted to have made “some families… newly eligible for Marketplace subsidies in 2023.” The number of families who benefited from this fix would be a direct indicator of progress in reducing this specific inequality of outcome. Conversely, the existence of a “coverage gap for people with income below the poverty level in those states” that have not expanded Medicaid serves as an indicator of persistent inequality based on geographic location.

4. Table of SDGs, Targets, and Indicators

Source: healthinsurance.org