WASHINGTON — Both public and private health insurance would become less expensive for large numbers of people under the $1.9 trillion COVID relief bill now being debated in the Senate.
Provisions Affecting COBRA, ACA Plans
The bill contains a number of provisions affecting insurance bought on the Affordable Care Act (ACA) insurance exchanges, as well as COBRA and Medicaid, and experts say that these provisions are likely to stay in the final measure, albeit with a few possible tweaks. The provisions include:
Help with COBRA premiums. COBRA (which stands for the Consolidated Omnibus Budget Reconciliation Act of 1985, the law that created the program) allows people who have been laid off from their jobs to purchase health insurance from their former employer — however, they have to pay the entire premium themselves, plus a little extra. Under the House bill, the government would pay 85% of the COBRA premium, and in the Senate version, the federal government would pay the entire amount. In either case, the subsidy would last only through September. Provisions such as this one are “really important to help people who have been struggling to pay expenses, not just health insurance but also food and housing,” said Tara Straw, JD, senior policy analyst at the Center on Budget and Policy Priorities, a left-leaning think tank here. The cost of this provision is estimated to be slightly under $8 billion, according to the Congressional Budget Office.
Help with ACA exchange premiums and subsidies. The bill contains a number of provisions in this area, most of which expire at the end of 2022. One provision would increase the amount of advance premium tax credits — which are refundable — that people could get to help them pay for insurance plans bought through the ACA’s insurance exchanges. For example, under current law, an individual making up to 150% of the federal poverty level — or $19,320 — has to pay a premium amounting to slightly more than 2% of their income for a benchmark “silver” plan from the exchange. The bill would reduce that premium to zero, explained Karen Pollitz, MPP, a senior fellow for health reform and private insurance at the Kaiser Family Foundation here, who called the change a “material improvement” in coverage.
The bill would also eliminate a “subsidy cliff” that stops subsidies abruptly for people with incomes over 400% of the poverty level, and instead would continue the subsidies beyond the 400% level, limiting the percentage of income those higher earners pay toward their premium to 8.5%, resulting in a gradual decrease in the subsidy as income rises, she said in a phone call.
A “repayment holiday.” In addition, the bill addresses the miscalculations that may have occurred at the beginning of 2020, when taxpayers using the advance tax credit had to estimate their coming year’s income in order to calculate the credit they would receive. Usually, if people estimate their income too low and receive too large a credit, they have to pay back the excess the following year.
“But people’s income was all over the place in 2020,” and they could have ended up owing the government a lot of money. So a provision in the bill says that “just for 2020, there’s a repayment holiday,” said Pollitz. “People can still claim additional credits if those are due, but if their income bounced around and they earned more than projected, they don’t have to repay” the extra tax credits. And there is one other provision of interest in this area — if a person received as little as 1 week’s worth of unemployment insurance, any income above 138% of the poverty level would be disregarded when calculating eligibility for tax credits. The Senate version of the bill also includes a similar provision for calculating cost-sharing subsidies.
Changes to the Medicaid program. Under current law, pregnant women eligible for Medicaid as a result of their pregnancy lose their eligibility 60 days postpartum. The bill would extend that 60-day period to 1 year. “That may impact the lives of more people” than the bill’s other Medicaid provisions, said Myra Simon, principal at Avalere, a healthcare consulting firm, in a phone interview.
The measure also provides incentives for states that haven’t expanded Medicaid to do so. When the ACA was first passed, the federal government paid states who agreed to expand their Medicaid programs 100% of the cost for the first 3 years; that amount then tailed off to 90%. Under the bill, the federal government’s contribution would still be capped at 90%, but the state would get an increase in the “matching fund” percentage for the rest of its Medicaid enrollees. Since most states’ Medicaid recipients are not in the expansion population, states would get more money from that provision than they would have with the federal government paying 100% of expansion costs for 3 years, Pollitz said, adding that whether they will take the deal “is a whole other question.”
Simon agreed. “When you look at the states that still haven’t expanded, there are a lot of political variables at play,” she said. “The increased reimbursement does create a new incentive, but you can’t assume states that haven’t expanded will expand. There are definitely factors at play that aren’t about federal matching.”
Republicans Decry High Cost
Republicans have objected to the bill, saying it’s too expensive and contains many provisions that aren’t related to the pandemic. But Straw disagreed. “Obviously the provisions related to unemployment compensation are directly related, and the premium tax credit increase is also directly related to the pandemic because we know people are struggling to pay premiums — and it’s not just the very lowest-income people but also people who have income just above the current limits but pay excessively high premiums,” she said.
That’s especially true of older people because of the age-rating allowed for premiums, she continued. “The premiums for a 60-year-old, for instance, might suck up 20% to 30% of their income without assistance … so if you imagine 20% to 30% of your income is going toward that, that could make it hard to pay other expenses. So that’s what this bill does, and I think it’s squarely related to the pandemic.”
One area that the bill doesn’t really touch is Medicare; however, the American Medical Association (AMA) is concerned about the measure’s potential indirect effects on that program. “According to the Congressional Budget Office, final passage of the American Rescue Plan Act of 2021 would set in motion PAYGO statute reductions in Medicare spending of 4% next year, totaling $36 billion,” AMA executive vice president and CEO James Madara, MD, said in a letter to House and Senate leaders.
“We strongly oppose these arbitrary across-the-board Medicare cuts, and the predictably devastating impact they would have on many already distressed physician practices. We urge you to take immediate action to prevent the triggering of Medicare cuts that would result from final passage of the American Rescue Plan Act,” he wrote.
The true cost of many provisions in the bill “will depend on uptake, and that will be a really interesting thing to watch,” said Simon. She noted that ever since the ACA’s insurance exchanges opened and some states expanded their Medicaid programs, “when people analyze who is still uninsured, they always find people who are eligible for subsidies on the exchanges, or eligible for Medicaid, but haven’t signed up. That’s the big question mark on this bill.” One thing is for sure, she added — because many of the provisions are time-limited, “we’ll have this discussion again relatively soon; it won’t be over when this is over.”