There are a number of key improvements to the ACA in the new law which focus on the “affordable” part of the promise Obama and Biden made eleven years ago. First, the new law provides nearly $35 billion in premium subsidies in the ACA marketplace with expanded eligibility for premium support and making the subsidies more generous. It also gives states that haven’t yet expanded Medicaid major incentives to do it. For people who’ve been laid off or had their hours reduced and are trying to maintain their employer-provided insurance, it subsidizes 100% of the COBRA premiums for the next 6 months. All of the people receiving unemployment insurance (UI) are guaranteed coverage through subsidies for their premium payments. It forgives more than $6 billion in potential tax liability for people who got more in premium subsidies than their 2020 income allowed.
The Congressional Budget Office estimated that the changes made by the American Rescue Plan could extend coverage to about 2.5 million currently uninsured people through 2023 because it makes it more affordable. One of the big ways the law does this is getting rid of the “subsidy cliff.” To save money back in the deficit-obsessed days of 2010, the administration and Congress stopped providing premium subsidies on the marketplace for people making 400% of the federal poverty limit. In 2021 dollars, that’s more than $51,040/annually for a single person, and $104,800 for a family of four. Which is not a lot of money to make in a year, particularly if your health insurance premiums could cost as much as 25.8% of it. Which it would if you were say, a single 60-year-old living in a rural community and making $51,100. For the next two years, that cap is gone and everyone, regardless of income, will be guaranteed premium help to ensure they don’t pay more than 8.5% of their income for insurance premiums in the individual market. Congress and the administration plan to make that permanent, which is a whole different conversation about how you get further healthcare reform through a 50-50 split Senate with a filibuster.
Beyond eliminating the subsidy cliff for two years, the new law also increases subsidies that would fully pay for coverage for people making up to 150% of the federal poverty level ($19,320/annually for an individual, $46,375 for a family of 4) for a silver, benchmark plan. The CBO calculated that people at that level would, regardless of age, pay no premium as opposed to $800/year currently. For an older person making 450% of FPL, the end of the subsidy cliff brings about $8,000 in savings.
People who have collected UI at any point this year will be able to qualify for a free silver-level plan for the remainder of the year. That’s unless they have a family member with employer-based coverage that can also cover them—this is the “family glitch” that remains the biggest obstacle to affordable insurance under the ACA. If the insurance offered by an individual’s employer is affordable for that employee (around 10% of income in 2020) then it’s assumed to be affordable for the whole family, even if purchasing family coverage under the employer plan is more expensive. Family members aren’t eligible for subsidies on the ACA marketplace in that case. That problem continues, another one that has to be worked out in future legislation, and unfortunately also applies here. Someone getting UI will still be barred from getting that ACA subsidy if someone in their household can get what’s deemed affordable employer-based coverage. The CBO estimates that about 1.4 million unemployed people are eligible for the free plans, including about 900,000 who’ve already enrolled and will get a credit back.
For all the people who already hold ACA plans and had income fluctuations in 2020, they don’t have to worry about having to pay back any of the excess premium subsidies they may have received. So people who underestimated their income for 2020 when they purchased their plans won’t have to pay back excess subsidies. That’s a boon for people who might have gotten an income boost because of epidemic hazard pay, substantial overtime pay, cashing out retirement benefits to live off of, or even UI payments.
Unemployed people who want to continue the coverage they had at work can get six months of free COBRA coverage, a huge boon because otherwise they would be responsible for 100% of the premium cost. That’s also true for those who have had their hours cut, and lost insurance as a result, but are still employed.
People who already have coverage under the ACA will see a reduction in their premiums retroactive to January 1. The details of how that’s going to work are as of yet not clear—whether the premium cost resets automatically or discounts or refunds have to be requested. That might be done on a state-by-state basis. If you’ve got ACA coverage, the Kaiser Family Foundation’s premium subsidy calculator has been updated with the new law and can help determine new premiums. These extra subsidies will last for two years.
The law has significant new Medicaid provisions, providing additional incentives for the 12 states (Alabama, Florida, Georgia, Kansas, Mississippi, North Carolina, South Carolina, South Dakota, Tennessee, Texas, Wisconsin, and Wyoming) that haven’t expanded to do so. Already, the federal government pays a permanent matching rate of 90% for the expansion population, and it is offering an additional 5% matching rate to those 12 states for a two-year period, no matter when they expand. That’s on top of a temporary 6.2% matching increase that is in effect for the duration of the pandemic emergency.
All states can use a new “state plan” Medicaid option that would extend maternal health coverage to women for one full year after the end of pregnancy, a great expansion of the current 60-day limit, starting next April and lasting for 5 years (unless it’s made permanent by Congress). Prior coronavirus relief legislation allowed for Medicaid to cover testing for the uninsured, and the new law continues that and extends Medicaid and CHIP coverage to vaccines and treatment, including prescriptions without cost-sharing, so families don’t have to pay.
All of this on top of the billions that will be spent on vaccines, testing, and tracing as well as vaccine education. To ensure that all communities are reached the law allows the public health workforce to expand, with $7.6 billion going to help public health departments staff make sure that there’s personnel to get the vaccine out and to do contact tracing and testing. There’s another $7.6 billion for community health centers which operate in underserved areas, and $250 million for states to establish teams of healthcare workers who will be deployed specifically to nursing homes to help combat the virus.
Biden’s American Rescue Plan is the beginning of building up a public health system that has been allowed to atrophy for too long. It’s also the beginning of the Biden-Sanders task force plan for healthcare reform created last year. That plan called for bigger subsidies on Obamacare exchanges and for more lower-income Americans to be covered. Here’s a first step. Still to come is establishing a public option on the exchanges, for people to buy into a Medicare-like program; lowering the Medicare-eligible age to 60; allowing Medicare to negotiate drug prices; and allowing undocumented immigrants to participate in the ACA marketplace, but without subsidies.
Biden seized this horrible moment in time to make his own big fucking deal law, one that builds on what he and President Obama started all those years ago. It is a monumental achievement even before all the provisions get rolled out.