The American Rescue Plan, the latest in a series of federal relief packages, aims to rebuild America in the midst of dual health and economic crises. President Biden signed the $1.9 trillion package into law Thursday, March 11th, after it passed Congress without a single Republican vote.
The package brings critical and timely relief when many in our country are suffering from food and housing insecurity, mass unemployment, and lack of affordable health care. Key provisions of the plan aimed at helping workers and families ride out the remainder of the pandemic include extended unemployment payments (previously set to expire on March 14), $1,400 stimulus checks to low- and moderate-income people, and a child tax credit that will lift millions of children out of poverty. Notably, lawmakers were not able to negotiate a much needed increase in the federal minimum wage, which would have helped 32 million low-wage workers and would have benefited women of all races, and Black and Latino men in particular.
How the American Rescue Plan Improves Health Care Affordability
The American Rescue Plan is a tremendous step forward in building back a more equitable economy. The health care provisions of the package represent the single biggest federal action to improve health care affordability since the passage of the Patient Protection & Affordable Care Act (ACA or Obamacare) in 2010.
According to Congressional Budget Office estimates, the legislation is expected to reduce the number of uninsured people by 1.3 million in 2022. The bill does this in a number of ways, the most significant being the expansion of health care premium subsidies. Changes include:
Expanding Health Insurance Premium Subsidies
People who buy coverage through state and federal marketplaces are currently eligible for premium subsidies if they earn between 100-400 percent of the federal poverty level ($12,880-$51,520 for an individual), so that most people who earn under 400% of FPL spend no more than 10% of their income on premiums. From 2020-2022, the federal package will:
- Fully subsidize coverage for those earning under 150% of FPL ($19,320 for an individual)
- Eliminate the subsidy cliff for people above 400% FPL by capping the percent of income a person will pay for premiums at 8.5% of their income. This means that the people who earn 400% of FPL who currently receive no subsidies and sometimes have to pay upwards of 30% of their income on just premiums alone, would now be guaranteed to pay no more than 8.5% of their income on premiums.
- Expand the definition of who is eligible for subsidies to include anyone who received even one week’s worth of unemployment benefits in 2020. For unemployment recipients, any income above 138% of FPL will be eligible to receive the maximum amount of subsidies.
Health equity note: Increasing premium subsidies is one of the most significant ways to improve affordability for people who buy coverage on the Exchange. However, many immigrants continue to be barred from the Exchanges, and subsidies will do nothing to address affordability for those who fall in the family glitch (the part of the ACA that defines subsidy eligibility on an individual’s income, even though it may not be affordable to families).
Subsidizing COBRA Benefits
The COBRA (Consolidated Omnibus Budget Reconciliation Act) program allows workers who have recently lost their jobs or employer-based health insurance due to a life event to elect to continue their coverage at their own expense for a limited time. The federal relief package will pay 100 percent of the cost of premiums through September 2021, which is estimated to add about 3 million enrollees who have lost health care coverage.
Health equity note: While this provision will improve coverage and quality of health care by allowing people to keep their current providers, employer-based and COBRA plans are not as effective as public plans like Medicaid and Medicare at controlling health care costs, and do not provide long-term affordable coverage. Additionally, COBRA subsidies will create a large windfall for health insurance carriers, who have made record profits during the pandemic.
Incentivizing Non-Expansion States to Adopt Medicaid
Twelve states have yet to adopt the ACA provision to expand Medicaid coverage to most people with incomes below 138% of FPL, leaving 4 million low-income people without an affordable health coverage option. The package increases Medicaid funding to states from 90 to 95 percent of costs, which, according to Kaiser Family Foundation estimates, would cover all the of the increased state expansion costs. While it is uncertain if more states will expand Medicaid, Wyoming is off to a good start.
Health equity note: Expanding Medicaid coverage is one of the most significant and well-proven policy solutions for addressing racial disparities in health outcomes, particularly for Black and Latino populations. Medicaid expansion has also been shown to improve access to and use of care, quality of care, and health outcomes, particularly for maternal and infant health.
Inviting States to Expand Postpartum Medicaid Coverage
The relief package extends the option for states to extend postpartum Medicaid coverage from 60 days to 1 year, which only six states have in place currently.
Health equity note: Advocates around the country, particularly Black-led maternal health coalitions, have critiqued this provision for not going far enough to address urgent racial and gender disparities, since the bill merely gives states the option of expansion, rather than making it a requirement, does nothing to increase the federal match, and only lasts for five years.
While these health care affordability measures are temporary provisions, Congress could make them permanent. They are representative of President Biden’s health care reform platform to build on the progress of the ACA.
Washington Leaders Can Lead the Way to Fill the Gaps in Health Care Access
While the provisions in the ARP are important, alone they will not fill all gaps in health care coverage. Washington leaders have the opportunity to lead the way on health care reform in three critical areas:
- Cascade Care 2.0 (SB 5377): The federal subsidy expansion will meaningfully help people afford coverage, but will expire after 2022 unless additional legislation is passed. Cascade Care presents an opportunity to implement permanent subsidies for people in Washington up to 500% of the federal poverty level. Additionally, Cascade Care 2.0 creates an opportunity to provide cost-sharing assistance to help people with out-of-pocket costs for accessing care, such as co-sharing and deductibles (the latter of which is growing four times as fast as income), since the federal subsidies do not address health care costs beyond premiums. Cascade Care also provides a critical cost-containment measure by strengthening Washington’s groundbreaking public option plan with additional requirements on hospitals.
- Postpartum Medicaid expansion (SB 5068): Washington’s postpartum expansion bill goes beyond the federal option by committing the state to expanding postpartum coverage for low-income birthing parents. If this bill passes, the state could draw down additional federal funds to cover this crucial program.
- Coverage for immigrants: Federal restrictions prevent certain immigrants from buying coverage on the Exchange or from receiving Adult Medicaid, leaving millions of immigrants without an affordable option. Washington’s immigrant population faces one of the highest uninsured rates in the state. In a recent survey of over 5,000 immigrants in Washington, 87% of respondents reported a lack of health coverage. Washington legislators can correct this egregious inequity by carving out funds in our state budget for a Medicaid look-alike or subsidies for undocumented immigrants.
The arc of federal progress is wide – but it moves at a snail’s pace and is dependent on the political climate and whims of federal leaders. Washingtonians deserve affordable health care, regardless of income, race, gender, or immigration status. Are Washington leaders ready to build on federal progress and take bold action for health equity?
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