Larger ACA Premium Subsidies Are Covering Millions More: Here’s How Congress Can Make Them Permanent
Even as states and communities have increasingly re-opened and begun an economic recovery, the pandemic continues to take its toll on the country, with recent news reminding us it is far from over, especially in regions with lower percentages of their population vaccinated. Amidst this still quite unsettled situation, a majority of people name the cost of health care as an urgent issue that affects their daily lives.
According to a Pew Research Center poll just this spring, 56% of those surveyed describe health care costs as a “very big problem,” and 30% view it as a “moderately big problem.” When 80% of people identify something as a ‘big’ problem that impacts their daily lives, there is clearly broad agreement that something needs to change. More specifically, a Kaiser Family Foundation poll found that among all low-income people, 51% of Black people compared to 31% of white people reported having trouble paying for basic needs, including the cost of health care. The Biden administration agrees and names health care as a top priority in their budget framework, the American Jobs Plan and the American Families Plan.
The Change is Real.
Fortunately, change is already in the making. The American Rescue Plan made desperately needed improvements to the Affordable Care Act that significantly lowered the cost of coverage for low- and moderate-income earners. As the Supreme Court made clear just last month, the ACA Is the law of the land – further reinforcing the fact that strengthening the ACA is the quickest and surest pathway to getting people the coverage and health care they need.
Changes to the “affordability” scale, which determines how much financial help individuals and families can access to purchase health coverage on the marketplaces, have eliminated premiums for those under 150% of the federal poverty level (FPL) and reduced premiums significantly for everyone else currently eligible for premium tax credits. Further, the American Rescue Plan ends the “subsidy cliff,” under which a small change in income such as a raise or promotion previously could result in a large premium spike. This provision is particularly important for middle-age and middle-income adults who now face very high premiums as soon as their income crosses the 400% FPL threshold.
Simply put, it means that a small business owner who relies on Marketplace coverage will feel significant savings – upwards of $200 a month, and be shielded from a subsidy cliff when their income rises, according to Kaiser Family Foundation. For those working low-income jobs, disproportionately Black and brown women, there are no premiums, increasing the likelihood that this population can acquire and maintain coverage. Recent data from HHS is even more telling, highlighting that “the median deductible for consumers new to the Marketplace since February 15 fell by 83%, from $450 prior to April 1 to $75 for consumers new to the Marketplace selecting a plan from April 1 through May 31.”
Unfortunately, these changes expire in two years. Even before the pandemic, health care was out of reach for far too many. The American Rescue Plan changes are significant and since the Biden administration introduced a special enrollment period to promote the new tax credits, more than 2 million people have signed up for ACA Coverage or Medicaid. Many of the enrollment gains are among people of color – for those reporting race, enrollment is up from 11% in prior years to 15 percent for Black people, and similarly, 16% to 18% for Latino people in Marketplace plans.
The solution is simple.
As the conversation starts to turn to what else needs to be done as well as how to pay for what is already being promised, there is one important “pay-for” that can help offset some of the infrastructure investment while also helping older people and people with disabilities. There is a solution that is simple, concrete and has the support of Congress and the administration and responds to the public’s demand for lower health care costs. Importantly, this pay-for is within the health care space.
The Trump administration finalized changes to a drug rebate rule at the end of 2020 that imposes significant costs to the federal government and harms older adults and the Medicare Part D (drug coverage) program, overall. According to the Congressional Budget Office, the rule would both increase people’s Medicare Part D premiums and saddle the program with $200 billion in new costs. Currently, the Biden administration has taken steps to delay its implementation. Congress can intervene and overturn the rule, saving taxpayers approximately $200 billion. So where should Congress direct the health savings? The answer is clear: permanently extend the American Rescue Plan’s ACA premium tax credits.
Marrying a cost-saver with a broadly popular and critical policy that promotes economic and health security is a no-brainer. As over 2 million people have taken steps to enroll in ACA marketplace plans just since the spring – and nearly 10.4 million individuals, a 14.7% increase, have enrolled in coverage between the start of the COVID-19 public health emergency in February 2020 and the present – it is abundantly clear that these new changes are fulfilling a critical need and having the intended effect – more lives are being covered.
Congress can take steps today to take this priority off the table and move on to other important priorities regarding health coverage affordability, access to benefits and high quality, equitable care. The agenda is broad and important – from addressing high cost-sharing that remains an issue for low-income people in particular, and the range of benefits people have access to from dental coverage, substance use disorder and mental health services to postpartum coverage, regardless of state of residence. And let us not forget the almost 2.2 million people still without access to Medicaid coverage in states that have not yet closed the coverage gap by expanding Medicaid. Congress has its work cut out for it in this key moment when good policy is possible.
Congress must show the public what good governing looks like – here is an opportunity. Take it.