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The Covid-19 relief package proposed by President Joe Biden and being considered by Democrats in Congress could expand health care coverage to millions of people, the most significant step in the last 10 years toward patching up some of the holes in the Affordable Care Act.
The ACA led to a historically low uninsured rate in the US — 8.6 percent in 2016 — but the number of uninsured Americans started ticking up again during the Trump administration, rising to 9.2 percent by 2019. Then millions of people lost their insurance (along with their jobs) during the coronavirus pandemic.
The Covid-19 relief plan is trying to move the rate back in the other direction. The most effective provision would be a two-year expansion of the ACA’s premium subsidies, which Americans can use to purchase private health insurance on the marketplaces the law established.
The House version of the Covid-19 relief bill would increase the size of the subsidy for those already eligible for assistance (people making between 100 and 400 percent of the federal poverty level). It would also extend subsidies for people earning more than 400 percent of the poverty level, ensuring that nobody would pay more than 8.5 percent of their income for health coverage.
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This would provide help to one of the populations left out of the ACA: the roughly 2.6 million people who make too much money to qualify for subsidies and are currently uninsured.
Based on prior estimates of such a proposal, somewhere between 4 million and 5 million people would be expected to gain coverage as a result of expanding the subsidies. The Biden administration has already opened ACA enrollment to everybody until May 15, which would give people an immediate opening to take advantage of the new benefits.
However, there is a catch: The subsidy expansion expires after two years.
The reason appears to be twofold. One, Democrats say they want this package narrowly focused on the Covid-19 pandemic. Two, Democrats are using the budget reconciliation process with the aim of passing the bill without any Republican votes, so they need to be mindful of how much the bill costs. Extending the subsidies permanently would raise the price tag.
But the two-year limit creates an expiration date for these new benefits. To avoid it, Democrats would need to either permanently extend the subsidies in another reconciliation bill later this Congress, or find another way to make them permanent in the next two years to prevent millions of people from losing coverage if the assistance is allowed to lapse.
So the Democrats’ Covid-19 relief bill will deliver important and immediate help to uninsured people in the middle class. Helping uninsured Americans living in poverty, the other big gap in the ACA, is going to be more difficult.
The ACA was supposed to extend Medicaid eligibility to all people in poverty. But the Supreme Court ruled that states could not be forced to expand Medicaid, and a dozen GOP-led states have refused to do so. That has left about 2 million people uninsured, with no other realistic option for affording health insurance.
There is no easy fix for covering those people. During the presidential campaign, Biden proposed creating a new government insurance plan that would automatically enroll them — a public option — but that is not being proposed as part of the Covid-19 relief legislation, and it may not be permissible under the budget reconciliation rules.
Under the Covid-19 relief bill, if a state expanded Medicaid now, it would receive a 5 percent bump in federal funding for its traditional Medicaid population for the next two years.
Because many more people are covered by traditional Medicaid than by the expansion, that funding bump would be expected to more than cover the 10 percent share states are asked to pay for Medicaid expansion under the ACA. It’s a new way to sweeten the expansion deal, which already comes with a permanent 90 percent federal match for expansion enrollees, for the holdout states.
In theory, that would be a way to cover 2 million more people and provide help to another group left out of the ACA. But Republican states have refused expansion as much because of their ideological opposition to the health care law as they have because of the specifics of financing it. Health policy experts sound skeptical that the incentive Democrats are including in their Covid-19 package will be sufficient to change the states’ minds.
Even with this big incentive, my guess is few of the 12 states that have not expanded Medicaid will change course. That's partly because the incentive is temporary.
— Larry Levitt (@larry_levitt) February 11, 2021
That will leave over 2 million uninsured poor people with no options, which is a big gap in our health system. https://t.co/tTcRn7cYkS
The Covid-19 relief bill does include other improvements to Medicaid, however, including new incentives for states to expand home and community-based services, assist the elderly and disabled populations that may have been particularly hard hit by the pandemic, and cover postpartum care for new mothers for 12 months.
Completing the work of universal coverage, which is what Biden’s campaign platform amounted to, will almost assuredly not be accomplished in the president’s first big legislative package. Democrats will likely face a lot of pressure from progressives to go bigger in the next reconciliation bill they pull together.
But this is, nevertheless, a start.
