Rescue Plan Could Have Lasting Impact On Health Care

The American Rescue Plan, the $1.9 trillion COVID-19 relief bill signed into law on March 11, could have a lasting impact on health coverage in the U.S., Manatt Health analysts said in a recent report.

In addition to providing funding to carry out the Biden administration’s COVID-19 response plans, the bill contains what Manatt called “the most significant changes to health care coverage and access policies since the passage of the Affordable Care Act.”

All of the health care coverage provisions in the bill are temporary. But many of them lay the groundwork for future policy discussions with the potential for lasting impact, Manatt said.

For example, the bill includes provisions that temporarily make ACA marketplace subsidies more generous and available to more Americans, including those in “middle” income brackets. The Department of Health and Human Services estimates that these provisions will reduce costs for existing enrollees and for 14.9 million uninsured Americans who are eligible for financial assistance.

These changes to the ACA marketplace are temporary, but they raise the question of whether Congress would seek to permanently modify these policies to avoid a coverage cliff, Manatt said. Other policies, such as incentivizing the dozen states that have not yet expanded Medicaid to do so, could permanently alter the coverage landscape if states adopt, and maintain, the Medicaid expansion.

Among the most important health care coverage provisions in the bill are:

• Enhancements to the advance premium tax credits available for individual insurance coverage purchased on the marketplace, including increased premium and cost-sharing assistance for Americans who receive unemployment insurance in 2021.
• Increased subsidies to make COBRA coverage available to people who lose employer-sponsored coverage.
• Time-limited Medicaid matching rate increase for states that adopt the ACA Medicaid expansion; and
• Establishment of an option for states to extend the period of time for which postpartum women are eligible for Medicaid or the Children’s Health Insurance Program.

The American Rescue Plan also expanded coverage of vaccines and COVID-19 treatment under Medicaid, abolished the cap on Medicaid rebates in the Medicaid Drug Rebate Program, and modified rebate obligations relating to COVID-19 treatments. It also provides significant funding to states and localities — $350 billion — to address the fiscal impact of COVID-19. These funds will serve many purposes, including mitigating state budget crises that could otherwise mean cuts to state-funded programs, including Medicaid.

The legislation also includes a targeted expansion of the Provider Relief Fund, allocating $8.5 billion for rural providers; additional funding for public health grants to address mental health and substance abuse and to provide maternal home visiting programs; and a handful of targeted Medicare policy changes.

Marketplace Subsidies

Among the most significant health care provisions of the American Rescue Plan are three temporary enhancements for advance premium tax credits available for individual insurance coverage purchased on the marketplace.

Zero Premium Coverage For People Who Receive Unemployment In 2021

Individuals who receive an unemployment insurance payment in 2021 would be eligible to receive premium tax credits that allow them to buy a silver-level plan with $0 premiums in 2021 and would be eligible for the maximum cost-sharing subsidies amount, regardless of their income. This includes individuals who are currently below the federal poverty level in the dozen states that have not expanded Medicaid. According to the Centers for Medicare & Medicaid Services, enhanced tax credits for consumers receiving unemployment compensation will be available starting this summer.

Enhanced Federal Tax Credits In 2021 And 2022

Financial assistance for people currently eligible for tax credits is increasing across all income levels and is extended to those above 400% of the poverty level (who have no other offer of affordable insurance) for the first time. The proposed subsidies do not cover individuals under 100% of the poverty level who fall into the coverage gap and who do not receive unemployment benefits in 2021.

Starting April 1, enrollees may update their application and reselect coverage before the end of the special enrollment period on May 15. If consumers do not reselect a plan during the enrollment period, the enhanced subsidies will be reconciled in their tax filing next year. State marketplaces are expected to release instructions in the coming days.

HHS estimates that increased subsidies under the revised affordability scale will reduce the cost of health care coverage for 9 million consumers currently receiving financial assistance on the marketplace. An additional 14.9 million uninsured people would be eligible for federal assistance if they choose to enroll in coverage, including 3.6 million uninsured Americans who are newly eligible for subsidies. Increased affordability with more financial assistance may prompt uninsured individuals who have forgone coverage in the past to enroll.

Proposed Premium Percentages by Household Income, Based on the Cost of Silver Plan

Eliminating Requirement To Repay Premium Tax Credit In 2020

In tax year 2020, individuals receiving tax credits will not be required to reconcile premium tax credits if their annual income increases during the year.

State-Based Marketplace Funding

In addition to the marketplace tax credits, the bill appropriates $20 million in grants for state-based marketplaces to modernize or update any system, program or technology to ensure compliance with ACA marketplace requirements.

Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].