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On March 11, President Joe Biden signed into law his first major piece of legislation, the $1.9 trillion coronavirus stimulus bill dubbed the "American Rescue Plan."
Among the many spending provisions in the bill, significant funds are earmarked for expanding health coverage through the Affordable Care Act to help many middle-income Americans who didn't previously qualify for federal subsidies or increase the subsidy amount for some who did. The measure also increased aid for low-income Americans.
These provisions represent the biggest expansion of the ACA since the sweeping health law first passed in 2010 and are Biden's first step in fulfilling his campaign promise to improve and build on ObamaCare.
"That is definitely true," said Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University. "The only revisions to the ACA that Congress has made in the last 11 years have been to chip away at it."
Subsidies, or the tax credit amount the government provides individuals to help pay for their ACA health insurance plans, are calculated based on the person's income, age and their area's average premium costs. Originally under the ACA, subsidies were only provided to those making between 100% and 400% of the federal poverty level (in 2021, that was between $12,760 and $51,040 for an individual).
The American Rescue Plan changes that calculation and sets eligibility for anyone whose marketplace plan would be more than 8.5% of their income. That is expected to increase subsidies to middle income customers.
And many people who are close to the federal poverty level who have been paying a small amount of their income to help cover their premium costs may be able to get the entire cost of their health plan covered.
The Kaiser Family Foundation estimated that these enhanced subsidies could help lower premium payments for nearly 15 million uninsured people and 14 million people insured through the individual market — though it's unclear how many will actually take advantage of the decreased premiums. The Congressional Budget Office estimated that the original House version of the bill would decrease the number of uninsured Americans by 1.3 million.
However, these additional subsidies will only be in effect through 2022, though there is the possibility that Congress could pass legislation to make the subsidy expansions permanent.
The American Rescue Plan also includes more generous financial incentives than already exist for the states — there are 12 — that didn't previously opt to pursue the ACA's expansion of Medicaid, the insurance program for low-income individuals.
Still, while the American Rescue Plan fulfills the criteria of expanding the ACA, it represents just a small part of what Democrats and Biden have said they want to do to make health insurance better and coverage affordable for all Americans.
For example, the legislation doesn't address a problem known as the family glitch, where a family is determined to be ineligible for subsidies based on an individual having access to e job-based coverage that is deemed affordable for an individual, rather than the whole family.
"As consequential as this bill is, it does not fill all the gaps that remain in our health care safety net. More work is needed to improve affordability and expand coverage," Corlette wrote in an email. "So I would expect the Biden administration will be rolling out more policies to fulfill that campaign promise, for both Congress and the executive branch."
Separate from the ACA, the covid relief law also includes subsidies for those who are unemployed and choose to extend their health coverage through COBRA — a federal program that allows recently unemployed people to purchase private insurance coverage from their former employers. This type of insurance is expensive, so the law's promise to pick up 100% of the cost of this coverage will significantly help those out of work, including people who lost their jobs as far back as March 2020.
The COBRA subsidies are also temporary — they will only be in effect for six months from April through the end of September.
We rate this promise In the Works.
Congressional Budget Office, "Cost Estimate - Reconciliation Recommendations of the House Committee on Ways and Means," Feb. 17, 2021
Email interview with Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University, March 11, 2021
Health Affairs, "The Family Glitch," Nov. 10, 2014
KHN, "Pandemic Aid Package Includes Relief From High Premiums," March 9, 2021
The New York Times, "Pandemic Relief Bill Fulfills Biden's Promise to Expand Obamacare, for Two Years," March 8, 2021
WMFE 90.7 FM, "American Rescue Plan Includes 100% Coverage Of COBRA Health Premiums," March 10, 2021