Just The American Rescue Plan Fixing Obamacare Premiums And Medicaid Expansion, No Big
Making the Care Act Affordable again.
Time for more of our ongoing coverage of what neat stuff is in the MONEY FOR 'MERICA, PLS JOE BIDEN Act, aka the American Rescue Plan bill that House Democrats will pass today after Republicans get some petty obstructionism out of their system. Along with the relief checks to most Americans, the bill will do a bunch of other great things, like cutting childhood poverty by half and making a start at long-overdue justice for Black farmers. And while Democrats were at it, they also added a couple of much-needed repairs to the Affordable Care Act, aka Obamacare, that will help that 2010 law better live up to its name. Yes, that's right, the law's ears will now stick out more.
No, hold on — the COVID rescue plan will make the ACA's private insurance plans actually affordable, by adjusting the formula for who can get premium subsidies and increasing the amount of those subsidies. And another provision in the new law will provide a huge financial incentive for the 12 states that have still refused to expand Medicaid to do so, too. As Los Angeles Times financial columnist Michael Hiltzik points out, these are the first major reforms to the ACA since it was passed. Seems appropriate to us, not only because the pandemic has made health coverage more vital than ever before, but also because after the Trump administration, we might finally be done with GOP efforts to eliminate the health law. Assuming, that is, that the Supreme Court doesn't do something nuts like throw the law out altogether.
Hey, congressional Dems, how come you didn't include a line in the rescue bill to restore a tax penalty, maybe one dollar, for people who don't buy insurance? Yr Wonkette is not a lawyer, but wouldn't that pretty much make the Texas lawsuit against the ACA vanish in a puff of logic? No problem, you can still put it in the infrastructure bill. You're welcome!
Now, one big limitation of both the fixes is that, to meet the budget constraints needed to pass through reconciliation, they're set to sunset in two years, but once in place, tweaks like this tend to be made permanent by later Congresses, because people like having reliable programs.
As Hiltzik notes , the big change on ACA premiums solves one of the problems that people had with the original formula for premium subsidies: Once you reach a particular income level — 400% of the poverty line — the subsidies vanish altogether, and suddenly you're paying a hell of a lot more for the coverage. And even with the subsidies, a lot of families still had trouble affording insurance:
The original ACA subsidies were designed to cap premiums on a sliding scale ranging from 2.07% of income (for those earning 138% of the federal poverty line) to 9.83% of income (for those at 400% of the poverty line).
The subsidies were pegged to premiums for the benchmark silver plan — the second-cheapest silver plan in any given jurisdiction.
For a family of four earning $100,000, then, the benchmark plan wouldn't cost more than $9,830 per person. For middle-class families, that's still a daunting figure, since four policies could cost almost $40,000 in premiums alone.
With most previous big programs, like the early years of Medicare, legislative tweaks to fix problems like that were pretty common, but for a decade, Republicans wanted to destroy the ACA, not make it work better.
The new rules for ACA subsidies will make insurance more affordable at both ends of the economic spectrum by getting rid of that "subsidy cliff" altogether:
Under the new measure, no one would have to pay more than 8.5% of income for a benchmark silver plan. Additionally, subsidies would be increased across the board.
Those earning from 100% to 150% of the poverty line ($26,500 to $39,750 for a family of four) would go from a maximum premium of 4.14% to zero premium. Those earning twice the poverty threshold would move from a maximum outlay of 6.52% of income to 2%.
The Congressional Budget Office estimates that for a 64-year-old earning $58,000, or 450% of the poverty line, the subsidy would go from zero under the old law to $7,950 under the new.
The plan to nudge the dozen states that have so far refused to expand Medicaid into finally doing it is also pretty neat, and might even work, depending on how stubbornly red states insist on refusing a tidy influx of federal money. The original Obamacare arrangement was that, for low-income folks, Medicaid would cover everyone up to the income level where they would be able to get subsidized insurance on the exchanges. But the Supreme Court had to go and say Medicaid expansion was optional, so a lot of red states refused to expand Medicaid, even though the federal government picked up 100 percent of the cost initially, which later went to 90 percent of the costs.
The relief bill dangles a great big incentive for states that have been holding out to own the libs and punish the poors: An analysis by the Kaiser Family Foundation (KFF) found that if all the holdout states accepted this offer, four million people who previously had no health insurance would be covered. And the states would make out pretty well, too. The math should be very attractive: The total cost of Medicaid expansion for all 12 states — their 10 percent share — would come to $6.8 billion over two years, with the feds picking up the other 90 percent. But then there's a five percent increase in the federal "match rate" that would come to $16.4 billion if they all opted in. That's a net gain of $9.6 billion over the two years.
Put another way, new federal funds under the 5 percentage point bump are more than two times larger than new state expansion costs; this ratio varies slightly across states, from more than one a half times larger in Texas to over four times larger in South Carolina
Individual states would see a lot of new federal money coming in, as Hiltzik 'splains, citing the KFF figures:
Texas would spend less than $3.2 billion on expansion but gain more than $5 billion from the increased share; Florida would spend $1.26 billion on expansion and collect $3.08 billion in return.
Hiltzik calls that an offer that "red states can't refuse, unless their political leadership is terminally dense," although he does acknowledge that some Republican governors or legislatures might well be mulish enough to refuse a pile of much-needed revenue just to spite the poor, not to mention those nasty commie socialist do-gooders in Washington. But as we saw in Georgia, people who are sick of Republicans and their fuckery can be mobilized to tell them where they can go, too.
Here, have all our What's In the Rescue Plan? posts
It's really a big heckin' deal, isn't it?
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