Bigger Tax Credits, More Medicaid Expansion Would Make Health Coverage More Accessible and Affordable

The health provisions that House committees are considering this week would make comprehensive health coverage more affordable and accessible for millions of people during the current crisis. In particular, proposals to expand and deepen premium tax credits that subsidize marketplace coverage and to boost financial incentives for states to adopt the Medicaid expansion would be a sizable step forward in improving affordability and reducing the ranks of the uninsured. Relief enacted thus far has omitted provisions to extend health coverage or make it more affordable, and policymakers now have an opportunity to address this gap.

Comprehensive health coverage is important under any circumstances because it improves access to care, financial security, and people’s health outcomes when they get sick. But preserving and extending coverage is even more important now because it helps shield families from COVID-19’s financial hardships and supports public health efforts, easing people’s access to testing, treatment, and vaccines. Those who have low incomes or are uninsured, in particular, have faced unprecedented challenges.

The House provisions would:

• Eliminate or vastly reduce premiums for many people with low or moderate incomes who enroll in plans through the Affordable Care Act (ACA) marketplaces. For example, a single individual making $18,000 would pay zero net premium rather than $54 per month and would qualify for the most generous cost-sharing subsidies (which reduce deductibles and co-payments). And a family of four with income of $110,000 would see their premiums for the average benchmark silver (second-lowest-cost) plan cut almost in half, by $666 per month. Instead of paying $1,445 per month in premiums for benchmark coverage, or nearly 16 percent of their income, the family would pay $779, or 8.5 percent of their income, with the premium tax credit making up the difference.
• Provide new help paying premiums to people with somewhat higher incomes who face high premium burdens. For example, a typical 60-year-old making $60,000 would see their premiums cut by more than half, or $535 per month. Instead of paying $960 per month in premiums for benchmark coverage, or 19 percent of income, the consumer would pay $425, or 8.5 percent of income. A family of four making $50,000 would pay $67 rather than $252 per month for the benchmark plan with a sharply lower deductible and other cost sharing.
• Protect marketplace enrollees, especially those whose income fluctuated last year, from having to repay the federal government for large portions of their premium tax credits. Under current law enrollees must pay back some or all of the credit they get in advance if their year-end income is higher than they estimated. The bill would eliminate these repayments for low- and moderate-income households if their 2020 income ended up higher than they predicted when they signed up for marketplace coverage. This could have happened if they got a better job part-way through the year or worked an essential job that demanded more hours than they anticipated because of the pandemic.
• Increase financial incentives for the 14 states that have not implemented the ACA’s Medicaid expansion to do so, providing critical coverage during the crisis. To help the states get expansion up and running, the bill would temporarily increase federal Medicaid funding for states that expand Medicaid within six months of the bill’s enactment. Nearly 4 million uninsured low-income adults could gain coverage if the remaining 14 states expanded Medicaid. Nearly 60 percent of them are people of color, and about 640,000 are essential or frontline workers.
• Enable people who recently lost their jobs to afford health coverage more easily. The bill would enhance premium tax credits for people who receive unemployment benefits in 2021 by setting their marketplace eligibility income at a projected income level that guarantees they get the most generous premium tax credits if they enroll in an ACA marketplace plan, irrespective of their year-end income. The bill would also provide federal funding to cover 85 percent of the cost of people’s premiums for “COBRA” coverage from one month after enactment of the bill through September. COBRA coverage lets people who have job-based health coverage retain it for up to 18 months after they lose their jobs, but people typically pay the full premium themselves.
• Strengthen Medicaid coverage with several other provisions. They include increased federal matching funds to help more people with disabilities receive services in the community instead of in nursing homes; a new option for states to extend Medicaid or Children’s Health Insurance Program coverage to 12 months after childbirth for postpartum people; and allowing Medicaid to cover health care services during the 30 days before people leave jail or prison, to improve the coordination of health services — including COVID-19 treatment — as they prepare to return home.