Affordable Care Act subsidies likely to increase under congressional plan

The ideas have been adopted in the past year by the Democratic-led House but had no chance of becoming reality until the Senate and the White House shifted last month into Democratic hands. Now, the committee’s plan — or something similar — is widely anticipated to become law, marking the first time since the ACA came into existence 11 years ago that the government would be adjusting the law’s subsidies, which some policy analysts have consistently criticized as too small to be useful for some people struggling to afford health coverage.

Increasing ACA subsidies and widening who can get them would represent a first step by Congress to embrace President Biden’s credo of using the sweeping — and politically polarizing — law as the main tool for improving the nation’s health-care system.

Some aspects of Biden’s health-care plans from his campaign are controversial even within his own party, such as a proposal to add a new government insurance alternative to compete with private health plans sold through ACA insurance marketplaces. The greater use of subsidies, however, is a strategy that has consensus support among House and Senate Democrats, from liberals to moderates, though it is opposed by most Republicans.

In starting with subsidy adjustments, the powerful Ways and Means Committee is essentially saying that, because of the pandemic, “the American people are in a world of hurt right now, and they need help right now,” said Stan Dorn, a longtime health-policy specialist and senior fellow at Families USA, a liberal consumer health group. “Let’s take those steps that the vast majority of health-care stakeholders support . . . and at some later point we can revisit these broader philosophical questions,” including Biden’s campaign plans for a public insurance option and lowering the age at which Americans can join Medicare to 60.

According to a White House official, who spoke on the condition of anonymity to discuss private conversations, the administration is in close contact with the House and Senate as the chambers draft pandemic relief legislation. The official said the ACA subsidies in the Ways and Means plan are consistent with ideas Biden laid out in what the White House calls the American Rescue Plan he has proposed.

According to Congress’ Joint Committee on Taxation, the changes would cost $52.6 billion. Another $6.3 billion under the plan would eliminate reimbursements people with ACA health plans ordinarily would be required to pay if they misjudged how much income they expected to earn in a year — and thus were given larger subsidies than they deserved.

As Ways and Means began considering its relief legislation Wednesday, chairman Richard E. Neal (D-Mass.) noted that the increased ACA subsidies would be accompanied by an increase in federal help in affording COBRA benefits, a type of insurance that laid-off employees from certain companies can purchase. They and other aspects of the committee’s relief package “will give Americans a sense of security in a time of overwhelming uncertainty,” he said.

Neal pointed out that the health-insurance proposal comes in tandem with the first action the Biden White House has taken to broaden access to coverage, including for the millions of Americans who have lost health benefits as their jobs were swept away by the pandemic’s economic ripple effects. Two weeks ago, the president ordered the reopening of the ACA’s federal insurance marketplaces for three months to give people who need coverage during the pandemic an extra chance to buy health plans.

ACA health plans were created under the 2010 law for individuals and families who cannot get affordable health benefits through a job. During the Trump administration, the window for buying insurance through HealthCare.gov, an online insurance-buying system, was narrowed to six weeks near the end of each year.

The new enrollment opportunity will run from next week through May 15. If Congress adopts the increased subsidies for monthly premiums during that time, the change “would kind of supercharge the new enrollment period,” said Larry Levitt, executive vice president of the Kaiser Family Foundation, a health-policy research group. Levitt has suggested previously the new enrollment period was a “very partial step” and predicted it might not attract many customers because the health plans were not affordable to everyone eligible for them.

The Ways and Means proposal would make a significant change by ending a rule that made the premium subsidies unavailable to consumers with incomes more than about $51,000 for an individual and $106,000 for a family of four — 400 percent of the federal poverty line.

For the first time, people in that middle-class group could qualify for help paying for premiums to ensure that they did not pay more than 8.5 percent of their income toward a health plan.

And at the low end of the income scale, federal subsidies would fully cover premiums for people with incomes of up to about $19,000 for an individual and nearly $40,000 for a family of four — 150 percent of the poverty level.

For income tiers in between, the subsidies at each tier would be larger than they are now.

These subsidy adjustments would be temporary, for 2021 and 2022.

Other changes, aimed at Americans who have lost jobs because of the pandemic, would be just for the current year, anticipating that the economy might improve if covid-19 fades after 2021.

One change would provide substantial ACA subsidies to anyone who is receiving unemployment insurance. The other would raise federal subsidies for COBRA, which tends to be expensive. The proposal would provide subsidies amounting to 85 percent of premiums through that program.

“The ACA has never done a good job of taking people who lost a job and getting them health insurance,” Dorn said. “This bill takes a more serious effort than we’ve ever done in our history to provide health insurance to people who lose their jobs.”

Republicans, who are in the House minority, remain opposed to the committee’s proposal, as they were when the House passed elements of it in individual bills last year. In his opening statement as the committee began debating its relief bill, Rep. Kevin Brady (R-Texas), Ways and Means’ ranking Republican, criticized what he called “higher subsidies for the failing Obamacare program.” And he derided the larger subsidies for COBRA insurance, contending they would be “another incentive to stay home, rather than rejoin the workforce.”

Dorn said the adjustments to ACA subsidies would put the federal help in line with financial help for insurance provided by Massachusetts and New York — two states whose generous assistance with health plans for some people has resulted in relatively few uninsured residents.