COVID-19 aid insurance language splits experts on necessity, scope
WASHINGTON – Democrats’ legislation to extend economic aid amid the pandemic is sparking debate over the scope of its insurance provisions and whether they belong in a COVID-19 relief package.
Critics say the provisions’ $52.8 billion price tag is far too high to justify the 1.9 million uninsured individuals that the Congressional Budget Office expects will gain coverage through the insurance exchanges and health care benefits for unemployed workers. By comparison, the Kaiser Family Foundation estimates that 14.9 million people are already eligible for coverage through the exchanges alone.
But proponents argue the language also reflects Democrats’ broader priorities on improving affordability for existing enrollees and helping people retain coverage they have not yet lost.
“This is clearly being written in the context of a Covid-relief stimulus bill, so it is stimulative,” said Loren Adler, associate director of the Usc-brookings Schaeffer Initiative for Health Policy. “It is a way to give people money that they would otherwise have been spending on health insurance, which has a stimulative purpose above and apart from your kind of standing affordability arguments.”
The reconciliation language would lower the costs of exchange insurance for a wide range of consumers.
The provisions would fully cover insurance premiums on the exchanges for people with income of up to 150 percent of the federal poverty level. It would revoke a cap on premium tax credits for households making more than 400 percent of the poverty level for 2021 and 2022.
The cost of premiums would also be capped at 8.5 percent of household income, and full tax credits would be extended to recipients of unemployment benefits for the two-year period. Tax credit recipients, meanwhile, would not be required to repay any excess credits for the 2020 tax year.
Additionally, the bill would cover 85 percent of the cost of continuing employer coverage for workers who left or lost their jobs under the program known as COBRA through September, and open a 60-day enrollment window for those who dropped their COBRA plan or opted out.
The CBO estimates the COBRA provision would cost $7.8 billion, affecting 3 million new and current enrollees. Only 600,000 of those, however, would have been previously uninsured. That, combined with a lower number of job losses compared to the beginning of the pandemic, has some doubting its impact.
“We’ve already experienced most of the job losses of the recession,” Adler said, adding that there’s an additional information barrier for potential enrollees to overcome.
Republicans worry that the more generous premium tax credits on the exchanges could trigger employers to offload coverage for employees they have held onto throughout the pandemic.
Businesses with more than 50 employees would have to weigh the costs of violating the 2010 law’s mandate to offer coverage. But Brian Blase, who served on the National Economic Council under former President Donald Trump, said the size of the subsidies involved would dwarf tax benefits employers receive for providing insurance to their workers.
“The main issue is this proposal makes the premium tax credit a much, much, much better deal for more workers,” said Blase, who now runs Blase Policy Strategies. “So particularly for older, upper-income workers, these subsidies are really large.”
Experts on both sides of the aisle see the $1.9 trillion reconciliation package as the first step in making permanent changes to exchange subsidies in a second piece of legislation later this year, provided Democrats can offset the costs to comply with rules allowing them to bypass a potential Senate Republican filibuster.
A separate piece of the overall package, approved by Energy and Commerce, would also further incentivize 12 holdout states that did not expand Medicaid eligibility under the 2010 health care law to do so.
That would help individuals with income below the federal poverty line, who often are not eligible for either Medicaid in their state or the exchange subsidies.
Committees approved their portions of the reconciliation proposal last week, transferring the legislation to the Budget Committee to be combined into one package. The chamber is expected to vote on the package next week and send it to the Senate.