What You Need to Know
- Premium tax credit changes could help unemployed people as well as
- The COBRA subsidy could last until Sept. 30, 2021.
- Private health insurers and plans could get about $50 billion in additional revenue.
House committees have approved temporary health coverage subsidy provisions that could briefly increase the number of relatively high-income people with private health coverage by 5.3 million.
The provisions could also increase health insurers’ and employer-sponsored plans’ revenue by about $52 billion, or by about $10,000 per additional coverage enrollee.
The proposals could have a major effect on:
- People with household income over 400% of the federal poverty level who buy individual or family coverage.
- People collecting unemployment insurance who buy individual or family coverage.
- People who use the COBRA coverage continuation rules to keep their employer-sponsored group health coverage in place after they leave their employers.
Analysts at the Congressional Budget Office (CBO) talk about the subsidy provisions in cost estimate reports for two new cost estimate reports for sections of a major new spending package — Senate Concurrent Resolution 5, a COVID-19 relief package set up in such a way that supporters can pass it through the “budget reconciliation process,” with support from just a majority of the members of the House and a majority of the members of the Senate.
The Reconciliation Recommendations
The CBO is a non-partisan body that helps members of Congress understand how legislation might affect federal finances.
Under the rules governing ordinary bills, COVID-19 relief package supporters would likely need 60 votes to get the package to the Senate floor. The Democrats and independents who caucus with the Democrats hold 50 seats in the Senate, and Vice President Kamala Harris can cast a vote to break ties.
One of the new CBO cost estimate reports covers a set of reconciliation recommendations approved by the House Ways and Means Committee Feb. 10 and Feb. 11.
A second CBO report covers a set of reconciliation recommendations approved by the House Education and Labor Committee Feb. 9.
Democratic House leaders say they hope to bring the entire Sen. Con. Res. 5 package to the House floor for a vote sometime next week.
The Premium Tax Credit Proposal
Affordable Care Act (ACA) premium tax credit subsidies now help about three-quarters of the 12 million ACA exchange program users pay for the private ACA exchange plan coverage they buy through HealthCare.gov or through locally run ACA exchange programs, such as Covered California and Connect for Health Colorado.
To hold down ACA tax credit program spending and keep the ACA exchange system from crowding out other forms of private health insurance, the Affordable Care Act limits access to ACA premium tax credit subsidies to people with household income under 400% of the federal poverty level. In 2021, that’s $51,520 for a one-person household in most of the United States, and $106,000 for a family of four.
Some states, including California, have added subsidies for people with income over 400% of the federal poverty level.
The House Ways and Means Committee is recommending that the federal government government increase premium tax credit subsidies for the people now eligible for ACA premium tax credit subsidies, and that the government suspend the 400% of the federal poverty level limit on access to the subsidies.
Under the committee proposal, the government would expect people in a household with income over 400% of the federal poverty limit to spend up to 8.79% of income on health coverage. The government would use premium tax credit subsidies to make up for the difference between the 8.79% limit and the actual cost of the coverage for relatively high-income ACA exchange plan users.
The CBO analysts give a 64-year-old with a $58,000 annual income as an example.
Under the current rules, typical exchange plan coverage for that individual would cost $12,900 per year, and the individual would get no help from the government with paying for the coverage
Under the new House proposal, the 64-year-old would get $7,800 in premium tax credit support per year and pay only $5,100 out-of-pocket for the coverage, according to the CBO analysts.
In a separate provision, House Ways and Means calls for the ACA premium tax credit system to treat any people who are getting unemployment insurance, and who make too much to qualify for Medicaid, as if they had household income of just 133% of the federal poverty level.