Cheaper Affordable Care Act plans and COBRA coverage benefit Californians under stimulus law
The COVID-19 relief law signed by President Joe Biden will affect all Californians’ health care in some way, but it will be especially helpful to those hard hit by the pandemic.
Californians laid off during the pandemic could save thousands of dollars on health care costs. Many of those enrolled through Affordable Care Act marketplaces will also save thousands on premiums. And everyone should benefit from increased money for vaccine distribution and testing.
“This is health on multiple fronts. We all have an interest in ending this health crisis as soon as possible,” said Anthony Wright, the executive director of Health Access California, an advocacy organization for affordable health care. “This has a multi-pronged effort to get people the care and coverage they need to get us through a recovery.”
The law gives $7.5 billion to track, administer and distribute COVID-19 vaccines, which Americans have been able to receive for free. Another $46 billion goes to diagnosing and tracing coronavirus infections, and $2 billion will go toward buying and distributing various testing supplies and personal protective equipment.
Those who sign up for COBRA — health care plans for those who were recently laid off by their employer so they can continue receiving the same health care coverage — will not have to pay any premiums on their health care plans through Sept. 30 under the new law.
The new law also puts limits on how much middle-income Americans making just over $50,000 per year will pay for coverage for a mid-level plan through the Affordable Care Act marketplace.
That’s in addition to more money given to state and local governments, which Wright said in many cases will go towards keeping people housed and preventing possible cuts to benefit programs.
COBRA
There’s a huge amount of savings for Californians who have been laid off under the COBRA changes. Laid off workers have to pay the entirety of the premiums on COBRA plans, since their employer is no longer covering any of the premiums as a benefit.
About 1.5 million Californians were unemployed as of December 2020. However, use of COBRA is “sparse,” according to Wright, because of its prohibitively high cost.
The average premium for health care coverage of a single person in 2020 was $7,470 per year, and the average premium for family coverage was $21,342 per year.
“Many employers cover 80%, 90% or even 100% of the premium as a benefit, so suddenly you’re going from paying 20%, 10% or even 0% of the premium to the full cost,” Wright said. “The double whammy is this is at the time when you’ve lost your income, or at the very least had it reduced, so it’s when you’re least able to afford coverage in any form.”
But the law means the government would pay all of the premiums until Sept. 30. So laid-off employees who switch to COBRA won’t have to worry about the drastically increased cost of health care premiums.
Affordable Care Act premiums
One change in the stimulus bill would cap premiums for people who earn 400% of the federal poverty line — just over $50,000 per year for an individual — at 8.5% of income for a mid-coverage plan under the Affordable Care Act. Currently, there is no federal cap on premiums for those households.
That had created what experts referred to as an “affordability cliff,” meaning people who made less than that could more easily afford health care plans than those who made more.
That change lasts until the end of 2022, but Wright and other experts are hopeful Congress will extend it or make the change permanent.
“These subsidies are the first improvement on the Affordable Care Act since its passage,” Wright said. “So we hope that will continue.”
Medicare cuts
There is one possible drawback to health care in the law, but the implications still remain unclear. The law could trigger $36 billion in cuts to Medicare this year, due to laws about how Congress has to pay for bills.
The $36 billion in possible cuts to Medicare would first be shouldered by health care providers, not the patients directly.
It’s not clear where those cuts would come in, so it’s hard to say how the cuts would affect providers or patients, Wright said.
But historically, health care providers have a history of making up for lower revenue among Medicaid and Medicare patients by charging other patients more. Or certain health care providers could stop accepting Medicare patients due to lower cost reimbursements.
The government has also given billions of dollars in support to health care providers, many of whom had budget difficulties particularly in the early days of the pandemic.
But the Medicare cuts are not certain yet — Congress could pass a waiver to ensure the Medicare cuts don’t occur. The cuts are due to a rule — called the PAYGO Act — that corrects for additions to the federal deficit by automatically cutting funding from certain departments and programs.
This story was originally published March 13, 2021 at 5:00 AM.
.jpg)