President Biden and Congressional Democrats campaigned on improving and building on the Affordable Care Act (ACA), and the President and Democratic Congressional Leaders did just that through the enactment of the American Rescue Plan (ARP) back in March 2021.  

In particular, ARP effectively increased the ACA premium subsidy amounts. ARP also eliminated the income limitation on premium subsidy eligibility so consumers at any income level could access a premium subsidy if they purchased an “individual” market plan through an ACA Exchange. In addition, ARP allows unemployed individuals to enroll in a $0 Exchange plan.  

These ACA “enhancements,” however, are only temporary. For example, the (1) increased premium subsidy amounts and (2) expanded premium subsidy eligibility are only available through the end of 2022. Also, the provision assisting unemployed individuals is only available through the end of 2021.  

However, days after the enactment of ARP, President Biden and Congressional Democrats promised that they would spend the rest of this year working to make permanent – or at least extend – all these ACA “enhancements.” 

Efforts to Extend These ACA “Enhancements” In the Build Back Better Act 

Over the course of the Summer, the White House and Congressional Democrats have been developing legislation that would establish and fund a number of social safety net and climate change-related programs. Embedded within this legislation are provisions to extend (for multiple years) the ACA “enhancements” enacted through ARP.  

Recently introduced legislative text for the Build Back Better Act (BBBA) extends the (1) increased premium subsidy amounts and (2) expanded premium subsidy eligibility for an additional three or four years, through the end of the 2025 or 2026. Similarly, the provision allowing unemployed individuals to enroll in a $0 Exchange plan would be extended through 2025, if enacted into law. 

Additional Efforts to “Improve” the ACA Through the BBBA 

Importantly, the BBBA goes even further than simply extending ARP’s ACA “enhancements.” The BBBA would also do the following:  

  • Individuals With Income Below 100% of FPL: The ACA’s premium subsidies would be available to individuals whose income are below 100% of the Federal Poverty Level (FPL). This means that low-income individuals in States that have NOT expanded their Medicaid program would now be eligible for a premium subsidy if these individuals purchase an “individual” market plan through an ACA Exchange. 
  • Employees With Income Below 138% of FPL: Employees with income below 138% of FPL would be eligible for a premium subsidy even if these employees are offered an “affordable” employer-sponsored health plan. In addition, the spouses and dependents of employees with income below 138% of FPL would ALSO be eligible for a premium subsidy. Under current law, if an employee is offered an “affordable” employer plan, the employee is NOT eligible for a premium subsidy. In addition, the well-known “family glitch” prevents spouses and dependents of an employee offered an “affordable” self-only employer plan from accessing a premium subsidy. If the BBBA is enacted into law, the “family glitch” and the “affordability” test would be effectively eliminated for low-income employees. Note: employers would also NOT be required to pay the “employer mandate” penalty tax if any of their employees with income below 138% of FPL actually access a premium subsidy.  
  • The “Affordability” Percentage Threshold for Employees: For at least 2022 through 2025, employees would be able to access a premium subsidy if the cost of the employee’s portion of a self-only employer plan exceeds 8.5% of their income. Under current law, employees must be required to pay more than 9.83% of their income toward an employer plan to be eligible for a premium subsidy. Note, if and when this 8.5% threshold snaps back to current law starting in 2026, this threshold would no longer increase each year (i.e., there would be no indexing in future years starting in 2026). 

Enactment of the BBBA Means Millions of New Exchange Enrollees 

The Congressional Budget Office (CBO) – a non-partisan agency that is responsible for estimating coverage gains or losses – has yet to officially estimate how many individuals would purchase an ACA Exchange plan if the BBBA is enacted. However, CBO has provided estimates of prior versions of the proposals discussed above. 

For example, when analyzing the proposal to allow individuals whose income are below 100% of FPL to access a premium subsidy, CBO estimated that roughly 2.3 million more individuals would purchase an Exchange plan each year starting in 2022, 2023, and 2024. Note, this additional annual increase of 2.3 million people would be concentrated in the 12 States that have not yet expanded Medicaid in accordance with the ACA. 

When analyzing a proposal to make permanent (1) the increased premium subsidy amounts and (2) the expanded subsidy eligibility, CBO estimated that an additional 3.4 million people would purchase an Exchange plan over 10 years. However, since the BBBA’s proposal only extends these “enhancements” through 2025, this estimate is likely to go down, but it is reasonable to suggest that the number of new Exchange enrollees would still be in the millions. This is especially true when we look to the end of the public health emergency (PHE) when we will see Medicaid redeterminations resume, resulting in disenrollment of potentially millions Medicaid beneficiaries. But, more to come on that later.   

With respect to the proposal to offer unemployed individuals a $0 Exchange plan, CBO estimated that about 500,000 individuals would newly enroll in an Exchange plan each year starting in 2022, 2023, 2024, and 2025. CBO also estimated that 300,000 more individuals would purchase an Exchange plan over a 10-year period if the “affordability” threshold is reduced to 8.5% of income, but this number will be less because the BBBA sunsets this proposal at the end of 2025.  

When Will the BBBA Get Enacted? 

That is the $1.75 trillion question. While President Biden and Congressional Democrats are committed to enacting this legislation, there continues to be disagreements over the details of particular proposals, including various tax provisions, paid family leave, and the extent to which the Federal government can negotiate the price of prescription drugs. These disagreements – in addition to concerns about the overall cost of the legislative package – have led to multiple delays of multiple scheduled votes to move the legislation along.  

Fortunately for the health care proposals discussed above, there appears to be very little disagreement. As a result, as the sausage-making process continues to churn on, we are optimistic that little if any changes will be made to these proposals. We are currently assuming that Congressional Democrats will be able to come to a final agreement and deliver the BBBA to the President’s desk by the end of 2021. But only time will tell…