There’s new Affordable Care Act news! Beyond Sen. Ron “Genius” Johnson (R-WI) calling for it to be repealed if the Republicans win back Congress, and then walking it back because all of a sudden he remembered what happened last time. That was great, because it really demonstrated just how dead Obamacare repeal is now. He about-faced on that suggestion so fast and to such great lengths as to make one thing even Ron Johnson won’t be trying that again.
But the actual news is pretty great, too. The Office of Management and Budget (OMB) is reviewing a rule to fix one of the long-standing problems in Obamacare: the “family glitch.” It’s good because it’s been a needed fix for nearly a decade now, and it’s good because it’s demonstrating that President Joe Biden is willing to start dealing with some of this stuff through executive action—not making himself a hostage to Sen. Joe Manchin of West Virginia when it comes to critical policy changes.
The “family glitch” was created by the IRS in regulations issued in 2012. The law provides tax credits to lower- and middle-income people to help pay for insurance, but if they have access to coverage from other sources, they can’t get those subsidies, provided the alternate coverage is “affordable.” That cap was set at 9.83% of household income, meaning that if they would have to spend that much or more on their share of their employer-sponsored coverage, they would qualify for ACA subsidies. The problem arose when the IRS interpreted the provision in the law to apply only to self-coverage, not what the premium would be for dependent coverage through an employer.
What that meant in practice is that someone opting for self-only coverage through an employer would pay an average of $7,470 per year, while the employee part of the coverage would cost $21,342 for the average family every year. Employers, on average, cover 83% of the cost of insurance for single coverage, but just 73% on average for family coverage. That puts about 5.1 million people into the family glitch, with a majority of them being children. Well, it did, until the American Rescue Plan passed.
The American Rescue Plan helped with that—not by eliminating the glitch but by providing expanded subsidy availability for 2021 and 2022. It increased the subsidy eligibility to people making above 400% of poverty and lowered the affordability threshold to 8.5% of income for premium contributions, extending subsidy eligibility to most of the families that fall into the glitch. The Build Back Better plan that Manchin has so far killed would have extended that expanded subsidy availability. Note that, after 2022, that expanded eligibility ends.
Which means it falls on the Biden administration to make the fix, by redefining “affordable” when it comes to the part of an insurance premium the employee is expected to pay. The IRS was directed last year “to review all existing regulations and other agency actions to determine whether the actions are inconsistent with the policy to protect and strengthen the ACA and, in particular, review policies or practices that may reduce the affordability of coverage or financial assistance for coverage, including for dependents.” They’ve done that, and now OMB is reviewing the proposed new regulations to fix it.
Health policy guru and executive vice president for health policy at the Kaiser Family Foundation Larry Levitt tweeted about how big of a deal this is. “Fixing the ACA’s family glitch may be the most consequential thing the Biden Administration could do without Congress to make health insurance more affordable,” he wrote.
It’s just one of the executive actions Democrats in Congress are calling for to get around the Manchin block in the Senate to help American families.
Rep. Pramila Jayapal (D-OR WA -- thanks to commenters who noticed the error.) who heads up the Congressional Progressive Caucus is urging this action, as well as executive actions to cap the price of insulin and change overtime eligibility rules to increase wages for millions of workers. Rep. James Clyburn (D-SC) is pushing for actions to protect voting rights, and Rep. Raul Ruiz (D-CA), chair of the Congressional Hispanic Caucus, is urging that the cap on refugee resettlement be hiked. A very large group of Democrats—including Senate Majority Leader Chuck Schumer—has been pushing Biden to forgive at least a portion of student loan debt.
Making health insurance more affordable for millions is big. It’s great. There are several dozen more executive actions Biden can take to help Americans on climate change, immigration, labor issues, access to health care, cannabis, and more. If Manchin’s not going to help or get out of the way, it’s time for Biden to just steamroll over him and act.
Crossposted from Daily Kos.
