Congress could adopt several measures to expand health coverage and lower state Medicaid spending on expensive drugs as part of the latest pandemic relief package in the works.
The House Ways and Means Committee on Monday proposed a number of changes to make health plans purchased through ACA marketplaces more affordable to more people, mainly by temporarily increasing federal subsidies. The plan would subsidize coverage in 2021 and 2022 for higher-income people that don’t qualify for subsidies now. It would also boost subsidies over the next two years for lower-income people that already qualify for financial help and max out subsidies for anyone collecting unemployment benefits in 2021.
“Hospitals and health systems cannot truly fulfill our healing mission when so many Americans do not have health insurance. That is why we are helping lead the work of the Affordable Coverage Coalition and its critical call to expand financial assistance, enrollment outreach and options for Americans who lost or could lose employer-based coverage during the economic downturn and public health emergency,” American Hospital Association CEO Rick Pollack said in an email.
The committee also wants to block the Internal Revenue Service from clawing back money from people who underestimated their 2020 income and received too much in ACA subsidies. Senate Democrats last May proposed similar legislation that would apply in 2020 and 2021.
The move could prevent families from getting hit with a surprisingly large tax bill this year.
“Millions of low-income workers faced widespread financial instability and uncertainty from layoffs, changes to hours or shifts and unpredictable work schedules as communities closed down and reopened throughout the pandemic,” according to a Health Affairs blog post. “Workers might have seen their income unexpectedly boosted due to, say, unexpected hazard pay for essential workers, extra shifts to cover for coworkers who were out sick or in quarantine, the need to cash out retirement, a second job or even debt cancellation.”
Likewise, marketplace enrollees may not have understood that the IRS treats unemployment benefits as income when it determines their eligibility for premium tax credits. And while that’s been true since the ACA took effect, a far greater number of people filed for unemployment benefits in 2020 compared to previous years. Congress also temporarily boosted federal unemployment benefits—something many people may not have factored into their expected income. Experts say the Trump administration’s decision to cut back on outreach in recent years may have made the issue worse.
The House Way and Means Committee and Education and Labor Committee also want to subsidize 85% of premium costs for COBRA coverage for workers that get laid off or have their hours cut. If Congress adopts the plan, the subsidies will kick in the month after the law takes effect and last through September.
But the House Ways and Means Committee “proposal does not do everything that has been in prior ACA enhancement legislation or in the Biden campaign platform. It does not, for instance, fix the ‘family glitch,’ tie the ACA benchmark plan to a gold plan (as opposed to the current silver plan), fund state initiatives, bolster outreach and enrollment funding or adopt a public option,” the Health Affairs blog post said.
Congress could also take steps to increase the number of people with Medicaid coverage. The House Energy and Commerce Committee on Tuesday said it wants to rincrease the base federal match for nonexpansion states by 5% to encourage them to expand their Medicaid programs. The increase would only apply to states’ nonexpansion populations. States that choose to expand their programs would still get a 90% match for their expansion population. According to the Center on Budget and Policy Priorities, the increase “offers a strong incentive for the 14 states that have not yet implemented the ACA’s Medicaid expansion to quickly do so by providing increased federal funds to states that newly expand.”
“If the remaining states expanded Medicaid, nearly 4 million uninsured low-income adults, including about 640,000 essential or front-line workers, could gain coverage. More than 2 million people now in the so-called coverage gap—that is, people whose incomes are below the poverty line, and thus ineligible for premium tax credits for marketplace coverage, but who are ineligible for Medicaid under their state’s rules,” the CBPP report said.
Edwin Park, a research professor at Georgetown University, said that financing has never been the main reason why states haven’t expanded Medicaid—it’s mostly been driven by ideology—but the additional funding could encourage some states to move forward. He noted that Congress increased the standard federal match by 6.2% until the public health emergency ends. So states would get additional funding for their expansion populations on top of the already enhanced funding. That overlap could incentivize states to expand quickly.
The plan would also give states the option to extend Medicaid coverage to women up to 12 months postpartum for five years without asking CMS for a waiver. Medicaid coverage for postpartum women typically ends after 60 days.
The Medicaid and CHIP Payment and Access Commission recently voted to recommend that Congress extend postpartum coverage to one year, regardless of changes to Medicaid and CHIP beneficiaries’ income, and provide 100% federal matching funds for the extended coverage period. But the House Energy and Commerce Committee plan would keep states’ matching rates in place.
In addition, the Energy and Commerce Committee wants Medicaid and the Children’s Health Insurance Program to cover the full costs of COVID-19 vaccinations, including vaccines and administration, for up to 12 months following the public health emergency. It also wants to increase federal funding for Medicaid programs aimed at crisis intervention services for behavioral health.
The committee recommended that Congress get rid of the Medicaid drug rebate cap starting Jan. 1, 2023. According to the Congressional Budget Office, the proposal would save the federal government and states at least $22 billion over 10 years. MACPAC recommended Congress ditch the cap in its June 2019 report, and the measure enjoys bipartisan support. But drugmakers will balk at the proposal because it would cut into their profits by forcing them to pay more rebates.
Under the current Medicaid drug rebate program, drugmakers have to give the federal government and states rebates for Medicaid to cover their drugs. And if their prices rise faster than inflation, manufacturers must pay additional rebates.
“However, under current law, total Medicaid drug rebates on both brand-name and generic drugs cannot exceed 100 percent of the (average manufacturer price). This limit undermines the effectiveness of the inflation-related rebate in discouraging manufacturers from instituting excessive annual price increases. When Congress originally enacted the limit as part of the Affordable Care Act, it did not anticipate the very large year-to-year price increases for both brand-name and generic drugs that have occurred in recent years,” according to a blog post by Park.