What’s new in the legislative halls of Washington and Albany?
It’s been a busy year for our elected officials, with bills, regulations and proposals flying around. While many of these events have been kicked off due to COVID-19, not all fall into that category. Here’s a rundown of a couple of recent changes that may impact you!
ARPA
The most recent legislation to come out of Washington, which impact benefits, is the American Rescue Plan Act (ARPA). It is a response to the COVID crisis, and it includes several provisions directly related to healthcare.
First, it impacts the ACA subsidies available to individuals through the exchanges (in New York, that’s the New York State of Health). If you think back to when ACA, sometimes called Obamacare, was passed, you’ll remember that in order to encourage individuals to sign up for health insurance, subsidies were implemented to cap the total cost of insurance.
Under the original ACA legislation, subsidies were designed to reduce the cost of insurance down to a set percent of your income. The lower your income, the lower your percent. The subsidies phased out with a targeted cost of 9.5% of income for an individual or family earning more than 400% of the federal poverty level. What that meant in practice was that in 2020, an individual earning less than $51,040 or a family of three earning less than $86,880 would qualify for insurance that cost 9.5% of their income.
ARPA changes both the maximum you can earn to qualify for a subsidy and the amount of the subsidy. While the original 9.5% cap went up to 9.83% under ACA, ARPA reduces it to 8.5%. Based on the sliding scale, most people who were already qualifying for a subsidy will see their cost reduced by roughly 3-4% of their income. Additionally, ARPA removes the income limit, meaning there is no “spike” in cost for someone who slides just above 400% of the federal poverty level.
Keep in mind, however, that ARPA only addresses the individual marketplace and does not say anything about employer affordability. That’s both good and bad for employers. It’s good because most employers set their contributions and budgets to meet the old rules of affordability and expect those to be in place for a full year. It’s potentially bad because people who are offered affordable coverage at work are not eligible for a subsidy through the individual exchange, regardless of their income.
What that means is that even though employers are meeting their responsibility by offering affordable coverage at 9.83% of earnings, their employees will be missing out on lower-cost coverage at 8.5% of earnings through the individual exchange.
The other impact of ARPA on healthcare has to do with people who lost jobs or hours during the pandemic. Anyone who lost coverage due to an involuntary job loss or reduction in hours is eligible for free COBRA through October 2021. Employers are responsible for paying premiums, but fortunately they are eligible for government reimbursement.
New York State
The updates from Albany are of a different variety, in that they don’t really stem from COVID at all. The New York Health Act is back on the table, currently under discussion in the Assembly Health Committee.
The bill seeks to create universal health coverage for New Yorkers by outlawing private insurance and creating a state-run funding arrangement, paid for by a 10% tax on wages (8% paid by employers, 2% by employees).
The legislation has substantial support now that there is a Democratic majority in both the state senate and assembly, but it faces hurdles on both the administrative and financial sides.
Financially, cost estimates vary, but most come in well over $200 billion, tripling the total state budget from its current number. Additionally, because of the ban on private insurance, that industry would effectively be eliminated in New York. It is estimated that total job losses due to the bill could equal 150,000.
Administratively, there are also challenges. Unlike national borders, state borders are extremely porous, with people traveling across state lines on a daily basis for work, recreation, and medical care. The bill does not address how out-of-state residents would be covered at New York providers, or how New Yorkers would be covered if they chose to seek care elsewhere. Regardless of whether it’s a Rochester resident seeking care for a serious cancer diagnosis at the Cleveland Clinic, or an Elmira resident whose primary care doctor happens to be just across the border in Pennsylvania, it’s a common occurrence left unaddressed.
The last major hurdle is that the state would need federal sign-off to move away from Medicaid toward a truly comprehensive, universal plan. While that was unlikely to be forthcoming under the Trump administration, the Biden administration has not given a signal yet as to how they would handle the situation.
Be sure to follow us for more updates as they become available.