The Biden administration is proposing a major policy change that it believes will help 200,000 uninsured Americans get comprehensive health plans while making coverage cheaper for an additional 1 million people.
And it’s something the Biden administration can do on its own, without congressional action.
On Tuesday, the Biden administration is formally proposing new rules that will allow more people to get subsidized private insurance through the Affordable Care Act’s online marketplaces, including HealthCare.gov.
The proposal will have to go through a public comment period and then further review by the Treasury Department, but a senior administration official who was briefing reporters on Monday said the hope is to have the new rule in effect for 2023.
Administration officials are billing the proposal as a way to bolster the Affordable Care Act, also known as Obamacare. President Joe Biden and former President Barack Obama will showcase the proposal at an afternoon White House event, where they will both speak about the legacy of the 2010 law.
The Affordable Care Act is a favorite topic of both men, in part because of all the grueling work they and their allies put into passing it during the Obama administration ― and in part because of what it’s accomplished. The law’s primary goal was to expand health insurance coverage, and it has succeeded in reducing the number of uninsured Americans to historic lows.
But the law was also the subject of fierce controversy through most of its existence, and even champions like Obama and Biden have been candid about what they see as its chief shortcoming: the fact that millions remain uninsured while millions more still struggle with high premiums, out-of-pocket costs or both.
The Family Glitch, And How It Came To Be
The regulation that Biden will introduce Tuesday ― as first reported by Politico’s Adam Cancryn ― would help a subgroup of these people affected by what policy experts call the “family glitch.”
They are partners, spouses and dependents of low-income workers at companies that offer family coverage. Buying the family coverage would cost them more than 9.6% of household income, which is the Affordable Care Act’s official definition of “affordable” ― which means, in theory, these people should instead be eligible to get subsidized private coverage through HealthCare.gov or one of the other online marketplaces.
But when Obama administration officials first wrote the rules for implementing the Affordable Care Act, they decided that eligibility for the subsidized plans should depend on the cost of an individual employer policy, not a family policy.
Individual policies usually cost a lot less than family coverage because they are for just one person. As a result, there are instances in which the family employer policy costs more than 9.6% of income but family members can’t get subsidized marketplace coverage because the individual employer policy costs less.
That’s the “glitch,” and about 5.1 million people fall into it, according to an estimate from the Henry J. Kaiser Family Foundation. Some of these people get the family coverage anyway, paying those high premiums, while others simply go without insurance.
The Obama administration’s regulatory decision was controversial at the time, with a variety of advocates and experts arguing that officials had interpreted the Affordable Care Act’s language in an unnecessarily narrow way.
With this new regulation, the Biden administration is basically proposing to rewrite the Obama-era rule in a way that officials can say is more consistent with both the statute’s language and its overall intent. And although not everybody affected by the glitch is likely to take advantage of the new opportunity to get subsidized marketplace coverage, some will.
“We’re excited about this,” the senior official briefing reporters on Monday said. “We think it’s the most significant administrative action to improve implementation of the ACA that we’ve taken since the law was first passed in 2010.”
The Politics, Financing And Effect Of Fixing The Glitch
Like any such proposal, the regulation could provoke opposition and criticism, and be subject to lawsuits challenging the Biden administration’s new interpretation.
And politically, it could draw criticism from Republicans who have long attacked Obamacare and, more generally, have opposed efforts to expand government-financed health insurance.
The White House won’t have to get a new congressional appropriation for the rule since it’s simply changing the way it administers the ACA. But if 1.2 million new people are getting subsidies to help pay for private insurance, it’s going to cost the federal government more money.
Eliminating the family glitch through legislation would cost $45 billion over 10 years, according to a previous Congressional Budget Office estimate, although it’s not clear if that number would apply to the kind of narrower, regulatory change that the Biden administration has in mind.