California stands to win big with the Obamacare expansion

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The Biden administration and Democrats in Congress are hoping to capture their economic recovery plan a significant extension of the Affordable Care Act, modeled on a program first enacted in California last year.

The proposal would constitute the most material expansion of Obamacare since its passage in 2010 and potentially save California about $ 350 million a year by absorbing the state’s costs for its own experimental program.

The Biden proposal “would completely take up space and do more than what state aid has done,” said Peter Lee, CEO of Covered California. “The state would be able to recycle resources. And Californians would benefit from more money in their pockets almost overnight. ”

Similar to the California program, the federal proposal would increase premium subsidies already offered under Obamacare, as well as increase the availability of subsidies to more households depending on their income level and insurance costs.

The California program expanded grants to include, for the first time, people earning as much as 600% of the federal poverty level, such as a family of four earning up to $ 159,000, up from the current federal maximum of 400% of the poverty level. or $ 106,000 a year for a family of four.

The city’s plan would take a different approach and offer subsidies to people at any income level if certain health insurance premiums exceeded 8.5% of their total income. It will also increase the amount of grants for people who are already eligible for them.

The extension is intended to solve a problem with the original law banning subsidies to households earning more than 400% of the poverty level. It left out residents in high-cost areas whose income levels were just above the line to qualify for assistance, even though they had to pay large portions of their income for insurance.

The success of California’s 2020 expansion increased lawmakers’ claim that increased subsidies could help expand the number of Americans who get help and make insurance more affordable, and address a chief, bipartisan critique of the law.

“California’s success confirms that premium costs remain an important barrier to enrollment and that inability to provide coverage becomes an increasing issue if Congress fails to address it,” several California Democrats wrote in a letter to congressional leaders last year. , which calls for the state model to be included in a previous COVID-19 relief bill. They argued that improving tax deductions would also disproportionately help people of color and those in states that did not take advantage of the law’s extension of the Medicaid program for the needy.

They hope that the adoption of a similar strategy at the federal level will serve as a payout for the health care reform that Democrats promised voters they would deliver. The federal expansion may begin as a three-year program, although the final details are being worked out.

California Democrats are eager to use the state as a test case for the progressive policies they hope their federal counterparts will adopt nationwide health care, climate and immigration.

“By increasing premium assistance and expanding eligibility, California has established a plan for effective investment in the ACA,” the rep said. Zoe Lofgren (D-San Jose), Chair of the Democratic delegation.

“When the legislature passed this and it was signed by Gov. [Gavin] Newsom, it was specifically said that this is the right thing to do, ”Lee said. “But we are doing this as a signal to Washington to build on and make the ACA better.”

Democrats have reason to proclaim the successes of the ACA in California, which aggressively implemented and upheld the law. The uninsured population fell from 7 million before the exchange opened to an estimated 2.7 million last year.

“California is in many ways a symbol of how transformative the Affordable Care Act can be, at least in terms of coverage,” said Shannon McConville, a researcher at the Public Policy Institute of California.

California’s expansion of grants made it the only state in the country to expand premium assistance with state funds.

In addition to the subsidies, California adopted other changes to its health exchange in 2020. After the federal government essentially lifted the mandate to purchase coverage, the state put it back in place as a means of encouraging enrollment.

The number of new entrants jumped 41% to 418,052 in the 2020 enrollment period before COVID-19 was declared a pandemic. Even more signed up when the economy disappeared. Experts attribute the increase to a combination of subsidies, mandate and an aggressive marketing campaign.

On Capitol Hill, Democrats argue that the federal subsidy increase will stimulate the economy. Plus, the income requirements already in place in the grant structure would ensure that money is targeted at people with some of the lowest incomes and in need of help.

For Democrats, it has added political benefits by building on the health care law. If they are adopted themselves temporarily, legislators are likely to have a hard time letting these benefits expire.

Biden and Democrats on Capitol Hill hope to use their slim majority to build on the health care law, especially to tackle affordable prices, arguably one of the law’s biggest weaknesses.

Almost immediately after the law was passed, critics and many supporters complained that the ACA did little to help people with moderate incomes who were hit with premium bills who ate a large percentage of their income, such as older adults who did not yet qualify for Medicare. The 8.5% ceiling is seen as a way to ensure that no one should spend too high a percentage of their salary on health insurance.

Republicans are likely to oppose an extension of the law. But Democrats pass their COVID-19 relief bill with a fast-track legislative procedure that does not allow a Republican filibuster.

Although Biden has said he wants to work with Republicans on the coronavirus stimulus bill and met with 10 Senate Republicans this week, there is not much sign of meaningful negotiation. Democrats seem ready to try to move the law on their own.

It is unlikely that there will be opposition to the subsidy expansion among Democrats given the party’s firm embrace of the law. The grants are in the current Emergency Aid Act, but Democratic aides acknowledge that it is too early to know if they will remain. If enlargement is cut from the current bill, Democrats are hopeful they can revive it later in the year in another bill that cannot be filibustered.

The plan will also extend the tax benefits of COBRA health insurance to people who have lost their jobs but want to remain on their employer plans.

The most significant obstacle may be the price tag. The COBRA expansion and ACA grant would cost $ 57 billion over three years, according to one Moody’s Analytics estimates.

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