As you know, Americans spend a significant amount of money on healthcare. Every year, they have to cope with copays, high insurance premiums, and high deductibles. In 2019, the country spent more than $3.8 trillion on healthcare. In 2020, the spending exceeded $4 trillion and is not expected to drop any time soon. Government policy is probably one of the main reasons for rising healthcare costs. But, the Pandemic Aid Package could be a relief, especially from high health plan premiums.
United States Sprawling Healthcare System
The pressure on the US healthcare system has never been greater. There has been an urgent need in every state to expand testing and treatment for the pandemic to everyone regardless of their health insurance status.
Long before the COVID-19 crisis, the nation’s healthcare system was expensive and complex. As noted by Peter G. Peterson Foundation, there has been an urgent push to lower costs. Over the last five years, hospital costs have been increasing much faster than professional salaries. Thus, passing the COVID-19 relief bill is good news for millions of Americans as it will bring down health costs.
The COVID Bill and Health Cost Savings
In brief, the relief bill includes provisions affecting Medicaid, Affordable Care Act (ACA), and COBRA health insurance plans. As noted in an article by the National Public Radio, the bill seeks to strengthen ACA and make some of the most significant changes to insurance affordability in US history.
How is it Different from the Current System?
As it stands, the bill seeks to spend $34 billion to help Americans buy health insurance from marketplaces created by ACA through 2022, which is the time the benefits will expire. Unlike the current system, the legislation will throw a lifeline to middle and lower-income citizens who have always fallen through the cracks of the state’s eligibility requirements for ACA subsidies.
So, Who are the Winners?
The legislation provides relief to many people. These include:
- Those already covered by Obamacare.
- Those who are signing up for Obamacare.
- Self-employed persons who buy their own health insurance without federal help.
- Laid-off workers who always struggle to retain employer coverage.
- Anyone collecting unemployment benefits.
The 3 Main Components of the Bill
According to president Joe Biden, public health experts, and other advocates of the bill, helping people afford health insurance is vital during the pandemic time. As we all know, millions of Americans lost their jobs. What does this mean? They also lost their job-based health insurance.
The situation could get worse as thousands of Americans are contracting the virus each day. To address these concerns, the COVID-19 bill has the following main components:
- It will Help with COBRA Premiums
Through the Consolidated Omnibus Budget Reconciliation Act of 1985, people who have been laid off from their jobs can purchase health insurance from their former employers. However, they pay the entire premium without any assistance. Worst of it, they pay a little extra.
However, the COVID-19 bill gives them a major reprieve. As highlighted by the US News, the government will now be paying 85% of the COBRA premium. Although the subsidy will be short-lived, it will save people a lot of money for the short time it will take effect.
- Expansion of Obamacare
More than 11 million Americans already enrolled in Obamacare will be the biggest winners. It will also significantly benefit those shopping for HealthCare.gov coverage. Through the bill, the formulas for health insurance tax credits will be changed to make them more generous for most citizens. This will also allow a wider population to qualify.
The legislation seeks to increase the amount of advance premium tax credits. These are refundables that people could get to facilitate payment of insurance plans bought through ACA’s insurance exchanges. This will be extended even to people with solid middle-class incomes who didn’t previously qualify for help with their premiums.
Generally, ACA gives subsidies based on the federal poverty level. In this context, aid is calculated based mainly on the recipient’s income, among other factors, such as their age. At the moment, subsidies are available to persons making between 100% and 400% of the poverty level. However, with the new bill, even Americans with incomes beyond 400% of the poverty level will be eligible for subsidies.
- There are Major Changes to the Medicaid Program
Medicaid has several provisions. Currently, an expectant woman is eligible for Medicaid but loses this eligibility 60 days postpartum. However, the bill extends the eligibility period to one year, which will save new mothers a lot of money.
The legislation also substantially supports states that haven’t expanded Medicaid. When ACA was passed, the federal government catered for 100% of the expansion cost to states for the first three years. The amount was then cut to 90%. Under the COVID-19 bill, the Federal government will still cater for 90% of the expansion costs. However, states will get an increase based on the rise in Medicaid enrollees. The goal is to encourage states to enroll more people in Medicaid.
The Bottom Line
There is no doubt that the Democratic Coronavirus relief legislation will save millions of Americans hundreds of dollars in health insurance costs. It will increase access to health coverage for the uninsured or those who lose insurance. More importantly, it revises eligibility criteria for people who receive health insurance subsidies. If you are looking for multiple insurance offerings, please contact Healthcare Solutions Team. Our industry-leading agents save you money and time by providing you the best coverage at the lowest cost.
Healthcare Solutions Team is a wholly owned subsidiary of the National General Insurance Group and the Allstate Insurance Company.