The American Rescue Plan Act: What’s it do for Health?

The American Rescue Plan Act: What’s it do for Health?

President Biden signed the American Rescue Plan Act on March 11. This $1.9 trillion plan, responding to the COVID pandemic, includes a number of provisions related to Medicaid, CHIP, marketplaces and other health programs.

Medicaid/CHIP

Medicaid Expansion. The ARP includes a two-year incentive for states that have not yet expanded Medicaid. In addition to receiving a 90% federal match for newly covering the expansion population, states would also receive an additional 5% federal funding for all other Medicaid populations for two years. This increase would more than pay for an expansion, providing states financial support in challenging budget times. Unfortunately, politics may still trump good economic and social policy, leaving millions of eligible individuals without coverage.

Post-Partum Coverage. The ARP gives states a five-year option to provide extended post-partum coverage to pregnant people enrolled in Medicaid and CHIP. States can extend the current 60-day post-partum period to a full twelve months of full Medicaid coverage. Given the maternal mortality crisis throughout the country, we hope many states will take up this option. And while time limited in ARP, we hope the option will become permanent in the future. For more on this provision, see this blog by my colleague Madeline Morcelle.

Home and Community Based Services. States will also get increased funding for Home and Community Based Services (HCBS) through March 2022. States would receive an additional 10% of federal funding  for HCBS services. Given how severely COVID ravaged nursing homes and other congregate care facilities, every effort to keep individuals in the community is important. For more on this provision, see this blog by my colleague David Machledt.

Mobile Crisis Response. ARP also provides federal coverage of 85% of the costs for mobile crisis response teams. These teams help reduce harms to people undergoing acute episodes by avoiding encounters with undertrained law enforcement, and can free the police to prioritize other activities.

Testing, Treatment and Vaccines. For all Medicaid enrollees, the ARP explicitly requires Medicaid and CHIP to provide testing, treatment and vaccines without any cost-sharing. And all individuals, even those in limited scope benefit categories (e.g. only receiving Medicaid for treatment of breast or cervical cancer or family planning services and supplies), will receive the COVID vaccine. These requirements continue until the end of the first quarter after the end of the public health emergency. Further, the ARP expands a state to not only cover COVID testing but also treatment and vaccines for uninsured individuals. The federal government covers 100% of the costs for these individuals.

Marketplaces

Reducing Premiums and Expanding Tax Credit Eligibility. Individuals earning less than 150% FPL will be eligible for a health insurance plan with $0 premiums. Individuals between 150-400% FPL will benefit from lower required contributions to their premiums. And for the first time, individuals over 400% FPL will be eligible for tax credits and their premium contributions would be capped at 8.5% of income. These changes last for two years as follows.

Income Range (% FPL)Range of Maximum Income Distribution (% of Income)
Current LawARP
100-133%2.070
133-150%3.10-4.140
150-200%4.14-6.520-2.0
200-250%6.52-8.332.0-4.0
250-300%8.33-9.834.0-6.0
300-400%9.836.0-8.5
Over 400%n/a8.5

See https://www.irs.gov/pub/irs-drop/rp-20-36.pdf, https://www.congress.gov/bill/117th-congress/house-bill/1319/text.

Additionally, individuals who received unemployment insurance in 2021 can get marketplace coverage even if they live in a Medicaid non-expansion state (which would usually prevent eligibility). For many of these individuals, the cost would be zero.

Eliminating Reconciliation for 2020 tax year. Anyone receiving APTCs in tax year 2020 will not have to pay back any excess tax credits received. The provision recognizes that the economic challenges of the pandemic makes it extremely difficult for many families to pay an unexpected tax bill. Individuals who already filed their 2020 taxes will have to wait to see how the IRS will refund those payments.

COBRA. ARP also pays for 100% of COBRA premiums for individuals through September 30, 2021. Individuals who found COBRA too expensive at the time of their initial eligibility would have a new 60 day window to enroll after being informed of the ARP COBRA provisions.

Additional Provisions

The ARP also includes additional health provisions such as additional funding for community health centers and certain Indian Health and native Hawaiian health providers.

Further, many of the provisions not directly related to health will still have an impact on the health of families and communities. The ARP is expected to lift millions of children above or closer to the federal poverty line and reduce child poverty by over 9%. These include expansions to the child tax credit and earned income tax credit; additional recovery payments of up to $1,400 for certain individuals and families; making some unemployment compensation received in 2022 tax free; and making student loan forgiveness tax free through 2025. It also provides housing and food and nutrition supports.

Overall, the ARP represents a much-needed shot in the arm both literally with its financial support for vaccines and figuratively with its economic boosts as well as a strong out-of-the-gate accomplishment for the Biden-Harris administration.

For additional information, see

CCF/CHIR, American Rescue Plan Act: Health Coverage Provisions Explained

CBPP, Health Provisions in American Rescue Plan Act Improve Access to Health Coverage During COVID Crisis

CBPP, American Rescue Plan Act Will Help Millions and Bolster the Economy


See other entries in our American Rescue Plan Act series:

Related Content