Biden Moves to Fix a ‘Glitch’ in the Affordable Care Act

PJoe Biden, a resident of Ohio, announced Tuesday that the Affordable Care Act will be modified to allow millions more Americans to afford health insurance.

The shift would fix what is known as the “family glitch,” a loophole that has prohibited more than 5 million people from accessing subsidized health plans on the ACA marketplaces even if they don’t actually have other affordable options.

“It’s a huge deal,” says Katie Keith, director of the Health Policy and the Law Initiative at Georgetown Law’s O’Neill Institute. “It’s one of the biggest things the Biden Administration can do on its own to expand coverage.”

The fix, which the Administration can make on its own without relying on the Democrats’ slim majorities in Congress, represents Biden’s latest effort to use the ACA as a vehicle to lower costs and improve coverage for Americans. Biden, who was visiting the White House for the first time since his departure in 2017, announced this new change during an event that was attended by Obama and former President Barack Obama. Obama had signed the ACA into Law 12 years earlier. Biden’s other health care agenda items remain stalled in Congress.

According to a Biden Administration senior official, the Treasury Department will be proposing the rule. It is anticipated that it will go into effect in 2023. The timing of the new rule could prove to be perfect for Democrats looking to promote health care achievements prior the fall midterms, which will coincide with the open enrollment period for Americans.

What is the ‘family glitch’?

This family glitch is related to the ability of individuals to purchase subsidized plans in the ACA marketplaces. If they don’t have a company-provided health plan, most people cannot buy health insurance from the ACA Marketplace. The law does allow people to buy ACA plans if the premiums through their job’s health plan would amount to about 10% or more of their household income.

But when Obama administration officials wrote the rules implementing the ACA, they calculated eligibility for subsidized ACA plans based on the premiums for an individual employer policy, not one that includes an employee’s spouse or children. A family policy is typically more affordable than an individual policy. So this has meant that there are cases in which a family’s employer coverage costs far more than 10% of their income but the family members can’t buy a cheaper marketplace plan because the individual employer policy costs less.

“Once today’s proposed rule is finalized, starting next year working families in America will get the help they need to afford full family coverage,” Biden said on Tuesday.

An estimated 5.1 million families in the United States are affected by this family problem, according to the Kaiser Family Foundation. These people are mostly women and their children. Although not all these individuals would be willing to change their plans right away, the White House predicts that approximately 1,000,000 people will switch to ACA plans, which are cheaper, and that 200,000 Americans who were uninsured would get comprehensive coverage.

A second executive order

Biden, Obama and others used Tuesday’s occasion to highlight how the ACA has enabled Americans to obtain coverage over time. They also highlighted the efforts of the Biden administration to strengthen the law. Both men stressed the importance of resisting Republican attempts to weaken the law.

“I know how discouraged people can get with Washington,” Obama said during Tuesday’s event. “But what the Affordable Care Act shows is that if you are driven by the core idea that together we can improve the lives of this generation and the next, and if you’re persistent, if you stay with it, you’re willing to work through the obstacles and the criticism, and continually improve where you fall short, you can make America better.”

Biden signed also an executive order Tuesday, which piggybacks on a order from 2021 directing federal agencies take action to strengthen Medicaid and the ACA. This order directs agencies to “continue doing everything in their power to expand affordable, quality health coverage.”

Democrats are still hopeful of expanding health coverage via the Build Back better Act. This would provide expanded subsidies for ACA plans as well as make low-income Americans with limited incomes in states without Medicaid free or inexpensive marketplace plans. Although the legislation has been in limbo for many months, it would lower prescription drug prices and allow Medicare to trade with pharmaceutical companies.

It’s unclear whether the Biden Administration’s signature legislation will clear moderate Senate Democrats’ objections. Obama and Biden hailed the latest ACA amendment as the first step.

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