The proposed Build Back Better Act (BBBA) would have significant implementations for health plans due to changing eligibility requirements. With control of the Presidency, House of Representatives, and Senate, Democrats hoped to enact this significant social spending bill during the 116th Congress.
Proposed changes to the Affordable Care Act (ACA) Marketplace, Medicaid, and Medicare would force health plans to adapt current offerings and invest in scalable technology. As stakeholders consider the implementation of the law, review the proposed changes outlined by the BBBA and begin planning for a seamless transition.
1. Closing the Medicaid Coverage Gap
Proposed legislation would drive new member enrollment in health plans in the 12 states that haven’t expanded Medicaid by allowing enrollees below the federal poverty level to access marketplace subsidies. The provision would be effective from 2022-2025.
In the 12 states that haven’t expanded Medicaid, low-income enrollees have limited access to affordable health coverage. Despite the provision expiring in 2025, non-expansion states will be encouraged to adopt Medicaid expansion through fiscal incentives. The temporary closing of the Medicaid coverage gap aims to act as a transitionary path for non-expansion states.
Health plans should position themselves to rapidly respond and scale to the increased demand for health coverage through the Marketplace.
2. Extending Availability of Enhanced Tax Credits
The BBBA would temporarily extend the enhanced premium tax credits created by the American Rescue Plan (ARP). These subsidies are currently set to expire at the end of 2022. The Kaiser Family Foundation (KFF) estimated that roughly 3.7 million Americans are newly eligible for marketplace financial assistance thanks to this ARP provision, which the BBBA would extend. This change would be effective from 2022-2025.
The suggested bill would extend the ARP’s assistance for households that receive unemployment insurance. Under the ARP, those households were eligible for zero-premium, low-deductible silver plans in 2021. The BBBA would renew and extend that provision through 2025. Following a record-breaking Open Enrollment season – largely due to the ARP expanding access to tax credits – extending the timeframe is a logical next step. Continuing the increased support for members also prevents the potential massive loss of coverage at the end of 2022.
3. Changing Affordability Test Requirements
Proposed changes include modifications to the affordability test for employer-sponsored coverage. Currently, the ACA makes people ineligible for marketplace subsidies if they have an offer of affordable employer-sponsored coverage – or coverage with an employee contribution of no more than 9.61% of household income. Under the BBBA, this threshold would be reduced to no more than 8.5% of income, aligning it with the maximum contribution for marketplace enrollees who choose a benchmark silver plan.
This post addresses only a few of the provisions of the BBBA. For more information about the BBBA’s provisions, read this KFF brief.
What’s Next for BBBA
Momentum to pass the BBBA was hampered in December when Senator Joe Manchin (D-WV) said he would not support the package. At the time, Manchin offered a substitute spending proposal, but his support for that legislation is now also in question.
Recently, Speaker Nancy Pelosi (D-CA) said she intends to bring a more modest version of the BBBA to the House floor. On the Senate side, Senator Manchin has expressed support for making more people eligible for ACA premium tax credits and increasing the size of the tax credits. Meanwhile, Senate Finance Committee Chairman Ron Wyden (D-OR) has indicated that any version of the BBBA his chamber considers will have provisions to address the Medicaid coverage gap.
A key obstacle Democrats face in getting a version of the BBBA enacted is that the legislation must go through the budget reconciliation process, which allows a bill to pass with a simple majority of votes. There are only a finite number of opportunities to use reconciliation during each Congress, with a single window remaining in 2022 for the BBBA.
Democrats are expected to revisit the BBBA more heavily during February 2022; health plans and government agencies alike should actively work towards systems with the flexibility to accommodate upcoming changes.
Josh Schultz is a Senior Policy Analyst at Softheon, where he advises the company on health policy issues affecting businesses and government health agencies. Prior to Softheon, Josh worked for a non-profit agency assisting Medicare beneficiaries, a technology company, and consulting firms.