Health Insurance10/28/20210How Does the American Rescue Plan Act of 2021 Affect Health Insurance?

The American Rescue Plan Act was created in order to speed the economic recovery of the United States as a result of the COVID-19 Pandemic. The American Rescue Plan (ARP) was passed as a follow up to its predecessor from March 2020, the CARES act. After one year of the pandemic, the Biden administration proposed the ARP plan as a push for economic stability after a tumultuous year for low-income Americans. The large plan was composed of sections for assistance towards agriculture, education, public health, small and large businesses, and more. The plan had been in the works since Joe Biden took office in January of 2021. The final approval and implementation came on the first anniversary of the United States declaration of a national emergency due to the COVID-19 pandemic on March 11, 2021. Although many Americans found the highlight of the plan to be the individual stimulus payments of $1400, the 1.9 trillion dollar plan extends much further than that. In the realm of health insurance, the APR assists millions of Americans by providing a subsidy for their health insurance plans when received under the Affordable Care Act.

The initial design of health insurance payments was to be structured by age. In general, when individuals continue to age, they experience an increase in health issues. Without the consideration of existing health issues, or pre-existing conditions, the cost of health insurance is intended to be ten times the age of the policy holder. In this case, someone who is ten years old would expect to have a policy for about $100.00 per  month. A 50-year-old would expect to pay $500.00 and so on. However, in recent times, this calculation is more expensive than many Americans can afford. The impacts of the pandemic and potential losses of income or economic strain worsened this trend.

The American Rescue Plan included provisions to assist many Americans with the cost of their health insurance premiums throughout the 2021 calendar year. The pandemic resulted in the closure of businesses and layoff of many employees. Since health insurance is often connected to full-time employment as a part of the company’s benefits package, these layoffs often resulted in not only a loss of income for many Americans, but also the loss of health insurance. Learning from this experience, the Biden administration pushed to include the continuation of the COBRA coverage program in the ARP. The Consolidated Omnibus Budget Reconciliation Act (COBRA) was created to subsidize health care insurance for individuals that lost their health insurance due to a reduction of hours or termination of employment from the COVID-19 pandemic.

In the official statement from the White House regarding the American Rescue Plan, the correspondence states that the purpose of the inclusion of health insurance on the plan is to ensure that insurance premiums and costs are lowered or eliminated for millions of low-income to middle-income individuals and families. Health insurance premium is the amount that is paid, often monthly, by an individual to maintain a policy and health care coverage. This premium covers the cost of maintaining the policy in the event that an individual would need to use their insurance for a medical procedure. Premiums are often high in order to keep medical costs and procedures low. When one pays a low monthly premium, they would expect to pay a higher amount, or out-of-pocket cost, for medical procedures and doctors visits. Oftentimes, these premiums can be the barrier between the ability to afford medical insurance, and therefore the ability to afford medical care. The example that was provided for the impact of the APR on insurance was the idea that a family of four that earns a household income of $90,000 per year may see a drop in their health insurance premium up to two hundred dollars. The initiative for the American Rescue Plan providing subsidies for health insurance was implemented to enable the lower to middle income bracket to gain coverage from health insurance that they previously would not have been able to afford.

In order to create accessible health insurance for individuals that cannot afford a plan with a high premium, a “silver” plan was created. This plan includes access to a network of health professionals to care for any medical needs. However, it introduces this structure at a moderate to low monthly premium, while keeping costs of medical procedures and needs at a moderate cost. The American Rescue Plan has continued to keep these effective Silver plans affordable to the public. This is a trend that is expected to continue for the next few years.

Although the American Rescue Plan had a variety of impacts in areas of education, public health, transportation, and overall economic well being, there is also a major impact on health insurance and coverage for many Americans. By providing a subsidy for health insurance premiums, the APR increased access to health insurance for low and middle-income individuals and families.

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