The ACA was supposed to cover people with very low incomes through the Medicaid program, and to cover everyone else who lacked employer-based insurance through private marketplaces, which would be regulated to guarantee a basic level of coverage and to protect people with preexisting conditions. People with moderately low incomes would get federal subsidies to help them buy private plans on these marketplaces.
But problems emerged. Many Republican-led states refused to expand their Medicaid programs, leaving millions of desperate people with no good option. Many other people earned too much to qualify for subsidies but still couldn’t afford the premiums. Some of them bought inadequate plans outside the marketplaces; others went without insurance altogether. The Trump administration made things worse by encouraging people to buy into those shoddy plans.
Those who opted out tended to be healthier, so insurance companies were saddled with high costs covering those who were left, forcing the insurers to raise premiums. This resulted in horror stories about premiums well above $1,000 a month, plus deductibles and other out-of-pocket costs. Because of these shortcomings, the ACA failed to meet its goal of ending “job lock,” in which employees feel they cannot go out on their own because they need employer-sponsored health-care coverage.
The relief bill addresses these problems. It offers more money to states that expand their Medicaid programs, increasing the incentive for them to cover their residents. It was already irrational for these states to refuse; now it is indefensible. The bill also enhances the subsidies available to people buying private insurance in the marketplaces, ensuring that no one, regardless of their take-home pay, must dish out more than 8.5 percent of their income on marketplace insurance premiums. The Congressional Budget Office reckons that a 64-year-old making $58,000 a year would see her monthly premium drop from $1,075 to $412.50 — still substantial but far more reasonable in proportion to her income. With more people buying marketplace plans, the whole system will be more stable, restraining premiums for upper-income people paying full freight, too.
Underlying this shift is the notion that the government should ensure that all Americans can buy quality coverage they can afford, an aspiration the Affordable Care Act did not quite reach.
Mr. Biden’s work is not finished. Some states still might refuse to expand their Medicaid programs. The marketplace subsidy reforms run for only two years; if they succeed, Congress should make them permanent and raise revenue to pay for them. Moreover, the covid relief package’s reforms do not address the astronomical amounts the United States spends on health care each year, a problem of generational importance.