With control of the Presidency, House of Representatives, and Senate, Democrats hoped to enact a significant social spending bill referred to as the Build Back Better Act (BBBA) during the 116th Congress. The BBBA could have significant implications across the health care ecosystem, including for health plans and state Medicaid agencies.
Expanded Scope and Regulations for Health Plans
Proposed changes to the Affordable Care Act (ACA) Marketplace, Medicaid, and Medicare would force health plans to adapt current offerings. As stakeholders consider the implementation of the law, review the proposed changes outlined by the BBBA and begin planning a seamless transition.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. Health plans should position themselves to rapidly respond and scale to the increased demand for health coverage.
Extending Availability of Enhanced Tax Credits
Additionally, 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.
Finally, the affordability test for employer-sponsored coverage is subject to change. 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.
Creating a Medicare Part D Out-of-Pocket Limit
On the Medicare side, the BBBA legislation would create a $2,000 cap on yearly cost-sharing in Medicare Part D, the prescription drug benefit. This would be an improvement for seniors and people with disabilities who rely on Medicare for their prescriptions and currently have no out-of-pocket maximum to limit their costs.
Refine and Extend Enrollee Aid for Government Agencies
The BBBA would also have a significant impact on state Medicaid agencies. Under the BBBA, state would receive increased funding to accommodate proposed expansions. The ability to scale production to accommodate these proposed changes proves paramount to the success of states.
Establishing a Timeline for Medicaid Unwinding
The Families First Coronavirus Response Act (FFCRA) offered states an increased Federal Medical Assistance Percentage (FMAP) for Medicaid populations in exchange for the adopting a continuous coverage provision in their Medicaid program during the Public Health Emergency (PHE). All states chose to provide continuous coverage, which resulted in an extended period where state Medicaid agencies have conducted very few disenrollments.
Under current law, the PHE declaration correlates to the FMAP increase, so states cannot begin to “unwind” their Medicaid operations if the federal government maintains the PHE. The BBBA would decouple the PHE declaration from the FMAP increase, phase down the higher FMAP, and allow states to begin redeterminations and disenrollments while the PHE continues.
Increasing Federal Match to Bolster Expansion States
Second, the ACA offered states an increased FMAP – 90% – for Medicaid expansion costs. Because the BBBA would create a federal alternative to Medicaid expansion, legislators want to keep participating states from opting out of their Medicaid expansions. To prevent this from happening, the BBBA would increase the FMAP for Medicaid expansion populations from 90 to 93% from 2023-2025.
Post-Partum Medicaid Extension
Recent regulations have motivated states and the federal government to focus on expanding Medicaid coverage after a woman gives birth (post-partum Medicaid). Currently, federal law only requires states to cover women under Medicaid for 60 days post-partum. The BBBA would require states to extend post-partum Medicaid coverage for 12-months. States can currently select to extend post-partum coverage through one year by submitting a State Plan Amendment (SPA) under the ARP. This option is available to states beginning April 1, 2022 and lasts five years.
Home and Community-Based Services (HCBS) Funding Increase
Another area of focus for Democrats is enhancing Medicaid-covered HCBS, services provided at home or in a community setting to help recipients with activities of daily living. The BBBA would provide a permanent 6% point FMAP increase for federal Medicaid matching funds for HCBS. To qualify for the funding increase, states would be required to maintain existing levels of HCBS eligibility, benefits, and payment rates. States would also need to have a plan to expand HCBS access, strengthen the care workforce, and monitor performance based on existing guidelines.
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.
Meet the Author
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.