The new stimulus bill made tens of millions of Americans eligible for new health insurance subsidies. But many will have to wait to get help: It will probably take a year for the full emergency aid to reach people, because of website complications and other logistical problems.
President Biden has promoted the subsidies as fulfilling his campaign promise to shore up the Affordable Care Act. And for many uninsured Americans, the new program will offer free or inexpensive health plans that were previously unaffordable.
But the health law’s complex structure makes it hard to retool insurance subsidies, let alone create a new program for the unemployed. The systems that distribute the benefits depend on government coders who update websites, and marketers who help people understand the new programs and jump through various administrative hoops to collect them.
“I don’t think there is enough Xanax out there for this,” said Jodi Ray, project director at Florida Covering Kids and Families, which manages the state’s health law outreach efforts.
Memories of Healthcare.gov’s notoriously bumpy 2013 rollout still linger in the minds of those overseeing the new update. The debacle quickly became a punchline for late-night television hosts, and a political liability for an already divisive law.
Now, it’s a cautionary tale of a federal government website unprepared for a deluge of shoppers.
“Technology is not self-executing — it takes work,” said Joel Ario, a managing director at the health consulting firm Manatt and a former official in the Obama administration before Healthcare.gov’s launch. “That’s unfortunate when you’re trying to deal with a large program like this.”
The first step of the federal upgrade should be ready by April 1: Healthcare.gov, where people sign up for insurance in 36 states, will start showing prices that reflect the new policy. For more than five million Americans with lower incomes, health plans will be available for no monthly premium. For others who earn more, new discounts could be worth hundreds of dollars a month.
But getting those lower prices will require work: Americans who already have Obamacare insurance will have to go back to the website where they bought their insurance; make sure they don’t want to switch plans; and certify that they want the new, expanded tax credits. Those who fail to do this will keep paying their current price. They should eventually receive the additional funds as a large refund with their 2021 taxes next spring.
People who have bought their own insurance elsewhere will need to cancel their current plan and switch to an eligible one.
“The main thing we’ve been telling people is: Go back onto Healthcare.gov, work with your navigator, and get your application updated,” said Adam VanSpankeren, program director with Covering Wisconsin.
Another key part of the stimulus provides free health plans with a generous set of benefits to Americans who received unemployment insurance this year. Even though the coverage will be retroactive to Jan. 1, the new benefit will take months to set up, and won’t appear on Healthcare.gov until this summer. That timeline may require people to visit Healthcare.gov as many as three times: once to sign up for a plan, then to get the new income-based subsidies, and again to get the special unemployment benefit once it’s ready.
“We’re going to miss a lot of consumers by making them circle back,” said Ms. Ray, the project director in Florida. “We don’t have enough resources, and we don’t have a lot of time.”
The Biden administration is at work expanding a network of professionals like Ms. Ray to help people navigate the process, after substantial budget cuts in the Trump years. And officials have already promised $50 million in spending to advertise Obamacare insurance options to those who may not realize they’re eligible.
Marketing will focus on the availability of big discounts and free health plans for many Americans. But advocates outside the administration are pushing for even more such spending to reach and enroll people.
The slow rollout of government aid is partly the result of the technological challenge of updating Healthcare.gov, which is connected to a maze of federal systems to verify people’s residency, income and insurance choices.
“It’s a stable platform now, so these aren’t hard changes,” said Andy Slavitt, a White House health adviser who was recruited by the Obama administration in 2013 to help rescue the original Healthcare.gov.
But even relatively easy changes to such systems take weeks or months of coding and testing. Peter Lee, the C.E.O. of Covered California, which runs that state’s insurance marketplace, said his website team initially told him the updates would take until August. He pushed back, and now automatic subsidy updates will start April 12 — with the unemployment benefits following this summer.
“I’ve been running Covered California for 10 years,” he said. “One of my biggest ‘Ahas’ is that big tech is not nimble.”
The slowness also reflects a policy debate within the administration about how automatic the new benefits should become. Because the subsidies for health insurance are structured as tax credits, anyone who gets too little help this year will eventually get a refund at tax time.
If the Biden administration automatically increases people’s tax credits, some people could face a higher risk of a large tax bill. About 2.6 million Americans had to repay excess Obamacare subsidies in 2019, according to Internal Revenue Service data compiled by Charles Gaba.
Frequently Asked Questions About the New Stimulus Package
The stimulus payments would be $1,400 for most recipients. Those who are eligible would also receive an identical payment for each of their children. To qualify for the full $1,400, a single person would need an adjusted gross income of $75,000 or below. For heads of household, adjusted gross income would need to be $112,500 or below, and for married couples filing jointly that number would need to be $150,000 or below. To be eligible for a payment, a person must have a Social Security number. Read more.
Buying insurance through the government program known as COBRA would temporarily become a lot cheaper. COBRA, for the Consolidated Omnibus Budget Reconciliation Act, generally lets someone who loses a job buy coverage via the former employer. But it’s expensive: Under normal circumstances, a person may have to pay at least 102 percent of the cost of the premium. Under the relief bill, the government would pay the entire COBRA premium from April 1 through Sept. 30. A person who qualified for new, employer-based health insurance someplace else before Sept. 30 would lose eligibility for the no-cost coverage. And someone who left a job voluntarily would not be eligible, either. Read more
This credit, which helps working families offset the cost of care for children under 13 and other dependents, would be significantly expanded for a single year. More people would be eligible, and many recipients would get a bigger break. The bill would also make the credit fully refundable, which means you could collect the money as a refund even if your tax bill was zero. “That will be helpful to people at the lower end” of the income scale, said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting. Read more.
There would be a big one for people who already have debt. You wouldn’t have to pay income taxes on forgiven debt if you qualify for loan forgiveness or cancellation — for example, if you’ve been in an income-driven repayment plan for the requisite number of years, if your school defrauded you or if Congress or the president wipes away $10,000 of debt for large numbers of people. This would be the case for debt forgiven between Jan. 1, 2021, and the end of 2025. Read more.
The bill would provide billions of dollars in rental and utility assistance to people who are struggling and in danger of being evicted from their homes. About $27 billion would go toward emergency rental assistance. The vast majority of it would replenish the so-called Coronavirus Relief Fund, created by the CARES Act and distributed through state, local and tribal governments, according to the National Low Income Housing Coalition. That’s on top of the $25 billion in assistance provided by the relief package passed in December. To receive financial assistance — which could be used for rent, utilities and other housing expenses — households would have to meet several conditions. Household income could not exceed 80 percent of the area median income, at least one household member must be at risk of homelessness or housing instability, and individuals would have to qualify for unemployment benefits or have experienced financial hardship (directly or indirectly) because of the pandemic. Assistance could be provided for up to 18 months, according to the National Low Income Housing Coalition. Lower-income families that have been unemployed for three months or more would be given priority for assistance. Read more.
Extra subsidies “are like a loan from the federal government,” said Sabrina Corlette, a co-director of the Center on Health Insurance Reforms at Georgetown, who says she understands why some people are reluctant to let the subsidies reset automatically. “You could potentially end up owing a lot to Uncle Sam.”
Many states that manage their own marketplaces have made the opposite decision: They are applying the new subsidies automatically to provide economic aid faster during the pandemic. California, Massachusetts, Washington and the District of Columbia will roll out the benefit this way.
“We want to make it as easy as possible for people to get this benefit,” said Mila Kofman, executive director of DC Health Link. “Right now, the impact of Covid has been so economically devastating. That’s why I’m most concerned about getting this out quickly.”
Research suggests that the more complex social welfare programs are to access, the more likely it is that eligible people will fall through the cracks.
“They could have just automatically done this, and instead they are requiring people to go through the process, and I think politically it’s a huge miscalculation,” said Pamela Herd, a professor of public policy at Georgetown, who studies the costs of administrative burdens. Ms. Herd said a simpler process would probably increase enrollment and also build more political support for continuing the programs, which are temporary (the new subsidies will expire at the end of 2022). People tend to dislike programs that are unpleasant to use, even if they are generous, she said.
Although the stimulus bill passed with overwhelming Democratic support in Congress, a substantial share of Democratic lawmakers would prefer a simpler, more universal path to wider health coverage. This month a majority of House Democrats co-sponsored a bill to create a “Medicare for all” system, which would automatically provide government health insurance to all Americans, without the current system of subsidies and signups.
Some state officials that use Healthcare.gov said they understood why the federal government was taking the more cautious approach, but would prefer a faster rollout of benefits.
“It’s a tough call, but I go with less burden on the consumer,” said Mandy Cohen, North Carolina’s secretary of health and human services.
Still, many policymakers say the changes are powerful, even if there are short-term hiccups. Mr. Lee said this moment was nearly as important as the launch of Obamacare’s major provisions in 2014. The Congressional Budget Office has estimated the policies will reduce the number of uninsured Americans by 1.3 million; he thinks there is potential to get many more Americans insured this year. “We are optimistic in a big way,” he said.
