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The American Rescue Plan Act of 2021 (ARPA), a $1.9 trillion economic stimulus bill, was signed into law by President Biden on March 11, 2021.1 Although the bill largely focused on the devastation related to the COVID-19 pandemic, the ARPA is also poised to effectuate a momentous expansion of the Patient Protection and Affordable Care Act (ACA).2 With an eye toward increasing access to health care and bolstering affordability, the ARPA expands health insurance marketplace subsidies, defrays the health insurance costs of the unemployed, and incentivizes nonexpansion states to expand their Medicaid programs to all low-income adults.1 Projections of the Congressional Budget Office (CBO) suggest that in so doing, the ARPA will extend health care coverage to an estimated 2.5 million uninsured US residents by 2023.3 The CBO further projects that premiums will decline by as much as 100% for as many as 3.4 million low-income enrollees.3 This Viewpoint discusses the ARPA elements that bolster the ACA and describes their potential implications and uncertainties.
In one of its most prominent features, the ARPA markedly expands the ACA marketplace subsidies (premium tax credits) during calendar years 2021 and 2022; this is the first increase in marketplace subsidies and thus in insurance expansion since the passage of the ACA.1 In so doing, the ARPA seeks to decrease the health insurance premiums of enrollees who earn up to 150% of the federal poverty level (FPL). Before the ARPA, individuals in this income category were required to contribute up to 4.14% of their household income to their health insurance premium.2 Under the ARPA, the health insurance premiums of individuals in this income category will be fully subsidized at the second-lowest-priced Marketplace health insurance plan in the Silver category. Some—albeit more limited—premium relief will be extended to enrollees whose earnings places them at 400% of the FPL. Moreover, enrollees whose earnings exceed 400% of the FPL, heretofore excluded from receiving premium support, will be eligible for marketplace subsidies that will decrease their contribution to no more than 8.5% of their annual income. In yet another important revision of the ACA, individuals receiving unemployment benefits will be deemed “applicable taxpayers” and thus eligible for marketplace subsidies even if their earnings place them below 100% of the FPL; under the ACA, this group was not subsidy eligible. According to estimates from the CBO, as many as 1.4 million individuals receiving unemployment benefits may enroll in subsidized marketplace plans.3
Apart and distinct from augmenting marketplace premium subsidies, the ARPA also addresses the needs of unemployed individuals who lose their employer-provided health insurance plan.1 Equal consideration is being given to individuals whose health plan enrollment eligibility was compromised by involuntary underemployment. With these challenges in mind, the ARPA commits to fully subsidizing the costs of the COBRA (Consolidated Omnibus Budget Reconciliation Act) health insurance premiums of displaced employees from April 1 to September 30, 2021.4 Absent extension of this commitment by government action, the COBRA subsidies in question will be discontinued. In yet another provision, employers will be eligible for a refundable payroll tax credit to offset amounts paid under the COBRA subsidy provisions. CBO estimates suggest that 2.2 million additional individuals are likely to enroll in subsidized COBRA health insurance plans.3
The ARPA also aims to enhance the ACA via the 12 states that have yet to expand their Medicaid program to all low-income adults (≤138% of the FPL).1 With an eye toward incentivizing these remaining nonexpansion states, the ARPA commits to increasing the federal matching fund contribution to the Medicaid programs of the nonexpansion states by 5 percentage points for 2 years. The collective potential net benefit of the increase in funding to the nonexpansion states is estimated at $10 billion.5 The federal incentive program may encourage states such as Wyoming and Kansas, which have previously considered the prospect of expanding their Medicaid program only to reject this possibility. Support for the conversion could also be triggered by the experience of Missouri and Oklahoma, which have resolved through popular vote to expand their Medicaid programs but have yet to do so legislatively.6 Further expansion of additional state Medicaid programs is also contingent on the outcome of Medicaid expansion ballot initiatives planned for Florida, Mississippi, and South Dakota in 2022.
However, the ARPA vision of an augmented ACA also faces multiple challenges. Perhaps most important is the obligatory upgrade of the state-based federally facilitated marketplaces that will have to be brought into compliance with the law. Although the ARPA allocates $20 million to defray the relevant costs required by this modernization effort, the magnitude of the task and the short timeline for achieving it may well prove challenging. Similar challenges are to be anticipated for the federal health insurance exchange website of the Department of Health and Human Services,7 which will require similar updates. Much will also be expected of other elements of the federal government, including the Internal Revenue Service, given the implications of the new regulations to tax filings for 2020. Further guidance from the Department of Labor is similarly anticipated.
An additional important consideration is the matter of California v Texas, a case the US Supreme Court is expected to decide by June, wherein the feasibility of the ACA is at stake.8 The case rests on the argument that the elimination of the “individual mandate” by the Tax Cuts and Jobs Act of 2017 renders some or all of the ACA unconstitutional.9 The Biden administration, departing from the position of the Trump administration, has taken the position that ACA remains constitutional. Although reading into the results of oral arguments is hardly an exact science, defenders of the ACA have some reason for optimism. The Supreme Court may uphold the statute through a combination of several different positions (ie, that the plaintiffs lacked standing to sue to invalidate the ACA), that the mandate remained constitutional even with a penalty of zero, and that even if the mandate itself were held unconstitutional, it is severable from the rest of the ACA, which would result in an empty victory for the challengers because it would merely eliminate a mandate Congress had already eliminated de facto. Any of these outcomes would leave the Biden administration free to continue to strengthen the ACA rather than having to address the challenging and uncertain task of implementing a replacement statute.
The first 100 days of the Biden administration have seen the implementation of a significant number of health care policies. Efforts to bolster the ACA, none more important than those embedded in ARPA, led the way. Whether Congress will extend the ARPA-associated ACA upgrades beyond the COVID-19 pandemic remains an unresolved question. Much will also depend on the outcome of California v Texas. If the Supreme Court upholds the ACA in large part, as many experts expect, the Biden administration is likely to do its very best to live up to its commitment to further expanding the access to and the affordability of health care.
Corresponding Author: Eli Y. Adashi, MD, MS, Brown University, 222 Richmond St, Providence, RI 02903 (firstname.lastname@example.org).
Published Online: June 9, 2021. doi:10.1001/jama.2021.8389
Conflict of Interest Disclosures: Dr Adashi reported receiving personal fees as cochair of the Safety Advisory Board of Ohana Biosciences Inc. Mr Cohen reported being a member of the board of trustees of New England Donor Services, serving as a bioethics consultant for Otsuka Pharmaceuticals on its digital medicine portfolio, and serving on the external ethics advisory board for Illumina.
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Adashi EY, Cohen IG. The American Rescue Plan Act of 2021: A Historic if Transitory Expansion of the ACA. JAMA. Published online June 09, 2021. doi:10.1001/jama.2021.8389
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