It's official: #AmFamPlan to *permanently* #KillTheCliff & #UpTheSubs. Make no mistake: This is still a #BFD.

White House Logo

After weeks of anticipation and jockeying for policy priorities to be included by various advocacy groups, President Biden is set to formally roll out the American Families Plan at a speech to a joint session of Congress this evening...the first such speech of his administration, falling just ahead of his 100th day in office.

The first half of Biden's larger "American Infrastructure Plan" is the "American Jobs Plan" which addresses "hard" infrastructure like road & bridge construction/repairs, green energy investment, broadband access, overhauling our clean water system and so forth.

The #AmFamiliesPlan comprises the second half, and includes the following:

  • Add at least four years of free education. Investing in education is a down payment on the future of America. As access to high school became more widely available at the turn of the 20th Century, it made us the best-educated and best-prepared nation in the world. But everyone knows that 12 years is not enough today.
    • The American Families Plan will make transformational investments from early childhood to postsecondary education so that all children and young people are able to grow, learn, and gain the skills they need to succeed. It will provide universal, quality-preschool to all three- and four- year-olds. It will provide Americans two years of free community college. It will invest in making college more affordable for low- and middle-income students, including students at Historically Black Colleges and Universities (HBCUs), Tribal Colleges and Universities (TCUs), and institutions such as Hispanic-serving institutions, Asian American and Native American Pacific Islander-serving institutions, and other minority-serving institutions (MSIs). And, it will invest in our teachers as well as our students, improving teacher training and support so that our schools become engines of growth at every level.
  • Provide direct support to children and families. Our nation is strongest when everyone has the opportunity to join the workforce and contribute to the economy. But many workers struggle to both hold a full-time job and care for themselves and their families.
    • The American Families Plan will provide direct support to families to ensure that low- and middle-income families spend no more than seven percent of their income on child care, and that the child care they access is of high-quality. It will also provide direct support to workers and families by creating a national comprehensive paid family and medical leave program that will bring the American system in line with competitor nations that offer paid leave programs. The system will also allow people to manage their health and the health of their families. And, it will provide critical nutrition assistance to families who need it most and expand access to healthy meals to our nation’s students – dramatically reducing childhood hunger.
  • Extend tax cuts for families with children and American workers. While the American Rescue Plan provided meaningful relief for hundreds of millions of Americans, too many families and workers feel the squeeze of too-low wages and the high costs of meeting their basic needs and their aspirations. At the same time, the wealthiest Americans continue to get further and further ahead.
    • The American Families Plan will extend key tax cuts in the American Rescue Plan that benefit lower- and middle-income workers and families, including the Child Tax Credit, the Earned Income Tax Credit, and the Child and Dependent Care Tax Credit. In addition to making it easier for families to make ends meet, tax credits for working families have been shown to boost child academic and economic performance over time. The American Families Plan will also extend the expanded health insurance tax credits in the American Rescue Plan. These credits are providing premium relief that is lowering health insurance costs by an average of $50 per person per month for nine million people, and will enable four million uninsured people to gain coverage.

There's obviously more details at the link, and this is just a blueprint; it's Congress which will actually decide what does and doesn't make the final cut (more specifically, it's Democrats in Congress who will do so; Republicans are certain to vote against the whole thing no matter how large or small it ends up being, so the question is whether House Speaker Pelosi and Senate Majority Leader Schumer can keep their entire caucuses in line).

Biden's official "American Families Plan" proposal, which is estimated to total around $1.8 trillion over the next decade (in addition to the $2.3 trillion American Jobs Plan), only includes one major healthcare expansion provision...but it's a vitally important one, and it consists of two parts:

  • Kill the Cliff (remove the 400% FPL income ceiling for ACA premium subsidy eligibility).
  • Up the Subs (upgrade the underlying ACA premium subsidy formula to max out at 8.5% of income from the current 9.8%).

As disappointed as many Congressional Democrats and other healthcare advocates (including myself) may be that these are the only healthcare bullets included, there's three important things to keep in mind:

  • First: This doesn't mean other stuff won't be included in the legislation; that's up to Congress, not Biden.

As I noted last week:

House Democrats on Thursday reintroduced their signature legislation to lower drug prices, known as H.R. 3, and Pelosi pointedly noted in a statement that including it in Biden's proposal is important for Democratic lawmakers. The measure would allow the secretary of Health and Human Services to negotiate lower drug prices, a long-held Democratic goal.

I'm no expert on how the Congressional Budget Office rules work, but I'm pretty sure that if HR3 is included in the larger bill but the rest of the healthcare provisions aren't, that means that the full $400 - $500 billion in savings couldn't be counted towards the later bill.

If I'm correct about this, it means that Speaker Pelosi is basically moving to include HR3 in the main bill regardless, which presumably would force the issue...because including it would pretty much require the provisions it's supposed to pay for to be included as well.

"Lowering health costs and prescription drug prices will be a top priority for House Democrats to be included in the American Families Plan," Pelosi said in the statement.

..."Families cannot afford to lose the enhanced [Affordable Care Act] benefit passed in the American Rescue Plan, and we must make it permanent," she said Thursday.

It is possible that House Democrats will add back in the drug pricing measure and other health provisions even if the White House leaves them out of the initial package.

I mean, in the end, it's Congress who ultimately decides what gets included in the final version of legislation, not the Administration. If ACA 2.0, Medicare expansion and/or any other provisions do end up being included and manage to pass both the House and Senate, President Biden's only option would be to veto the entire thing...and somehow I can't fathom him doing that.

  • Second: Medicare provisions like negotiating drug prices & expanding what it covers are still on his administrative agenda

When you read further in the White House #AmFamiliesPlan, it specifically states that he's not blowing off the other big-ticket healthcare items:

Extend expanded ACA premiums tax credits in the American Rescue Plan.
Health care should be a right, not a privilege, and Americans facing illness should never have to worry about how they are going to pay for their treatment. No one should face a choice between buying life-saving medications or putting food on the table. President Biden has a plan to build on the Affordable Care Act and lower prescription drug costs for everyone by letting Medicare negotiate prices, reducing health insurance premiums and deductibles for those who buy coverage on their own, creating a public option and the option for people to enroll in Medicare at age 60, and closing the Medicaid coverage gap to help millions of Americans gain health insurance.

The American Families Plan will build on the American Rescue Plan and continue our work to make health care more affordable. The American Rescue Plan included a historic investment in reducing Americans’ health care costs. The biggest improvement in health care affordability since the Affordable Care Act, the American Rescue Plan provided two years of lower health insurance premiums for those who buy coverage on their own, saving families an average of $50 per person per month. The American Families Plan will make those premium reductions permanent, a $200 billion investment. As a result, nine million people will save hundreds of dollars per year on their premiums, and four million uninsured people will gain coverage. The Families Plan will also invest in maternal health and support the families of veterans receiving health care services.

In short, Biden is proposing to lock in the expanded ACA subsidies now, and address his larger healthcare vision a bit down the road (presumably well before the midterms).

It's also worth noting the "...reducing health insurance premium and deductibles for those who buy coverage on their own", which refers to upgrading ACA benchmark plans from Silver to Gold and presumably expanding CSR subsidies, as laid out in #S499...which would also fund CSR payments, in turn eliminating #SilverLoading, which would in & of itself pay for most of the cost of doing both of these.

Put another way, the disagreement between Congressional Dems and Biden is NOT about the list of healthcare policy changes, it's about whether to bake them into the #AmFamiliesPlan or to do most of them as a separate package. The Dems want to do it now, Biden wants to do it separately.

  • Third: Even if #KillTheCliff & #UpTheSubs are the only items which make the final cut...that'd still be huge!

It's important to keep some perspective here.

Well over a year ago, I predicted that even with a Democratic trifecta (White House, House, Senate), the odds of getting a "Public Option" passed was only perhaps 10% at most as long as the filibuster was kept in place...and even that assumed that Democrats would have perhaps 52-53 Senators. I also gave a robust "ACA 2.0" upgrade (which primarily means killing the subsidy cliff & upgrading the APTC formula, but would also include upgrading CSR, fixing the #FamilyGlitch and so forth) a 75% chance of happening.

With a bare 50/50 majority in the Senate and a razor-thin majority in the House, the odds of a "true" Public Option drop to perhaps 1% and the odds of ACA 2.0 perhaps 60%...and that's where it looks like things are headed at the moment.

Back in January 2020 (just before COVID hit the nation), I travelled to Washington, DC and had over a dozen meetings with various Congressional staffers to push support of doing exactly what Biden is proposing. In fact, the subsidy expansion included in the American Rescue Plan (and being proposed permanently now) actually go beyond what I was hoping for at the time.

Remember, here's side by side comparisons of the official ACA APTC subsidy table, how it would have been upgraded under H.R. 1868 (last year) and how it has actually been upgraded under H.R. 1319 (the American Rescue Plan):

The differences between HR 1868 and HR 1319 may seem small in the table...just a difference of a percentage point or two...but in practice that's massive.

Remember, thanks to CSR assistance, everyone under 150% FPL is now effectively eligible for a FREE Platinum plan, and thanks to Silver Loading, millions of people over 200% FPL are now eligible for a FREE Gold plan!

Put another way, here's what the cost of a benchmark Silver plan looks like for a single adult earning 200% FPL (around $25,500/year) under all three:

  • Original ACA (6.5%): $1,656/yr
  • HR 1868 (4.0%): $1,021/yr
  • HR 1319 (2.0%): $510/yr

That's an additional savings of $510 per year. This goes above and beyond what I was hoping for when I met with all those staffers last year.

The Urban Institute recently posted an analysis (cited in the WH #AmFamiliesPlan description above) which projects that making the ARP-enhanced subsidies permanent will increase ACA exchange enrollment by 5.1 million people, reduce the ranks of the uninsured by 4.2 million people and reduce unsubsidized premiums by 15% in the process (thanks to the improved risk pool). That would be a reduction in the uninsured rate of around 15%, while making coverage far more affordable for a good 12 million or so current enrollees.

The point is that while there's still much more to be done, this alone would still be a huge upgrade to the Affordable Care Act, and it shouldn't be understated. This is a #BFD no matter what else does or doesn't make the cut.

As an aside, the Biden Administration is reportedly also working on fixing the #FamilyGlitch via regulatory changes at the IRS, which wouldn't require any legislation at all. If successful, this would make an additional 2 - 6 million more Americans eligible for ACA subsidies as well.

UPDATE: One more time: Congress ultimately decides what legislation gets passed, not the President:

Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ) released the following statement today on President Biden’s American Families Plan: 

“President Biden has put forward a bold proposal that would make historic investments in American families and build a brighter, more sustainable future for our children. 

“The American Families Plan will continue the work of the American Rescue Plan to build on the Affordable Care Act and lower monthly health insurance premiums for millions of Americans. The President’s plan will make those premium reductions permanent – continuing the largest expansion of health care coverage since passage of the original law more than a decade ago. 

“Finally, it is unacceptable that Americans pay three or four times more than people in other countries do for the exact same prescription drugs. It’s critical that we level the playing field by giving the federal government the ability to negotiate lower prescription drug costs, and this will be one of my top priorities as we work to pass the American Families Plan.”