The Biden Administration is proposing a rule called Family Glitch, which is a vague problem of words buried deep in the text of the law, which surprisingly prevents large numbers of people from receiving lower health premiums. The law provides government subsidies for people with health insurance plans, but only if their employers do not provide them with affordable health coverage. If premiums exceed 10 percent of an employee’s family income, the law deems the employer-sponsored plan unaffordable. So, if workers have to pay Sky-High premiums for their employer-sponsored plan, they can always get coverage at Obamacare Marketplace and get help from government subsidies.
The problem comes when workers try to add spouses or children to their employer health plans. Doing so can significantly increase employee premiums. But the 2012 Internal Revenue Service interpretation of the law does not matter; In an employer-sponsored plan the employee is ineligible for government assistance as long as the cost of covering a worker and the worker alone is 10 percent south of that worker’s family income.
This is not only an acceptable reading of the wording of the law and it is irrelevant in the context of the broader interests of the law. However, the Kaiser Family Foundation estimates that family error affects approximately 5 million people. More than 4 million of them have accepted owner-sponsored coverage, meaning they pay a huge share of their revenue – about 16 percent on average – on premiums, even though Congress designed Obamacare to help people in their situation. Others just go without coverage.
Biden Administration is finally proposing to understand the law more intelligently, offering subsidies to families who have to pay more than 10 percent of their income to cover each member in an owner-sponsored plan. Doing so would cost money – about $ 45 billion in 10 years. But in the context of national health care reforms it is very small, and it helps families. In addition, those caught up in Family Glitch are younger and healthier than those currently buying plans on Obamacare Marketplace. If they buy subsidized plans, the stability of marketplace risk pools will improve, which will reduce the premiums for all those on Obamacare plans.
But there is only so much that Mr. Biden has been able to do on his own. Democrats in Congress are considering long-term Obamacare solutions that could prevent marketplace premium costs and reduce the high burden some families pay for health insurance. This should be a priority between now and the August break.
Obamacare has fulfilled its primary goal of significantly reducing the proportion of Americans without health care coverage. It is now an indispensable part of the health care system. The onus is on Congress to see that it does the maximum good.