Biden’s fix to the “family glitch” illegally sidesteps Congress
In early April, the Biden administration issued a proposed rule to expand access to premium subsidies under the Affordable Care Act (ACA) by fixing the so-called family glitch. But there is a serious problem with the proposal. It’s not lawful.
What exactly is the family glitch? The ACA established premium subsidies to help low-income people buy health insurance coverage on the individual market. But to pass the ACA, President Obama and Congress knew they had to keep the federal cost to the taxpayer down and avoid major disruptions to people who already had health insurance. So, they added a “firewall” between subsidized coverage and employer coverage. This restricted people from qualifying for subsidies if they had access to “affordable” employer coverage.
The family glitch arises from how the law defines affordability for dependents in a family with access to employer coverage. Specifically, the law states that affordability for the entire family is based on whether the employee’s premium for “self-only coverage,” not the premium for family coverage, exceeds 9.5 percent of household income. This means dependents are restricted from premium subsidies even when the cost of the family premium exceeds 9.5 percent of income.
Supporters of the ACA have long claimed the family glitch is unfair and needs to go. But the Obama administration concluded back in 2013 that their hands were tied. They found the statute specifies affordability for families is based on the cost of self-only coverage and applied the law.
Now, under pressure to do something to fix the glitch, the Biden administration has reexamined the statute and proposed a rule that they claim offers the “better reading” which would base affordability on the cost of family coverage.
A thorough review of the statutory text and the legislative history of the ACA shows there is absolutely no legal basis to support this reexamination.
Today, Health Affairs published an article I wrote that delivers a full critique of the Biden administration’s legal argument.
Ultimately, I concluded that there is no legal basis to support the fix. The plain language of the statutory text unambiguously includes the family glitch. The legislative history confirms this plain reading and shows how Senate amendments created the family glitch. Moreover, despite Biden’s claim that fixing the family glitch will support the ACA’s purpose to provide affordable health care, the ACA had other competing goals. The family glitch helped Congress negotiate a mix of priorities necessary to enact the ACA: The family glitch lowered the ACA’s cost, reduced the incentive for employers to drop coverage, and protected the individual market risk pool.
The family glitch may be disfavored today, but Congress enacted it by design and fixing it administratively would illegally sidestep Congress.