Print - Reform - ARRA Provisions 1

STIMULUS ACT HELPS PEOPLE IN NEED AS WELL AS THE ECONOMY

On February 17, twenty-eight days after his inauguration, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (ARRA or "Stimulus Act"). See http://appropriations.house.gov. The law is more than 1,000 pages long and includes provisions relating to nearly every Department of the federal government. It is divided into Divisions A and B; A is entitled "Appropriations Provisions" and B is entitled "Tax, Unemployment, health, State Fiscal Relief, and Other Provisions." Much of the $311 billion in appropriations included in the Act must be spent by the end of 2010.

Significantly, the Act includes an entire Title relating to accountability and transparency, as well as specific references in various other sections to increased appropriations for Inspectors General of the Departments and for the Comptroller General, through the Government Accountability Office, to conduct oversight.

Reflecting a growing awareness in the health policy world of the importance of the development of health information technology, the Act devotes more than 200 pages to that subject, including creating a health IT infrastructure, and including various health IT provisions in Medicare and Medicaid.

Also reflecting a growing concern about health care costs in general and what value we get for the dollars we spend, the Act includes money for research to determine the comparative effectiveness of various medical interventions.

Also significantly, provisions relating to increases in public benefits include protections against those increases adversely affecting eligibility for other public benefits.

Of most immediate and direct relevance to the health care needs of individuals, the Act:

Extends until December 2010 the Qualified Individual (QI) program that pays Medicare Part B premiums for certain low-income Medicare beneficiaries;
Increases access to COBRA benefits for individuals formerly eligible for health insurance coverage from their employers; and
Provides fiscal relief for state Medicaid programs that serve, among their more than 50 million recipients, 8.8 million low-income Medicare beneficiaries.

This Alert will address these three latter provisions of the Act: QI, COBRA and state Medicaid fiscal relief. Future Weekly Alerts will look at other relevant provisions of the Act.

Extension of Qualified Individual Program

QI is a Medicaid program that pays the Part B premium for individuals with incomes between 120% and 135% of the federal poverty level ($12,996 - $14,620/year for an individual in the lower 48 states in 2009) and limited resources. The program has been extended for short periods of time ever since its initial expiration date in 2002. The ARRA, Division B, Title V, Section 5005, further extends QI through December 2010. It also adds $572,500,000 to cover the program costs for calendar year 2010. This reflects an increase of $72.5 million over the calendar year 2009 appropriation and $172.5 million over appropriations for years prior to 2009.

Premium Assistance for COBRA Beneficiaries

Division B, Title III, Section 3001 provides for assistance with 65% of the cost of the premium for COBRA health care continuation insurance for eligible individuals. COBRA premium assistance is available to individuals who became or who will become eligible for COBRA between September 1, 2008, and December 31, 2009, who elect COBRA coverage, and whose COBRA qualifying event is involuntary termination of employment. The premium assistance begins on or after the date of enactment, February 17, 2009, and lasts for up to nine months. Assistance ends sooner if the maximum time period for COBRA coverage ends sooner or if the individual becomes eligible either for coverage under another group health plan or for Medicare. Individuals must notify their group health plan that they are no longer eligible for the COBRA premium assistance according to rules to be developed by the Secretary of Labor.

Individuals who would be eligible for premium assistance but for the fact that they did not elect COBRA coverage will have an extended opportunity to elect COBRA coverage, beginning on February 17, 2009, and ending 60 days after notice is provided.

The statute sets requirements for all COBRA notices and time frames for the Secretaries of Labor and of Health and Human Services to develop notices. It also requires outreach consisting of public education and enrollment assistance.

The statute also provides individuals with the opportunity to enroll in a different coverage option from the coverage option in which they were enrolled at the time of their COBRA qualifying event if such option is available. Individuals whose request for premium assistance is denied will have an opportunity to request expedited review, with a determination about eligibility to be made within 15 business days after receipt of the application for review. The premium reduction does not count toward income or resources for any federal, state, or local public benefit program.

Increase in Federal Share of Medicaid Costs

Medicaid serves over eight million individuals who are also eligible for Medicare. These dually eligible beneficiaries are the poorest of Medicare beneficiaries and have among the highest health care needs of the population. States provide them various benefits that supplement Medicare either by paying some or all of Medicare's cost-sharing, or by covering services not covered by Medicare, or both. States pay, based on a formula, between 17% and 50% of the costs of Medicaid, with the federal government paying the rest. The federal portion is referred to as the Federal Medical Assistance Percentage, or FMAP.

Division B, Title V, Section 5001 increases the FMAP of Medicaid payments in three ways. First, it allows states for which the federal percentage decreased in 2009 to use their 2008 rate, and similarly, for 2010 and 2011, to use the highest federal rate that applied in any year since 2007.

Secondly, the Act provides an across-the-board increase of 6.2% in the FMAP during the
"recession adjustment period" (defined as October 2008 through December 2010), so that a state paying the highest state share of 50% would, under the ARRA, pay 43.8%.

Third, the Act includes an additional FMAP increase based on unemployment rates in individual states, with three levels of adjustment. For calendar quarters in which a state's unemployment rate increased between 1.5% and 2.5%, the additional FMAP increase would be 5.5% (based on a somewhat complex formula taking into account the first and second FMAP adjustments described above); an increase between 2.5% and 3.5% would result in an 8.5% adjustment, and an increase above 3.5% would result in 11.5% adjustment.

To be eligible for the increases, states generally must maintain eligibility and services at the level provided on July 1, 2008.

Each of these provisions will have positive effects on individuals needing health care. Other provisions of the Stimulus Act, to be discussed in future Alerts, have great potential to help beneficiaries as well, though their effects are more indirect and complex.

For further information contact Patricia Nemore (pnemore @ medicareadvocacy.org) or Vicki Gottlich (vgottlich @ medicareadvocacy.org) in the Center for Medicare Advocacy's Washington, DC office at (202) 293-5760.