Build Back Better Act: Health Coverage

The Build Back Better Act (BBBA) is a spending plan that was passed by the United States Senate and House of Representatives on November 19, 2021 and later resulted in the Inflation Reduction Act of 2022. One of the goals of the BBBA is to build upon the Affordable Care Act (ACA), the landmark health insurance program established in March of 2010 to make healthcare more affordable and easier to access for American adults and children.

This article covers how the BBBA impacts healthcare coverage for individuals and families, including its effect on healthcare subsidies, the price of pharmaceutical drugs, Medicare and Medicaid, children's health insurance, and paid family or medical leave.

Major Health Coverage Provisions of the Build Back Better Act

The BBBA impacts health coverage in significant ways for adults, children, families, and individuals via the following provisions.

ACA Marketplace Subsidies

Subsidies are tax credits that people receive to help cover the cost of insurance. Under the ACA, people who make 100–400% more than the federal poverty level qualify for subsidies. Since 2022, the number has expanded to include those with higher incomes, including some people covered by their employers.

Under the BBBA, subsidies have been modified, including for people who live in states that did not accept ACA's expansion of Medicaid, the health insurance program for low-income people funded by states and the federal government. New provisions under the BBBA include the following:

• From 2022–2025, people who live in states that did not adopt the ACA's Medicaid expansion and who make an income that is too high for Medicaid but too low for ACA subsidies will receive tax credits to purchase an ACA Health Insurance Marketplace plan.
• Until 2026, households with working dependents younger than 24 years old would not have to include the dependent's salary in household income if the dependent makes less than $3,500 a year.
• People who have lost their job because of international trade agreements can receive subsidies that cover 80% of premium costs.

Drug Pricing Policies

Under the BBBA, drug prices have also been lowered or will lower for some adults and children because of the following:

• Starting in 2024, the Children's Health Insurance Program (CHIP) will provide more lower-cost or no-cost prescription drugs.
• Pharmacies will need to fill out monthly drug cost surveys so states can keep track of drug costs.
• Insulin products will cost no more than $35
• In most states, starting in 2023, Medicaid will cover all vaccines for adults.

Medicare Part D Reforms

Medicare Part D recipients received the following under the BBBA:

• A drug negotiation program that will negotiate prices on popular drugs starting in 2025.
• Insulin will be capped at $35.
• A lowered cap for prescription drug prices and out-of-pocket costs
• Fines for pharmaceutical companies who do not negotiate prescription drug prices or who raise prices beyond inflation
• There will be no more "safe harbor" protection for pharmacy benefit managers (PBMs) negotiating drug prices. PBMs are middle people between patients and companies who process drug claims. Under the Trump administration, PBMs were provided safe harbor from a federal anti-kickback law. This would have raised drug prices in the long term.

Maternity Care and Postpartum Coverage

The BBBA impacts new parents and their children with the following policies:

• For up to a year after a person gives birth, the person and child are provided with healthcare coverage under CHIP. Until 2023, when the program starts, states can use federal funds to provide the same coverage.
• In 2023, maternal care homes will need to provide 12 months of postpartum (after-birth) care.
• Maternal care homes will also receive more funds and have to provide more data on patients' needs.
• The BBBA provides funding for better maternal healthcare worker training and for research on maternal health, including the risks of pregnancy in the U.S.

Medicaid and Children’s Health Insurance (CHIP) Changes

People who have health plans via Medicaid and/or CHIP can benefit from the BBBA through the following policies:

• Starting in 2024, the Children's Health Insurance Program (CHIP) will expand prescription drug coverage.
• From 2022–2025, people who live in states that did not adopt the ACA's Medicaid expansion and who make an income that is too high for Medicaid but too low for ACA subsidies will get healthcare tax credits.
• Starting in 2023, for up to a year after a person gives birth, the person and child are eligible for healthcare coverage under CHIP.
• The federal funding for CHIP programs has become permanent.
• States can raise the income limit for qualifying for CHIP with the help of federal funding.
• Children under 19 are eligible for a year of Medicaid and CHIP.
• People in the justice system are eligible for Medicaid starting from 30 days before their release.

Medicaid Financing and Benefit Changes

The following are changes that the Build Back Better Act made to Medicare financing and benefits:

• States cannot change Medicaid eligibility requirements until 2025 without a penalty.
• States can raise the income limit for qualifying for CHIP with the help of federal funding.
• Federal funding for Medicaid will increase by 3%.

Paid Family and Medical Leave

The BBBA establishes paid family and medical leave for the first time in U.S. history, including for part-time and freelance workers, for up to $2,000 of their income. These provisions, which begin in 2024, include:

• Four weeks of maternity or paternity leave
• Four weeks of leave to care for a loved one
• Compensation for employers who have already provided such benefits

What Does This Mean for Me?

Healthcare provisions of the BBBA contribute to more affordable healthcare for all populations, including people who purchase insurance from their employers. Some ways the provisions impact all Americans include:

• Lowering prescription drug prices
• Almost $80 million in savings for the Medicare program
• Capping healthcare costs at 8.5% of income, including for those with employer-based insurance
• Providing paid family leave
• Providing funding for health research

Summary

The Build Back Better Act (BBBA) is a federal spending program that was passed in November of 2021. The BBBA includes several provisions that impact healthcare access and affordability for most Americans. The BBBA provides for lower drug costs, and it also expands maternity care. This includes more data on drug prices and providing a full year of CHIP coverage to newborns and people who have given birth for up to a year.

CHIP and Medicaid coverage have also expanded under the BBBA. This includes allowing people who live in states that did not expand Medicaid under the ACA to purchase insurance if they cannot meet their state's Medicaid requirements. CHIP's federal funding has also become permanent. Paid family leave, including for births or caring for a loved one, has also been passed as part of the BBBA for the first time in American history.