A Family Glitch

Eakinomics: A Family Glitch Former President Barack Obama returned to the White House yesterday for a family reunion of sorts. Surrounded by his former vice-president and a roomful of ardent advocates for the Affordable Care Act (ACA), he basked in their praise of the ACA accomplishment. He touted the ACA’s expansion of coverage, emphasized its importance as a symbol of the road to universal coverage, and then teed up another key moment in the family’s collective efforts: President Biden’s announcement of a fix for the family glitch. What is the family glitch? Under the ACA, individuals who are not offered “affordable insurance” by their employer qualify for subsidies to buy coverage on the ACA exchanges. Due to some ambiguities in drafting, the Treasury interpreted the requirement to be that employers offer individual coverage that costs less than about 10 percent of their income. It doesn’t restrict family coverage to be under 10 percent of family income; families that are offered any insurance at all are not eligible for the ACA. Under Treasury’s new proposed rules, family members who have to pay more than 10 percent of income will be able to get subsidies under the ACA. The family glitch is not a recent discovery. AAF wrote about it as early as 2014. At present, it affects roughly 5 million Americans. The proposed Treasury rule is expected to shift 1 million people out of employer insurance and to bring 200,000 uninsured individuals into coverage. All of which raises a single question: If the family glitch is such a big deal, and if it can be easily rectified by a Treasury rulemaking, why didn’t President Obama and Vice President Biden fix it a decade ago? Oh, and there are a few corollary questions as well. Is it really worth throwing a family reunion and pulling in Barack Obama for an action that will raise the ACA’s taxpayer tab, lead to roughly a million people losing their employer-sponsored insurance, and on net cover only 200,000 more Americans? That seems like a family glitch.