COVID-19 Relief Package Signed into Law; House Poised to Act on Medicare Sequestration Cuts

March 16, 2021

On Thursday, March 11, President Biden signed a $1.9 trillion COVID-19 relief package into law. The legislation, known as the American Rescue Plan, allocates money for vaccines, schools, small businesses and anti-poverty programs such as an expanded child tax credit that would mean new monthly payments to many parents.

Health provisions included in the bill include:

  • Increasing Federal Medical Assistance Percentages (FMAP) from 7.35% to 10% to make improvements to Medicaid home- and community-based services.
  • Incentivizing states to expand Medicaid by providing a temporary (two-year) 5% increase to the Medicaid FMAP for states that enact the Affordable Care Act’s (ACA) Medicaid expansion and covers the newly eligible adult population per ACA requirements.
  • Expanding eligibility for the $8.5 billion set to go to rural healthcare providers.
  • Covering 100% of Consolidated Omnibus Budget Reconciliation Act (COBRA) premiums through September 30, 2021.
  • Temporarily increasing subsidies for people purchasing health insurance through ACA marketplaces and limiting payments on health insurance for all Americans through the end of 2022 at 8.5% of a household’s income.
  • Providing $20 million to the Department of Health and Human Services (HHS) for grants to eligible states to modernize the health insurance marketplaces established under ACA with funding limited to two years.
  • Expanding ACA’s premium tax credits for health insurance purchased through an exchange.

A total of $14 billion was included for vaccine distribution, with $8.5 billion going to the Centers for Disease Control and Prevention to track, administer and distribute COVID-19 vaccines. Another $47.8 billion will go toward diagnosing and tracing coronavirus infections, and an additional $2 billion will go toward buying and distributing various testing supplies and personal protective equipment.

Addressing Pending Medicare Cuts

The United States House of Representatives is soon expected to consider a bill to extend the temporary moratorium on the 2% sequestration cuts to Medicare, which is set to expire on March 31, 2021. The legislation would extend the moratorium until December 31, 2021.

The bill would also waive a 4% cut to Medicare payments, and larger cuts to mandatory programs across the board, scheduled to take effect in 2022. These future cuts were triggered when the COVID-19 relief package (outlined above) passed earlier this week. Under the 2010 Pay-As-You-Go law (PAYGO), spending increases and tax cuts that add to the deficit, such as the American Rescue Plan, trigger automatic cuts the following calendar year. The bill addressing sequestration cuts would also entirely waive the PAYGO rules, and prevent the automatic spending cuts to all programs, including Medicare.   

The Association for Clinical Oncology (ASCO) continues to advocate for extended relief from the 2% Medicare cuts in 2021, as well as the 4% Medicare cuts in 2022.

Bookmark ASCO in Action for more updates, as well as news, advocacy, and analysis on cancer policy.