After a week of intense negotiations, Democrats and Republicans finally reached a deal on a $2 trillion stimulus package aimed at resuscitating the economy following several weeks of severe, acute economic downturn. The House passed the Coronavirus Aid, Relief and Economic Security Act
on Friday afternoon, an unprecedented stimulus package that includes billions in emergency relief for hospitals, small businesses, individual Americans and more.
The CARES Act functions largely as an economic stimulus by providing cash payments to individuals below a certain income, providing extra unemployment benefits, and allowing self employed individuals to apply for unemployment. For businesses, aid is provided through emergency grants, forgivable loans and relief for existing loans. These provisions are intended to assist employers to help them stay in business, keep employees on their payroll, and allow them to continue to support employees through employee benefits and health insurance.
Several portions of the bill that we anticipated would be included remained in, including direct payment to Americans. Those with adjusted gross income up to $75,000 ($150,000 for married couples) would get a $1,200 ($2,400 for couples) rebate from the federal government, with an additional $500 per child. The payments would begin phasing out for earners above those income thresholds and would not go to single filers earning more than $99,000; head-of-household filers with one child, more than $146,500; and more than $198,000 for joint filers with no children.
The Treasury Department will divvy up $500 billion between struggling industries, including $58 billion for airlines. Several Democratic and Republican “fiscal hawks” took issue with the “bailout” of airliners, but were appeased with the addition of several provisions. White House officials agreed to permit an independent inspector general and oversight board to inspect all lending decisions made to the large corporations receiving government assistance. In addition, the bill bans stock buybacks for the term of the government assistance plus one year for any company receiving said assistance.
Hospitals will receive the $100 billion in federal assistance they initially requested be in the FFCRA
along with a 20 percent bump in Medicare payments for treating COVID-19 patients. Experts expect rural hospitals to be hit especially hard during this pandemic, since they already operate on thin margins with limited staff. Unlike the providers, insurers were not so lucky. Carriers requested an emergency fund to offset losses from the pandemic, including premium subsidies to help fund temporary COBRA coverage, but received nothing.
The bill expands coverage beyond what was in last week’s Families First bill by requiring health insurers to pay for coronavirus testing beyond those that are FDA-approved to include those provided by labs, state-developed tests, and any other tests approved by HHS. Accessibility for telehealth is also expanded. High deductible health plans with HSAs may now allow pre-deductible coverage for telehealth and other remote services, as well as allowing the use of HSAs for the purchase of over-the-counter medications without a prescription.
Very limited action was also taken to address surprise medical bills. Under the CARES Act, all health insurance plans would reimburse a COVID-19 test provider at the in-network rate put in place prior to the breakout. If the provider is out of network, the health plan is to fully reimburse the provider based on the provider’s own “cash price” which must be made publically available while the public health emergency is still declared. Providers that do not post their test price publically could be fined up to $300 a day.
Leading up to the CARES Act’s passage in the Senate Wednesday evening, a group of Republican senators threatened to block the vote over certain unemployment benefit provisions. According to the bill, those unemployed would get an extra $600 per week for up to four months, on top of state unemployment benefits to make up for 100% of lost wages. Those who opposed the provision argued that it incentivizes people not to go back to work; ultimately these senators dropped their concerns and allowed the bill to pass.
The bill also provides $150 billion for state and local governments, as states quickly burn through their own funding. Several states anticipate they will face multibillion-dollar budget shortfalls. New York’s budget office, for example, anticipates state revenue losses could be as high as $15 billion. The massive stimulus package also includes:
- $200 million to be invested in telemedicine
- $30 Billion for education funding
- $25 Billion for public transit
- $17 Billion for small businesses
- $10.5 billion for the Pentagon, including $1.5 billion to deploy the National Guard
- $10 billion Treasury loan for the Postal Service