$1.9 trillion stimulus: How does it impact the health care industry?

Gabriel Perna | March 16, 2021

It turns out that $1.9 trillion can go a long way and it’s not just to send money into the pockets of Americans during the COVID-19 crisis.  

Last week, President Joseph R. Biden Jr. signed the American Rescue Plan Act of 2021 into law after it passed through the budget reconciliation process in the Senate and House by a razor-thin majority along partisan lines. For health care CEOs, there is a lot in this newly minted law that will impact their organizations. Health Evolution parsed through 600-some odd pages to determine the most important elements for payer, provider, and life sciences CEOs.  

Here are some of the highlights.  


ACA and health insurance 

Medicaid. For the 12 states that haven’t expanded Medicaid under the Affordable Care Act, the stimulus plan offers more incentives to do so. Particularly, it offers a temporary increase of the state’s Federal Medical Assistance Percentage (FMAP) for their base program by 5 percentage points for the next two years. The law also gives states the option to extend Medicaid and Children’s Health Insurance Program (CHIP) eligibility to pregnant individuals for 12 months postpartum, allows states to expand Medicaid coverage for prisoners close to release and for pregnant and postpartum women for 5 years, removes the cap limiting how much drug manufacturers must rebate to Medicaid and extends Medicaid assistance to Urban Indian and Hawaiian health care systems. 

Increased subsidies. This law increases ACA marketplace subsidies above 400 percent of the poverty level and also increases subsidies for those making between 100 percent and 400 percent of the poverty level, for two years (2021 and 2022). According to Kaiser Family Foundation, this will create substantially lower premiums for the 15 million uninsured people eligible to buy a plan on the marketplace and the 14 million people insured on the individual market.  

COBRA. In addition to the ACA subsidies increase, the American Rescue Plan Act of 2021 pays 100 percent of COBRA premiums for eligible individuals and families to remain on their employer-based coverage after losing unemployment. This is only in effect until September 30, 2021.  


Provider relief  

Provider relief fund earmarked for rural providers. The CARES Act, the $2.2 stimulus from last year, offered more than $175 billion to providers in relief during the early days of the COVID-19 pandemic. This one isn’t as generous, with the fund topping out at $8.5 billion and being designed for rural providers only. In order to apply for the fund, providers must write a statement justifying the need, be enrolled in Medicare or a state Medicaid plan, provide diagnoses, testing, or care for individuals with possible or actual cases of COVID–19 and be located outside a metropolitan statistical area (MSA) and within a rural census tract of an MSA.  

Oversight. The plan also gives $5 million to the HHS Office of Inspector General (OIG) for oversight activities with respect to the public health and social services emergency fund (the Provider Relief Fund). The Department of Justice has already started cracking down on providers who abused the first wave of provider relief funds. 


COVID-19 and public health  

Big money on vaccines testing, distribution and awarenessNot surprisingly, the law includes significant funding for public health and COVID-19 vaccine distribution. This includes $7.5 billion to the Secretary of Health and Human Services (which is on track to be Xavier Becerra) to plan, prepare for, promote, distribute, administer, monitor and track COVID-19 vaccines. According to the American Hospital Association (AHA), it’s giving out $15 billion for expanding nationwide distribution and administration of vaccines by supporting efforts such as increasing access, specifically in underserved communities and nearly $50 billion to continue the national testing and contact tracing strategy. There’s also $1 billion earmarked for Centers for Disease Control and Prevention to increase vaccine confidence, which has already begun according to STAT. An additional $1.75 billion is allocated to strengthen and expand activities and workforce related to genomic sequencing, analytics, and disease surveillance. 

Public health workforce. The new law doles out $7.6 billion to the HHS Secretary for establishing, expanding, and sustaining a public health workforce, including by making awards to State, local, and territorial public health departments. According to the AHA, it also earmarks “$100 million for the Medical Reserve Corps; $800 million for the National Health Service Corps; $200 million for the Nurse Corps; and $330 million for teaching health centers that operate graduate medical education. 

Read more: Can community health workers and empathy improve inequity and reduce disparities? 

Help for state, local and tribal governments. The law gives $350 billion to states, localities and tribes, part of which can be used for public health efforts responding to the COVID-19 pandemic or overall investments into public health infrastructure.   


Mental health and other 

Money towards mental health programs. The American Rescue Plan Act of 2021 allocates $3.5 billion for programs like the Community Mental Health Services Block Grant and Substance Abuse Prevention and Treatment Block Grant. $15 million is earmarked for planning grant funds for states to develop a mobile crisis service program, $50 million for community-based providers addressing mental health needs, and $80 million for pediatric mental health access. 

Provider mental health programs. The law includes $100 million for training to reduce suicide, burnout, mental health conditions, and substance use disorders among health care professionals, as well as a mental health awareness campaign directed at health care professionals and first responders and employers of such professionals and first responders. There’s also $100 million funding for behavioral workforce education and training.  

More help for rural providers. For rural providers, along with the relief funds, the law appropriates $500 million to increase capacity for vaccine distribution, provide medical supplies to increase surge capacity, increase telehealth capabilities, construct permanent or temporary structures for health care services, including vaccine testing as well as administration and other uses.  

Indian Health System. The American Rescue Plan Act of 2021 includes more than $5 billion for the HHS Secretary to use to improve the Indian Health Service. This includes $140 million for telehealth and IT upgrades, $2 billion for lost reimbursements, $600 million for vaccine distribution and more.  

Veterans’ health. The law also includes a $14 billion appropriation to improve veterans care.  



“While the bill will help provide much-needed relief for rural hospitals, the association also is disappointed that it does not deliver more overall funding for the Provider Relief Fund. AHA is concerned that the bill does not include an extension of relief from Medicare sequester cuts and fails to provide loan forgiveness for Medicare accelerated payments for hospitals.” 

AHA President and CEO Rick Pollack 

The time is now to make real investments in mental health services, and our country is finally stepping up to the challenge in this COVID-19 relief package. NAMI is grateful for the leadership of the President and leaders in Congress for making these critical investments to improve the lives of people living with mental illness.” 

National Alliance on Mental Illness (NAMI) CEO Daniel H. Gillison

Fully covering the cost of COBRA premiums during these challenging economic times is precisely the kind of timely, targeted, and temporary action Americans support and need during the pandemic, offering them greater health security and added financial stability when they need it most. 

America’s Health Insurance Plans (AHIP) President and CEO Matt Eyles 

“The bill’s $8.5 billion allocation for rural providers will protect and support care for many of the nation’s most vulnerable patients, especially those who live in rural, underserved communities. Meanwhile, funding for vaccine distribution and testing included in the legislation takes direct aim at COVID-19’s grip on the nation. 

Federation of American Hospitals President and CEO Chip Kahn 

About the Author

Gabriel Perna, Senior Manager, Digital Content

Gabriel Perna is the Senior Manager of Digital Content at Health Evolution. He brings 10+ years of experience in covering the intersection of health care and business. Previously, he was at Chief Executive, Physicians Practice and Healthcare Informatics. You can reach him via email or on Twitter at @GabrielSPerna