The American Rescue Plan, as put forward by President Biden and about to be approved by the U.S. Congress, is a bold and necessary action—not just to restore the American economy in the wake of the COVID-19 pandemic but to make it far more just. Here we point to some of the leading features of the plan with estimates of how many people in Pennsylvania will benefit from it. (PA estimates are from the Senate version of the legislation. Links are to the sources of our information.)
Most notably, the legislation takes a major step forward in making health insurance through the ACA more affordable and includes a welcome expansion of child tax credits, which for the first time would give low- and moderate-income families in our country the kind of support that can be found in many other countries.
And, at one stroke, the legislation would ensure that state and local governments and school districts could all overcome the revenue shortfalls created by the pandemic and meet the challenges it has created in our communities.
This legislation is much-needed and far-reaching. It would restore our economy to health and take a necessary and long-delayed step forward in overcoming the inequities that the pandemic has revealed to all of us.
Individual Payments
The Senate bill would provide payments of up to $1,400 to families with an income of less than $160,000 per year and to individuals with an income of less than $80,000 per year.
- 5,876,366 Pennsylvanians would receive a total of $14.8 billion in direct payment from the federal government.
Unemployment Insurance
Under the extension of the Federal Pandemic Unemployment Compensation (FPUC), people who are unemployed would get $300 added to their regular weekly unemployment benefits through September 6. Under the extension of the Pandemic Unemployment Assistance (PUA), freelancers, gig workers, and independent contractors would continue to receive unemployment insurance during that time. Under the extension of the Pandemic Extended Unemployment Compensation (PEUC) program, provisions that increase the duration of payments for those in the traditional state unemployment system would continue as well. The first $10,200 of unemployment payments would be tax-free for households with annual incomes of less than $150,000.
- 642,478 Pennsylvanians, (10.23% of all workers in the state) were facing a cut-off of these benefits. They will now continue.
The legislation includes a major expansion of the Affordable Care Act, including subsidies for health insurance on the exchanges / marketplace for two years. Democratic leaders plan to continue the subsidies after that time.
- Individuals and families would now pay no more than 8.5% of their income towards coverage, down from the current amount of nearly 10%. Also, those earning more than the current cap of 400% of the federal poverty level—about $51,000 for an individual and $104,800 for a family of four in 2021—would become eligible for help for the first time. Subsidies for lower-income individuals and families would be increased, in many cases eliminating their premiums entirely. People collecting unemployment benefits would pay no premiums in 2021.
- 280,000 Pennsylvanians now secure health insurance on Pennie.com, the Pennsylvania insurance marketplace. Our rough estimate is that at least a third, and perhaps up to a half, of those 280,000 will see their premiums go down. In addition, thousands of people who purchase insurance outside the marketplace will now have a strong incentive to buy insurance inside it. That will expand the pool of insured and bring premiums down even more.
- Some particular examples of the impact of In Pennsylvania, we estimate that:
- A 45-year-old individual with an income of $60,000 would see her monthly premium go down $89 from $514 to $425.
- A couple composed of two sixty-year-olds, with an income of $75,000 would see their insurance premiums drop $1,402, from $1,933 to $531 per month.
- A family of four with an income of $120,000 would have their premium drop $605 from $1,455 to $850 per month.
- A 60-year-old with an income of $55,000 would see his premiums drop by $527 a month from $917 to $390 for a silver plan per month. A low-cost bronze plan would drop by $535 a month from $634 to $99. A low-cost gold plan would drop by $497 a month from $841 to $344.
- In addition, 26% of the uninsured in PA (96,216 people ) are now eligible for a free bronze-level plan or a low-cost silver plan with a very low deductible.
- The Senate legislation also provides more generous assistance to those who have lost their jobs but want to remain on their employer health insurance plans through COBRA. These laid-off workers would not pay any premiums through the end of September.
Children
The legislation includes a major expansion of the child tax credit. It would give low-income families $3,600 for each child under age 6 and $3,000 for each one under age 18, up from the current credit of up to $2,000 per child under age 17. The child tax credit would become fully refundable so that parents with a very low income would receive benefits. And households could receive payments monthly, rather than in an annual lump sum, which would make it easier for them to cover their expenses. More than 2.3 million children, or 90% of all children under 18 in Pennsylvania, would benefit from the expansion of the child tax credit.
The legislation would also provide $39 billion to child care providers, some of which would be required to help families struggling to pay the cost.
- In Pennsylvania:
- 892,000 children under 17 who were left out of the full $2,000 Child Tax Credit would now benefit.
- 140,000 children under the age of 18 would be lifted above poverty.
- 311,000 children under 18 would be lifted above or close to the poverty line.
- 90% of children under 18 would benefit from the expansion.
Child Care
Pennsylvania would receive $34.45 million in new funding for Head Start.$457 million from the Child Care and Development Block Grant (CCDBG) program, and $731 from the Child Care Stabilization Grant program both of which are part of the Child Care and Development Fund, which provides support for child care for low-income families.
Earned Income Tax Credit
The Senate bill would also expand the earned income tax credit. Working adults who are not raising children at home now get only a small credit. The legislation would raise the maximum EITC for these “childless adults” from about $530 to about $1,500, raise the income cap for them to qualify from about $16,000 to at least $21,000, and expand eligible childless workers to include younger adults aged 19-24 who aren’t full-time students, as well as those aged 65 and over.
Food Assistance
Nationally, those who receive food stamps would continue to receive a 15% increase in benefits, which had been scheduled to lapse in June, through September. The families of children whose schools are closed would be able to receive benefits that replace free and reduced-price meals through the summer if their state opts to continue it. In Pennsylvania, 1.8 million SNAP recipients would get an average increase of $27 a month, adding $50 million per month in total food assistance.
Housing
Funding in the amount of $20 billion would go to state and local governments to help low-income households cover back rent, rent assistance, and utility bills.
For homeowners, $10 billion would help those who have difficulty paying their mortgages, utilities, and property taxes.
States and localities would receive $5 billion to assist those at risk of experiencing homelessness and an additional $5 billion for emergency housing vouchers for those who are currently homeless.
Support for Businesses
The Senate bill includes $15 billion for the Emergency Injury Disaster Loan program, which would provide long-term, low-interest Small Business Administration loans.
It includes $25 billion for a new grant program, specifically for bars and restaurants. Businesses could receive up to $10 million for expenses including payroll, mortgage and rent, utilities, and food and beverages.
The Paycheck Protection Program, which is currently taking applications for second-round loans, would get an additional $7 billion, and the legislation would expand eligibility for non-profit organizations.
The legislation includes $350 billion in much-needed assistance to state and local governments. The state of Pennsylvania would receive $7.293 billion, and county and municipal governments would receive $6.149 billion. Every county and most municipalities in Pennsylvania would receive some aid with $1.1 billion going to Philadelphia and $354. million to Pittsburgh. This funding would help state and local governments cover revenue shortfalls created by the pandemic, respond to the COVID-19 emergency, and make investments in broadband and water and sewer systems. States would not be allowed to use these funds to reduce taxes or add to pension funds.
Education Funding
The legislation includes $168 billion in education funding—$126 billion for K-12 education, $40 billion for higher education, and an additional $2.75 billion for private schools and other uses. K-12 funding is for helping schools reopen and helping students catch up on what they have missed during the pandemic. States would be required to spend a percentage of the funds on summer learning, afterschool programs, and education technology. Some funding would be set aside for challenge grants focused on educational equity. An amendment added during the Senate floor would provide $800 million to support education and wraparound services for homeless children. It would also require school districts to develop a plan for the safe return to in-person schooling. About $7.2 billion would go toward the E-rate program to help residences and libraries connect to the internet.