May 18, 2020

Congress Gets Serious About COVID Phase 4 Legislation

To date, Congress has passed four bills to combat the threat of COVID-19:

  • March 6: Coronavirus Preparedness and Response Supplemental Appropriations Act (“Phase 1”) – $8.5 billion
  • March 18: Families First Coronavirus Response Act (“Phase 2”) – $200 billion
  • March 27: Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (“Phase 3”) – $2.2 trillion
  • April 24: Paycheck Protection Program and Health Care Enhancement Act (“Phase 3.5”) – $500 billion. This bill is colloquially known as “Phase 3.5” as it was primarily a vehicle to renew and extend funding authorized in “Phase 3.”

Notice a theme?

First, the cost of the bills has increased exponentially. In the span of just three weeks in March, the amount of money Congress believed was necessary to combat coronavirus multiplied by more than 250 times. (The White House’s original request for Phase 1 was just $2.5 billion.) Even the roughly $2.2 trillion allocated under the CARES Act – to date the costliest bill enacted in U.S. history – proved insufficient, and Congress found itself having to renew funding for several programs less than a month later.

Second, the pace of lawmaking has slowed considerably. Notwithstanding “Phase 3.5,” Congress went from passing a new bill roughly every 10 days to having not funded any new programs for nearly two months. Since Phase 3 was passed in late March, however, the number of confirmed COVID-19 cases in the United States has risen from just over 100,000 to more than 1.4 million, and the number of confirmed deaths has increased from roughly 2,000 to more than 80,000. Equally concerning, the economy has gone into free-fall, with the official unemployment rate hitting nearly 15 percent, the highest figure since the Great Depression nearly 90 years ago. Economists expect the unemployment rate to continue to climb.

While some on Capitol Hill and in the administration continue to urge a “wait and see” approach, it is becoming increasingly clear that Congress will have to pass at least one more large virus response and economic stimulus bill. Unlike previous bills, which passed relatively quickly and with overwhelming support, the debate over “Phase 4” is likely to be more in line with what we have come to expect from Washington – a bitter partisan battle.

House Democrats Make the Opening Move

On March 15, the House of Representatives, H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES) Act, largely on a party-line vote. Weighing in at around $3 trillion, it roughly equals the amount of federal funding allocated so far in the four previous bills.

Spanning more than 1,600 pages and hundreds of individual provisions, the bill is particularly noteworthy for the nearly $1 trillion for state and local governments, $200 billion in hazard pay for essential workers, and allocating another round of $1,200 stimulus checks to individuals. While Republicans have already called the HEROES Act “dead on arrival,” is represents the Democrats’ opening bid in what will be a prolonged debate. It is after House passage that “real” negotiations with the White House and congressional Republicans will begin.

Republican Priorities

Republican leaders and the Trump Administration have other priorities. Republicans are split on how costly a Phase 4 bill should be. While President Trump appears to have no concerns about crafting a large bill, fiscal conservatives on Capitol Hill and in the administration are expressing alarm about the aggregate cost of COVID-19 on the federal budget. It is safe to assume the final bill will be smaller – perhaps much smaller – than $3 trillion. One area Republicans are united on is the need for businesses that reopen after stay-at-home orders are lifted to be given indemnity against lawsuits by consumers who may be exposed to COVID-19. Separately, the President has urged Congress to provide a payroll tax holiday in the next bill, though that idea has only lukewarm support among Republicans and Democrats.

What About Employers?

After passage of the CARES Act in late March, PBGH laid out a set of policy priorities on behalf of large employers with the overlying goal of helping employers continue to provide high quality health to their employees.

As noted in the chart below, the HEROES Act checks a few boxes, but there is still substantial room for improvement as we enter the coming debate.

As Congressional leaders begin to work out details of the final Phase 4 bill, PBGH will be engaging with congressional leaders on each of these topics, with a particular focus on strengthening the primary care system and preventing price spikes that could fundamentally destabilize the ability of its members to continue to provide high quality coverage to their employees. And on May 19, PBGH was jointed by 35 organizations representing many of the nation’s leading private and public sector employers in issuing a letter to congressional leaders requesting they take immediate action to ensure Americans have access to high-quality, affordable health care, both now and long after the COVID-19 pandemic ends.

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