On April 26, the Biden administration proposed rules to address a longstanding problem: “Dreamers” — that is, young people who were brought to the United States as children and are now protected against deportation by the Deferred Action for Childhood Arrivals (DACA) — lack access to affordable health insurance unless furnished by their employers. The rule would recognize DACA recipients as legally present in the U.S. and, in doing so, would allow Dreamers, like other legal U.S. residents, access to marketplace coverage and, in some cases, Medicaid and CHIP. The comment period ends June 23.
Under this proposal, the administration uses the regulatory powers granted to the Secretary of the Department of Health and Human Services (HHS) under the Affordable Care Act (ACA) to broaden the definition of who is a legal U.S. resident to include DACA recipients. If finalized, the rule would immediately extend access to marketplace coverage, along with premium assistance and cost-sharing subsidies, to Dreamers. The proposal also would apply the expanded definition of legal residency to Basic Health Programs (BHP), currently offered in New York and Minnesota to low-income residents who otherwise would enroll in marketplace plans. (Oregon proposes to become the third state to offer a BHP.)
The finalized rule is set to go into effect in November 2023, in time for Dreamers to take advantage of the marketplace open-enrollment period for 2024, as well as the special-enrollment period that applies to all people who become newly eligible for marketplace plans. Additional outreach and support services would be available to help Dreamers navigate enrollment — likely their first experience doing so.
The proposal also would apply the broader definition of legal U.S. residency to Medicaid and the Children’s Health Insurance Program (CHIP). Normally, Medicaid and CHIP applicants with newly acquired U.S. legal status must wait five years to access these programs. But in states that have taken advantage of a flexibility rule that was part of the CHIP Reauthorization Act of 2009 (CHIPRA), coverage can begin immediately for pregnant people and children. Medicaid’s five-year waiting period would apply to Dreamers (those pregnant or children) in states that have not opted for CHIPRA and to those applying under other Medicaid eligibility categories (e.g., ACA expansion adults). Marketplace benefits would be available to recently legalized Dreamer populations without a wait, if they cannot qualify for Medicaid as a result of the waiting period.
The proposal carries enormous implications. The administration estimates that of the approximately 589,000 active DACA recipients in 2022, more than one-third (34%) were uninsured. Furthermore, the proposal anticipates that Dreamers will broadly embrace the new coverage options, projecting that some 200,000 Dreamers will apply annually. Although the Medicaid and CHIP coverage pathways are narrower because of the waiting period, the changes are expected to have an important impact in the 35 states and the District of Columbia that have adopted the CHIPRA option to waive the waiting period for pregnant women and children.
Official projections state that 130,000 DACA recipients will gain insurance across all insurance affordability programs — marketplace plans, BHP plans, Medicaid, and CHIP. Marketplace plans would account for most of the enrollment, with 119,000 new enrollees. Medicaid enrollment would rise by 13,000 annually in 2024 and then decline as young Dreamers age out, falling to 6,000 by 2028. The remainder will predominantly be pregnant people.
Why has it taken more than a decade to align ACA insurance coverage policies with DACA? Despite the Trump administration’s attempt to end DACA, and a number of states persisting in challenging DACA’s existence, DACA has become a staple of the U.S. legal immigration landscape. Logically, ACA coverage access should have aligned with DACA from the time this new legal status was first recognized in 2012. Because this did not happen, tens of thousands of children and young adults have gone without insurance coverage for more than a decade.
By eliminating this barrier to marketplace, Medicaid, and CHIP benefits, this proposal changes the picture profoundly. HHS rests this major shift in policy, designed to align DACA status with other legal immigration categories, on new evidence regarding Dreamers’ pervasive uninsured rates, as well as the lack of any law barring this regulatory change. As such, the proposal rectifies a longstanding barrier to health equity.
