The Health Provisions in HEALS and Heroes

After working through their internal disagreements, Senate Republicans recently released a proposal for the next round of COVID-19 relief legislation, called the Health, Economic Assistance, Liability Protection and Schools Act, or HEALS. House and Senate leaders, along with representatives from the Trump administration, must reconcile it with the Heroes Act, which House Democrats passed in May.

Striking a compromise will be a challenge. The Congressional Budget Office (CBO) estimates Heroes would cost $3.5 trillion over a decade if enacted. There is no budgetary analysis yet of HEALS, but it would likely add about $1.0 trillion to the federal budget over the same period. The four previous relief bills have already spent $3.7 trillion over ten years, with most of the added costs occurring in 2020 and 2021.

 

 

The diverging budgetary effects of HEALS and Heroes is tied primarily to their differing approaches to economic assistance and recovery. Heroes: extends the CARES Act’s $600 per week pandemic unemployment assistance through January 2021; authorizes another round of $1200 direct payments to individuals (whether unemployed or not); enhances and extends the Paycheck Protection Program (PPP); provides $1.0 trillion in new state and local government support along with $90 billion for schools; and ramps up housing, food, and other low-income assistance programs.

HEALS likewise provides another round of $1200 stimulus checks but cuts the special unemployment assistance to $200 per week and extends it through September. Beginning in October, workers could get up to 70 percent of their previous wages in regular unemployment assistance plus special pandemic support. HEALS also extends and modifies PPP, offers liability protection to businesses that follow public health protocols for reopening, and provides $70 billion for K-12 education.

While the differences on economic relief and recovery are substantial, the divergent approaches to the health-related provisions are just as important because of what they would mean for the trajectory of the pandemic in the coming months.

• Centralized vs. Decentralized Public Health Response. The most important health-related difference is one of strategic orientation. Heroes calls for federal implementation of a coordinated national testing, contact tracing, and virus mitigation strategy. HEALS would continue the Trump administration’s approach of allowing state and local governments to take the lead in controlling the spread of the pandemic with much less federal direction, support, and funding. As the pandemic has worsened in recent weeks, this split has become central to the congressional debate.
• Testing and Contact Tracing. Heroes provides an additional $75 billion to support expanded testing capacity and to help states finance more robust contact tracing. This funding would add to the $25 billion provided in a previous bill. HEALS would provide less new funding — $16 billion — and focuses it on testing alone and not contact tracing. A long roster of public health experts assembled by the Rockefeller Foundation recently recommended an additional $75 billion for testing and tracing in a report that stressed the urgency of moving quickly with a revamped and coordinated national program.
• Health-Care Provider Financial Support. Heroes provides an additional $100 billion for hospitals and other facilities, as well as for physician practices. HEALS provides $25 billion for this purpose. The financial outlook for the provider community has improved somewhat since May, when Heroes was assembled, which may affect the level of support that is inserted into a compromise plan.
• Vaccine Development, Procurement, and Distribution. Heroes provides an additional $4.5 billion for vaccine and therapeutic development, through an additional appropriation for the Biomedical Advanced Research and Development Authority (BARDA). It also provides $4.7 billion for the National Institutes of Health (NIH). HEALS directs much more funding toward this objective, with $20 billion for BARDA, $6 billion for a vaccine distribution program, and $15 billion for NIH (much of which would help the agency resume non-COVID research sidelined by the pandemic). HEALS also directs $3 billion to an international COVID-19 vaccine procurement program sponsored by Gavi and the World Health Organization.
• Support for Job-Based Health Insurance. Heroes pays 100 percent of the COBRA premiums for unemployed workers who have lost their job-based coverage for the period March 2020 to January 2021. CBO estimates the cost at $0.1 trillion. HEALS provides no comparable support.

From the beginning of the crisis, and especially since April, Trump administration officials have made the case that states should take the lead in controlling the pandemic because conditions around the country are too varied to lend themselves to a federally-directed response.

The experience since then has shown that a state-led response was a mistake. The SARS-CoV-2 virus spreads easily from region to region. It is not possible for states to protect their citizens when the virus is transmitting rapidly in other parts of the country. Moreover, only the federal government can marshal the resources commensurate with the challenge. The fragmented, state-by-state program on display since April has produced a cacophony of conflicting messages from elected leaders and public health officials along with dismal results, measured in the harm caused to human health and to the livelihoods of tens of millions of Americans.

And yet, despite the undeniable facts on the ground, the Trump administration is unlikely to change course; it is too committed to vindicating previous decisions. Congressional Republicans have less ownership of what is transpiring and thus more leeway to demand a reset. They should side with congressional Democrats against the administration and insist on an assertive and coordinated national plan for the duration of the crisis. In return, they should request that Democrats support the GOP’s more robust plan in HEALS for vaccine and therapeutic funding and procurement, which is also essential to fully ending the crisis and allowing a period of recovery to begin.

The U.S. squandered the beneficial effects of the March-April lockdown on a flawed reopening in May and June. The bill Congress is now negotiating is critical to setting the country on a better course to weather the pandemic over the coming months. There is no more time to waste.

James C. Capretta is a columnist for State of Reform and holds the Milton Friedman Chair at the American Enterprise Institute.