What should the Biden administration do on health care?

By Arielle Kane

In his first joint address to Congress, President Biden made it clear that he plans to go big on many health care issues including expanding the Affordable Care Act (ACA), reforming drug pricing, and even “ending cancer as we know it.” But he was scant on details and Democrats in Congress are nervous that if he doesn’t act soon, the window for health reform will close with the 2022 midterms.

Everyone agrees that passing health care reforms won’t be easy with paper-thin Democratic majorities in the House and Senate — especially when Democrats themselves disagree over the course Biden should take.

Last week, the pragmatic New Democrat Coalition urged the president to include in his American Families Plan several policies that would “strengthen and expand on the ACA:”

  • Making the American Rescue Plan’s increase and expansion of ACA subsidies permanent
  • Giving holdout states 100 percent federal match if they expand Medicaid (meaning the federal government would cover the entirety of the cost)
  • Automatically enrolling those eligible for Medicaid and fully subsidized ACA plans

Meanwhile, a group of left-leaning and moderate Democrats led by Reps. Pramila Jayapal and Conor Lamb — are encouraging the president to:

  • Allow Medicare to negotiate drug prices
  • Lower the age for Medicare eligibility
  • Expand Medicare coverage of dental, hearing and vision benefits

Senator Sanders and 17 other Senators also signed a letter encouraging President Biden to push for these expansions saying that, “the time is long overdue for us to expand and improve this program so that millions of older Americans can receive the health care they need, including eyeglasses, hearing aids and dental care.”

Rep. Frank Pallone and Speaker Nancy Pelosi have re-introduced the late Rep. Elijah Cummings’s bill HR 3, which seeks to cap Medicare beneficiary out of pocket drug spending and overhaul how Medicare pays for drugs.

Democrats aren’t just debating the contents of the President’s health proposals, they also disagree about legislative tactics: Some want the president to include his larger health care priorities in the next reconciliation package, which requires only a simple majority to pass. Others worry that if only one Democratic Senator breaks ranks, that tactic will fail and leave them empty-handed.

One thing is clear: Other than on drug pricing, Democrats are not pushing for policies that would rein in health care costs. Adding benefits is easy; controlling costs is hard.

The health care industry will always push back against measures that seek to limit health care spending.

But there is widespread support among corporate leaders and voters for more government action on health care costs. A new survey from the Kaiser Family Foundation and Purchaser Business Group found that corporate leaders think that the cost of health insurance will reach a breaking point in the next decade. To mitigate high health care spending, 83 percent said that a greater government role health care would be “better for business.” Specifically, the survey found support for:

  • Lowering Medicare eligibility age
  • Creating a public insurance option
  • Capping hospital prices caps
  • Drug price negotiation
  • A broader federal role in health insurance coverage

There is also bipartisan support for Medicare drug negotiation: KFF found that 89 percent of survey respondents support allowing the federal government to negotiate with drug companies to get a lower price on medications.

But how does President Biden balance public demands with the political pressures of a divided Congress and strong health care industry lobby?

Given that the cost of health care is a top concern of the public and employers, President Biden should pursue pragmatic policies that would rein in spending which would allow his administration to pursue more ambitious coverage expansions.

  • Creating an early Medicare buy-in: A Kaiser Family Foundation analysis found that health spending for 60- to 64-year-olds would be lower under Medicare than under large employer plans. Allowing this group to buy into Medicare earlier at a premium that fully covers the cost of their coverage is a politically popular idea that would reduce health care expenditures for both employers and the federal government because of the employer sponsored health insurance tax exclusion.
  • Encouraging states to expand Medicaid: Medicaid expansion has been passed by voter referendum in even the most conservative states, such as Idaho. The Biden Administration should push hold out states and provide additional financial incentives for states to expand Medicaid. It is a cost-efficient way of providing health coverage to low-income people.
  • Expanding ACA subsidies only with other cost controls in health care spending: Expanding the ACA subsidies, while an important step in getting more people insurance coverage, is the most expensive way to do so. The per capita cost for subsidizing ACA plans is more expensive than the per capita costs of Medicare and Medicaid. Making the enhanced subsidies permanent would cost $200 billion, roughly one-fifth the cost of the entire 2010 Affordable Care Act.

The health care industry supports making permanent the ACA subsidy expansions included in the American Rescue Act. When more people have access to affordable health insurance, hospitals, doctors, and drug companies are more likely to get reimbursed for the services they provide. However, these subsides should only be made permanent with some tradeoffs to rein in costs — these could include Medicare drug negotiation, price caps or a public option to compete alongside private health plans, but the administration should not authorize $200 billion in new health care spending without finding ways to curb the health care cost growth curve.

In general, it seems that most Democrats are tempering their expectations and pursuing realistic policy goals that can make it through a starkly divided Congress. But given the uncertainty of when the Democrats will have the trifecta of the White House, Senate and House again, they should use this time to pursue health care policies that will both expand coverage and reduce costs, making a real difference in people’s lives.