6 minute read 6 Jan 2021
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How health care may fare under the Biden Administration

Authors
Heather Meade

Principal, Washington Council Ernst & Young

WCEY health care principal, health & tax-exempt policy, former Congressional staffer, recovering ERISA attorney, coalition builder, teacher of civics and math through games. Sideline soccer fan.

Tara Bradshaw

Executive Director in Washington Council Ernst & Young

Change maker. Story teller. Passionate about helping clients achieve their policy goals through strategic communications.

Laura Dillon

Washington Council Ernst & Young (WCEY) Senior Manager

Health policy wonk. Former health system best practice researcher, global and mental health advocate. Avid hiker, biker and wayfarer.

6 minute read 6 Jan 2021

Democrats now lead both houses of Congress, but by such a narrow margin that companies should expect compromise, not broad, dramatic reform.

In brief

  • A public option health care plan and an expansion of Medicare would likely still encounter roadblocks in the divided Senate.
  • Democrats are in a better position to shore up the Affordable Care Act, through congressional action and through Biden Administration executive orders.
  • Bipartisan issues include drug prices and value-based care, as well as problems affecting hospitals in rural and underserved communities.

Voters have consistently ranked health care as a top concern, and this was even more true during the 2020 election, which was dominated by a global pandemic that is threatening not only our economy but also stressing our health care system. How best to handle the US response to the COVID-19 crisis may have been the single most important campaign issue — and it may have helped Joe Biden win the election.

However, the final makeup of the Senate has been in flux until now, with two runoff elections in Georgia on January 5 determining its fate. Now that Democrats Jon Ossoff and Rev. Raphael Warnock have been declared the winners and flipped the seats in question, the Biden Administration will be working with a 50-50 Senate and the tiebreaking vote of Vice President Kamala Harris.

The Biden health care agenda

President-elect Biden’s health care agenda includes a focus on expanding access to affordable health insurance, lowering costs, improving health outcomes, addressing rising drug prices and reducing disparities while ensuring access for vulnerable populations.

The core of his health care plan, however, is expanding the Affordable Care Act (ACA) and reversing course on the changes implemented during the Trump Administration. While political advertising has suggested that Biden is keen to adopt a “Medicare for All” single-payer overhaul of the US health care system, his actual proposals are more modest. While the Democratic Party’s left flank may continue to advocate for a more wide-reaching policy, the realities of the political process and Biden’s own preferences are likely to constrain a further shift to the left.

Of course, there is currently a case before the Supreme Court that challenges the constitutionality of the ACA. While initial arguments have led court-watchers to believe the ACA will be upheld, a decision striking down the whole or part of the ACA could serve as a forcing function for the Biden administration and Congressional Democrats to address health care earlier on in his term.

Additionally, President-elect Biden has nominated California Attorney General and former Congressman Xavier Becerra to helm his health department. Becerra has emerged as the nation’s defender of the ACA, leading more than a dozen other Democratic attorneys general in supporting the law at the Supreme Court.

He has also been outspoken on issues including women’s health and addressing health disparities, has gone after hospital consolidation, and joined other attorneys general in holding drug companies accountable for their role in the opioid crisis and providing discounts under the 340B program. After confirmation, Becerra will lead the Biden team in regulatory change to purse his agenda regardless of congressional movement.

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Chapter 1

Improving access to coverage

Getting moderate Democrats on board with big changes would be a big hurdle, but more centrist actions could find favor.

To increase access to affordable health insurance, Biden has proposed introducing a public option similar to Medicare that would be empowered to negotiate prices from providers. The proposal would cover primary care without co-payments and be available without premiums to Medicaid-eligible people in states that did not expand Medicaid eligibility, enrolling this population automatically. Biden also favors allowing people age 60 and older to buy into Medicare and adding vision, hearing and dental benefits.

Significant questions remain about how the proposals would work, the effect on the health care market and how they would be paid for. With a slim margin in the Senate, big reform like this may be delayed, as it would require a lot of political capital from the onset, and getting both moderate and progressive Democrats on board may prove difficult. The prerogatives of moderate senators like Joe Manchin (D-WV), Kyrsten Sinema (D-AZ), Susan Collins (R-ME) and Lisa Murkowski (R-AK) will be crucial and their deal-making leverage at a maximum.

Biden’s proposals would also increase the value of tax credits under the ACA, eliminating the income cap on tax credit eligibility; lowering the limit on the cost of coverage; and basing their value on Gold plans rather than Silver, which should allow patients to reduce their monthly costs while gaining better coverage should they choose.

Strengthening the ACA with these more modest proposals is more likely to find favor with Congressional Democrats, especially in light of the coronavirus pandemic and its impact on health care coverage and access.

Biden is also likely to use executive action to restore consumer outreach and assistance programs, which were cut by the Trump Administration, and unwind various Trump-era regulations and guidance that undermine the ACA, such as those expanding access to short-term limited-duration plans and supporting Medicaid work requirements and block grants.

In another bid to reduce costs, Biden also proposes increased antitrust scrutiny to promote competition in the market. Concentration of market power is happening throughout health care, so discouraging provider consolidation is aimed at slowing rising prices and increasing consumer choice.

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Chapter 2

Areas of compromise and consensus

Partisanship, procedural and budget pressures may center Biden’s priorities around drug prices and value-based care.

Democrats and Republicans have pursued proposals aimed at reducing the price of prescription drugs, and it was a key tenet of Biden’s health care platform during his campaign.

With the freedom of a candidate not constrained by legislative outcomes or regulatory constraints, Biden has proposed repealing the exception that prevents Medicare from negotiating lower prices with drug companies, using the average price paid for drugs in other countries to set price ceilings, and leveraging an independent review board to determine the launch price for drugs that face no competition. These prices would be paid by Medicare and the public option, as well as private plans participating in the individual marketplace.

Additional Biden proposals call for limiting price increases beyond general inflation, with violators subject to tax penalties, and allowing consumers to import drugs certified as safe by the Department of Health and Human Services. He also supports current congressional proposals to end the tax deduction for pharmaceutical advertising and to accelerate the development of safe generics, a proposal the Trump Administration tried to advance through the regulatory process before it was struck down by the courts.

While most of these actions will require congressional approval and bipartisan support, a receptive House and Senate could find their way to a more limited set of consensus policies to reduce drug costs for patients covered by Medicare. The impact on nongovernment plans is questionable, however, and could raise issues of cost-shifting. All patients would benefit from faster access to low-cost generics, if enacted, which encompass some of the more bipartisan drug pricing proposals currently in Congress.

Due to congressional resistance to many of Trump’s drug pricing proposals, even among Republicans, the Trump Administration instead resorted to using regulatory powers to address the issue. President Trump finalized two major drug pricing proposals in his final days as President – one that would base what Medicare pays for Part B, physician-administered drugs, on the lowest price of peer nations and another that would require drug rebates to be passed on to the consumer at the point of sale. The Biden Administration has not publicly addressed whether or how it would change these policies; however, they are likely to be subject to lawsuit or delay based on questions of executive authority and administrative procedure.  

Areas of bipartisanship

Even with a slim Democratic majority in the Senate, Republicans’ strong performance in the Senate elections is likely to have a moderating effect on President Biden’s plans. He may opt to focus on smaller bipartisan areas of consensus in health care policy out of the gate due to the constraints imposed by partisanship, procedure and pandemic budget pressures.

Areas of bipartisan consensus include a focus on issues plaguing rural and underserved communities, many of which are struggling to keep hospitals afloat. A bipartisan congressional task force stood up this summer aims to explore policy solutions in this area. Other bipartisan priorities could  include limited drug price transparency and patent reform, maternal mortality, health equity, mental health and opioid use disorders. 

A presidential agenda and the process

Passing legislation through Congress requires a 60-vote supermajority in the Senate: without 60 votes, President Biden will need to find either bipartisan support or secure a bicameral majority to use an obscure procedural vehicle called “budget reconciliation” that allows often controversial legislation to be passed with a simple majority.

Democrats now control the House and have a razor-thin margin in the Senate, thanks to the tiebreaking vote of Vice President Harris. In this scenario, health care changes could be made through the budget reconciliation process, assuming Democrats don’t alter Senate rules to weaken the 60-vote filibuster requirement or remove it altogether.

Even if Congress chooses to use the budget reconciliation process, which was utilized during the passage of the ACA and the Tax Cuts and Jobs Act to move legislation, Democrats will still face procedural and policy constraints. Any legislation moving through reconciliation will be constrained by arcane budget rules that limit the inclusion of policies that do not have a sufficient effect on the federal budget and require that any policy changes not increase the deficit outside a 10-year budget window, among others.

These rules could require policymakers to adopt unpopular policies such as program cuts or sunset certain changes to meet the requirements. If used to move health care reforms, Senate Democrats will also be challenged to find consensus between members who favor incremental changes and those who prefer large-scale overhauls.

Voter polls from 2020 show that health care remains a top issue for voters. Faced with an ongoing pandemic, a growing federal deficit and voter demand, the question is: how will the newly elected Congress and Administration respond?

 

Summary

Although Democrats now are in control of the White House and Congress, health care changes are likely to be modest over 2021 and 2022, as the Senate is narrowly split between the two parties. Action may be taken on bipartisan issues such as drug prices, value-based care, and care in rural and underserved communities, whether through congressional action or executive orders.

About this article

Authors
Heather Meade

Principal, Washington Council Ernst & Young

WCEY health care principal, health & tax-exempt policy, former Congressional staffer, recovering ERISA attorney, coalition builder, teacher of civics and math through games. Sideline soccer fan.

Tara Bradshaw

Executive Director in Washington Council Ernst & Young

Change maker. Story teller. Passionate about helping clients achieve their policy goals through strategic communications.

Laura Dillon

Washington Council Ernst & Young (WCEY) Senior Manager

Health policy wonk. Former health system best practice researcher, global and mental health advocate. Avid hiker, biker and wayfarer.