We know that our healthcare system is broken. We need transformative solutions to fix and repair this system, but right now, we need Congress to take immediate action while millions of Americans are left with zero coverage in the middle of a global health crisis. In this article, we explore what the Biden administration has done so far, what we anticipate might be done next and obstacles that could be faced along the way.
House Democrats are pushing for a temporary expansion of the Affordable Care Act (ACA) as part of the COVID relief bill package. Expansion of the ACA would include provisions integral to President Biden’s ambitious healthcare agenda. These encompass fully subsidizing ACA coverage for individuals earning up to 150% of the federal poverty level and those receiving unemployment benefits. It would also make those earning more than 400% of the federal poverty level eligible for subsidies for the first time, capping premium costs at 8.5% of their income. Another stipulation calls for the federal government to cover 85% of the cost of private health insurance through September of this year for workers laid off during the pandemic.
All the proposed increases in subsidies would sunset at the end of two years. However, in the interim Congress could vote to extend or make them permanent, something President Biden would like to see happen.
Late last month, Biden signed an executive order that directs the federal government to open a special enrollment period from February 15th to May 15th for ACA exchanges that serve 36 states. This action is designed to boost coverage for people who are uninsured. Several of the 14 states which manage their own marketplaces, including California, Massachusetts, and Massachusetts had already reopened enrollment. A second item in the executive order resumes federal funding for advertising and outreach. The Trump Administration had cut such funding. With increased advertising more unemployed people will likely seek alternate coverage on the federal ACA exchange.
Along with the measures incorporated in the House COVID bill, Biden’s executive order ties into what will be the focus of the new Administration early on in his presidency; reinforcing the ACA. Also, instrumental changes to Medicare are in the offing.
With the Democrats in narrow control of the House and Senate, Biden may be able to pursue fortification of the ACA, which comprises augmenting the law with a public option, expanding ACA for lower-income Americans in non-Medicaid expansion states, and introducing legislation on enlarging Medicare eligibility to include those 60 and older.
Here, the common theme is improving people’s access to health insurance. In a survey conducted in 2019, nearly 75% of the approximately 30 million uninsured cited the high cost of health insurance as the main barrier to obtaining coverage. This problem has been further compounded by the COVID-19 pandemic. As a result of an economic recession in 2020, the number of uninsured has risen. The Commonwealth Fund estimates that as many as 15 million people may have lost employer-sponsored health coverage. Some will have found alternate coverage through another job, Medicaid, a state insurance exchange, or the federal ACA marketplace. But, on balance the number of uninsured has likely increased by at least several million.
In addition to the provisions in the COVID relief bill, Biden may direct Congress to reduce deductibles and cap annual out-of-pocket costs for subsidized beneficiaries.
It is also probable that Biden will seek to bring back the penalty attached to the ACA’s individual mandate, requiring individuals to have health insurance. While Biden he might do this through issuing an executive order, alternatively Congress could amend the legislation to reinsert the penalty into the existing ACA law.
During the campaign, the Biden team emphasized what it perceived as the need to strengthen the ACA with a public option. Here, Americans would have a choice of signing up for a “Medicare-like” plan or maintaining their private coverage. Anyone without insurance would be automatically enrolled. The public option could serve as an affordable option for individuals who are unable to obtain private coverage or are not satisfied with their current insurance.
At the same time, Biden proposed a substantial expansion to ACA, specifically adding approximately five million people living in the 12 states that decided not to expand Medicaid. These are mostly individuals who earn too much to be eligible for Medicaid, but too little to afford their own insurance. Notably, the House COVID relief bill also contains a provision to entice the 12 states to expand Medicaid. Namely, the federal government would pay an additional 5% of all their Medicaid costs for two years.
And then there’s Biden’s Medicare for More proposal, which aims to expand Medicare by lowering the age of eligibility to 60. It is estimated that approximately 20 million more Americans would be eligible for Medicare. Enrolling in Medicare between the ages of 60 and 64 would be voluntary. Employers would be prohibited from dropping newly Medicare-eligible persons from their plans. Premium and cost-sharing subsidies would be offered to lower-income beneficiaries.
Ideally, adding relatively healthy, younger people to Medicare’s risk pool would reduce per capita costs in the Medicare program. Correspondingly, removing some middle-aged adults from marketplace risk pools could make health insurance more affordable for younger adults.
All these healthcare reforms will not be cheap, whether included in the COVID relief bill or future legislation. With a newly austere Republican Party, costs could prove to be a major stumbling block. Several conservative Democrats, like Senators Manchin of West Virginia and Sinema of Arizona, may also balk at the price tag. Indeed, at this stage, it is not known for sure whether the Senate will even take up the slew of ACA reinforcements contained in the House COVID relief package.
Separate from what is in the House COVID legislation, estimates of the total cost of Biden’s healthcare initiatives are in the $750 billion range over the next 10 years. There is not much budget room to spare, in light of the size of the federal deficit. To pay for the proposed healthcare legislation, Democrats might opt to attempt to repeal tax cuts for the wealthy and raise the top income tax rate to its previous level of 39.6%. It remains to be seen, however, whether this is politically feasible, and how much the Biden Administration is willing to forge a compromise to strike a deal.
Clearly, revamping the ACA will be a major priority of the new Administration in 2021. The stakes are high, given the urgency of getting something of substance done early in the term and not wasting the opportunity of having a majority, albeit narrow, in both the House and Senate.