Health care policy in the Biden era

Democrats hoped a victory in the presidential election would translate into strengthened numbers in Congress too, and thus provide a mandate to enact far-reaching health care legislation. It didn’t work out that way. Republicans are poised to pick up eleven seats in the House and may control the Senate, even as former Vice President Joe Biden won the presidency by a sizeable margin. The incoming Congress tracks with an evenly divided nation.

 

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The final results in the Georgia Senate races will matter, of course. If the challengers both win (a big “if”), Democrats will control the Senate with Vice President-elect Kamala Harris breaking 50-50 ties. But even with 51 Senate votes, it will be difficult to pass controversial measures on a partisan basis, in part because House passage would be no sure thing. It is more likely that the Biden administration will need to attract some Republican support to move legislation through Congress.

The following are some of the possible implications of this unexpected political landscape.

  • A Continued Emphasis on Administrative Action. After failing to repeal and replace the Affordable Care Act (ACA) in 2017, the Trump administration focused its energy on implementing policy changes through regulations and other administration actions. The Biden administration will do likewise, just in the opposite direction.

The first priority will be to reverse many of the current administration’s policies. For instance, the Biden team is likely to revisit a regulation that liberalized the terms for short-term insurance plans that are exempt from ACA requirements. The Trump rule allowed these plans to be renewed for up to three years, up from 90 days during the Obama era. The incoming administration may push for a reversion back to the earlier policy.

Biden’s team also will emphasize funding ACA enrollment campaigns, which have not been a priority since 2016.

Beyond strengthening the ACA, the Biden administration will shelve Trump-era guidance to the states encouraging work requirements and block grants in Medicaid.

  • Drug Pricing. One area of potential agreement between the outgoing and incoming administrations is drug pricing. At the last possible moment, the president and his aides finally released regulatory changes that would cut Medicare reimbursements for prescription medications. One rule would tie what Medicare pays for drugs administered in physician offices to the lowest prices charged in a select number of high-income countries. The incoming Biden team may try to defend this policy when it is challenged in court, and, if it loses, try again with a proposal that follows the normal practice of issuing a draft version for comment before moving to a final regulation.
  • Long Odds for Medicare at 60. After he won his party’s nomination in the spring, Biden worked with Senator Bernie Sanders on a unity agenda, which included a push to lower Medicare’s age of eligibility to 60 from 65. While popular, that idea is unlikely to gain favor in the next Congress. One reason is that Medicare’s hospital insurance (HI) trust fund is expected to be depleted of reserves in 2024. The next round of Medicare legislation will be focused on shoring up the trust fund, not expanding program enrollment.
  • Redefining the Public Option. Biden won the nomination in part by positioning himself as an opponent of Medicare for All and a supporter of a new public option. That history ensures his administration will make a push for such an insurance plan beginning in January. However, strong Republican opposition will make enactment of a purist and far-reaching version difficult. Instead, the administration may need to rely more on state-initiated plans, such as the one that is emerging in Washington State. There, government officials are working with private insurers to offer plans to consumers with ceilings on payment rates for providers of services. A quasi-public option relying on private administration would attract less enrollment than an undiluted Medicare-like plan, but it would have a much better chance of surviving political scrutiny.
  • A Short List of Bipartisan Opportunities. Both parties say they want to pass a bill reining in surprise medical bills and yet the current Congress has been unable to settle on a final, compromise plan. The Biden administration will have an opportunity to break the logjam and claim credit for resolving a matter that irritates consumers of all political stripes. Beyond surprise billing, Congress might yet pass a compromise on drug pricing too, focused on tightening reimbursement levels in Medicare and protecting consumers. The primary obstacle to passage will be disappointment among Democrats over its modest reach.

President Trump came into office promising big changes in health care, including repeal and replacement of the ACA. He failed to deliver, in part because he never produced a workable plan to replace the ACA. The ACA is now more secure than when he took office.

President-elect Biden has an ambitious health-care agenda too, centered on building on the ACA. He is likely to stick with it as his opening bid. However, given the make-up of Congress, recalibration will be inevitable, and necessary. He will reverse many Trump initiatives, and protect the ACA.  Beyond that, change, as is often the case, will be incremental.

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