“It could fundamentally change how healthcare is priced in the U.S.,” said Cynthia Cox, vice president of the Kaiser Family Foundation.
President-elect Joe Biden will seek to bolster the Affordable Care Act after his predecessor chipped away at the signature legislation, but he also has grander legislative priorities of his own for the health sector.
His most ambitious plan is to create a so-called public option plan, available to all Americans to purchase even if they already have coverage through their employers. It holds the potential to alter how millions get healthcare and put pressure on prices, experts told Healthcare Dive.
“It could fundamentally change how healthcare is priced in the U.S.,” Cynthia Cox, vice president of the Kaiser Family Foundation, told Healthcare Dive.
Still, even with control of Congress and the White House, the plan may take a backseat as the pandemic continues to sicken and kill a record number of people. And while the idea has drawn more support among Democrats in recent years, powerful interests like private insurers and providers will push back against the proposal, while some progressives have their eye on the more ambitious Medicare for All.
A public plan for all
Simply put, a public option plan would give consumers a government-run choice for insurance, a market that can be tightly consolidated, leaving consumers with few carriers to choose from, especially in certain regions of the country.
“If your insurance company isn’t doing right by you, you should have another, better choice,” Biden has touted via his website.
Biden’s proposal allows anyone to buy a public option plan, even those now with employer plans. It is not limited to those only those on the exchanges, or consumers without employer plans.
Biden has said a public option plan will lower prices for patients because the government would be negotiating lower prices with healthcare providers. That theory relies on providers accepting these lower rates and electing to be in-network with the public plan.
The public option plan would reimburse providers less than typical commercial plans, which tend to pay the highest rates to providers for services compared to other government programs such as Medicaid and Medicare.
Ultimately, it is a more direct way to regulate healthcare prices in the U.S., Cox said.
As such, it will face fierce opposition from providers who typically treasure commercial insurance over other government plans as it tends to generate less revenue for hospitals and payers who see the option as competition.
A public option plan was included in early drafts during the construction of the ACA, though at the time it was limited to those without employer coverage. The idea gained support because policymakers were unsure how many private plans would sell plans on exchange. Plus, at the time, the idea was that it would offer premium pricing pressure and more choices in areas that potentially did not attract any on-exchange carriers.
In 2013, the Congressional Budget Office scrutinized the impact of adding a public plan to the exchanges. At the time, CBO’s estimates expected premiums to be lower than private plans by 7% and 8% on average. And CBO estimates showed it would reduce the federal deficit in a few ways, mainly through a decrease in subsidies as consumers opted for the public plan.
In the end, though, the idea was nixed to gain backing from moderate Democrats as Republicans villified it as a government takeover of healthcare.
Not bold enough for far-left Democrats
While the public option was called too far left at the time of the ACA, it now may not be progressive enough for those in the liberal wing of the party, as ideas like Medicare for All have become more mainstream.
The shock of the COVID-19 pandemic may hasten calls for a bigger revamp, having laid bare the deep inequities in the nation’s healthcare system. Both death and infection rates are higher for people of color compared with their White counterparts.
At the same time, millions have likely lost insurance coverage as the economic upheaval caused by the pandemic resulted in historic job losses. Many Americans receive health coverage through work.
Earlier periods of upheaval paved the way for bold social programs such as those that followed the Great Depression via President Franklin D. Roosevelt’s New Deal.
Prior to the pandemic, a public option was seen as more palatable for some than a “Medicare for All” option, a favored policy among the more progressive wing of the Democratic party. It was a heavily debated topic during the Democratic primary, during which Biden cautioned that such a plan would mean eliminating the ACA, a signature policy he helped enact as vice president.
A public option plan, while an ambitious measure, is not as industry-altering as Medicare for All, which would force Americans onto a single system and eliminate the private insurance market. A wing of the party’s progressive group continues to advocate for Medicare for All.
The Democrats currently have a 10-vote margin in the House, and an even slimmer margin in the Senate with Vice President-elect Kamala Harris serving as the tiebreaker.
Some had suggested those farther left in the party should withhold their votes for Nancy Pelosi as speaker of the House in exchange for securing a floor vote on Medicare for All. Pelosi ultimately retained her speakership position.
But Rep. Alexandria Ocasio-Cortez, D-N.Y., batted down such ideas as premature on Twitter due to the lack of Democratic votes to pull off such a move successfully.
“So you issue threats, hold your vote, and lose. Then what?” Ocasio-Cortez tweeted on Dec. 11.
Even with Democrats in control of Congress and the White House, don’t expect any sweeping healthcare legislative changes like Medicare for All, experts say.
The margins are so slim in the Senate it leaves one avenue to pass legislation: through so-called budget reconciliation. That avenue comes with complicated rules, generally limiting the kind of bills that can be passed to those with an impact on revenue, spending or deficits.
Given that hurdle alone, industry analysts don’t expect a public plan to pass through Congress, instead pointing to more incremental changes, which eases market fears of broad changes.
Plus, the pandemic will be absorbing most of the attention as the 46th president tries to stamp out the pandemic.
“Not to be overly simplistic, but I don’t think healthcare is on the front page of priorities,” David Windley, an analyst with Jefferies, said, pointing to Biden’s transition website, which does not call out other healthcare policy goals aside from tackling the pandemic.
It sets the table for a unique first term, Andy Slavitt, former CMS acting administrator under President Barack Obama, said. Slavitt will serve as a senior adviser to Biden’s COVID-19 response.
“For the first time in a long time, healthcare will not be a big first-term agenda item for the Congress,” Slavitt said during a healthcare conference last week. He expects Biden to focus on building back the ACA through administrative action and rule making as opposed to legislative battles in Congress.
“I don’t think Biden is looking to pick big divisive fights to the extent that healthcare looks like a big divisive fight. It doesn’t strike me that that’s where he wants to be,” Slavitt said.