The Democrats Are About to Set a Whopper of an Obamacare Political Time Bomb for Republicans

Contained inside the Democrats' $1.9 trillion coronavirus stimulus bill is a political time bomb for Republicans.

Included in the bill's long list of stimulus spending is a provision that delivers on President Biden's promise to strengthen the Affordable Care Act, or Obamacare.

Obamacare's big failure has been what it did not do to help––and actually hurt––middle class buyers of individual health insurance. Since the health law's inception, consumers, who are eligible for little or no Obamacare subsidy, have faced daunting premiums and out-of-pocket costs.

In 2021, for example, a family of four with mom and dad age-40 in the Alexandria, VA zip code would find that the cheapest unsubsidized Silver Plan would cost $18,046.32 in annual premiums, with a per person deductible of $6,500 a year.

Candidate Biden's plan would fix that by capping what people at any income level would pay for marketplace plans at 8.5% of their income––the 400% of the federal poverty level cap on subsidy eligibility would no longer apply.

A family of four making the current 400% of poverty level annual income of $106,000 would pay no more than $9,010 in annual premiums (8.5% of their income) under the new rules.

The House passed stimulus package includes this and goes even further by letting people who earn up to 150% of the federal poverty level get full subsidies and also by extending full subsidies to those receiving unemployment benefits.

At 150% of the federal poverty level, four person families earning up to $39,750, and individuals earning up to $19,320, would pay nothing in premiums for their Obamacare individual health insurance under the House passed plan.

The House stimulus bill would also cover 95% of Medicaid expansion costs for states that have not yet expanded––up from the baseline 90% match.

The Congressional Budget Office has estimated that these changes would cover 1.3 million more people and cost $34 billion.

If these changes survive in a Senate passed coronavirus stimulus bill, they would dramatically improve the costs middle class individuals and families face on the Affordable Care Act's insurance exchanges and encourage states to expand their Medicaid programs.

But here's the catch. These improvements are part of a temporary stimulus bill and would only apply to health insurance subsidies and federal Medicaid costs in 2021 and 2022.

On January 1, 2023, the Obamacare insurance subsidies would revert to the old levels that have caused middle class families to face these huge premiums. 

What else is happening at the end of 2022? The Congressional elections.

This would make Obamacare another huge election-year issue.

Would Republican House and Senate candidates support making these middle class improvements to the Affordable Care Act permanent, or would they call for letting them drop?

Now, that is one heck of an ugly election-year choice for Republicans who have consistently called for Obamacare to be repealed and replaced.

If Democrats can succeed in keeping these substantial improvements to Obamacare in a stimulus bill they can get passed through the Senate, they will have set one whopper of a political time bomb for Republicans come November 2022.

Health Care First Steps for President Biden and the Democratically Controlled Congress

After four years of the Trump administration's undermining of The Affordable Care Act/Obamacare, what can we expect over the next few months from the new administration?

On the regulatory side, not as much as you might expect.

During the campaign Biden talked about building on the law's success in covering the people it has covered––primarily through the Medicaid expansion and for lower income people who get the best subsidies in the insurance market.

A big difference will be an administration promoting the law, particularly during the fall's open enrollment, rather than decrying it as a complete failure

Democrats were harshly critical of the Trump administration's regulations to end the insurance exchange cost sharing subsidies as well as opening the market to lower cost short-term plans that did not comply with the ACA's benefit minimums.

But Trump's killing the cost sharing subsidies, that went to insurance companies, backfired by increasing consumer subsidies enabling people to buy the best Gold Plans while the carriers just raised the rates for the unsubsidized. If the Biden administration were to now repeal those regulations, before passing new legislation to improve the subsidy structure, it would mean that lower income people would see their subsidies reduced.

The Biden administration will have the same dilemma over the short-term plans. We now have about two million people covered by these plans, that critics often refer to as "junk insurance." These people largely bought these alternative plans because of the prohibitive premiums that those with minimal or no subsidies were faced with under Obamacare. If the Biden administration now repeals those rules, without first expanding the subsidies for these people, they will be left without any kind of insurance.

My sense is that the biggest short-term difference with this new administration will be one of attitude and support for the existing law and some minor regulatory changes around the edges. But, I would expect to see a backing off of Medicaid waivers that gave states the ability to broaden work requirements among other state flexibility that moved away from Medicaid's traditional entitlement promises.

Candidate Biden called for two major health care legislative initiatives: Controlling prescription drug prices through government price negotiation and expanding the ACA's insurance subsidies for the middle-class as well as adding a government-run public option.

The Trump administration began a regulatory process of having the federal government, through a pilot program, use a basket of other nation's negotiated drug prices here as well as to allow the "reimportation" of drugs from nations that have achieved lower prices for the same drugs. I would expect the Biden administration to take a careful look at these first steps in using government negotiation––albeit––another government's negotiation––short of getting the Congress to formally approve drug price regulation.

Candidate Biden also called for ending the income cap on who would be eligible for individual market insurance subsidies and lowering the maximum families would have to pay as a percentage of their incomes. Both of these steps would go a huge way toward making individual health insurance affordable for people who make too much for the best subsidies, or any subsidy.

First, it will likely be later this year before the Democrats can move on any major health care legislation. The slow start the Biden administration has had in the face of the election controversy, plus the time and political oxygen a Trump impeachment trial will take, doesn't make any quick action possible.

The Democrats will also have to use the Senate's budget reconciliation rules in order to move any such legislation with a simple majority.

The need to find a way to pay for any ACA/Obamacare expansion will also mean coupling health efforts with the budget reconciliation and Biden's promised tax increases for the wealthy.

Democrats have lots of spending priorities. Some of them could be wrapped up in an upcoming stimulus bill that will not be paid for with offsetting revenue. But under budget reconciliation rules, there will have to be offsets. The Democrats will have to first settle on just what they will do with the revenue from any tax increases.

None of this will be a slam dunk for a Democratic Congress that has a very slim working majority in the House and only a tie-breaking vice presidential vote in the Senate.

I don't doubt the votes will be there in both chambers to increase the subsidies. But passing a public option, taking on the drug industry lobby, and big tax increases to pay for it all, even on just the wealthy, will be by no means easy.

Report From Inside the Beltway––We Kept It!

Wednesday was maybe the most disheartening and embarrassing days in history for all of us as Americans. But, in the end, it was a day to be proud of.

In 1787, Ben Franklin was walking out of Independence Hall after the Constitutional Convention, when he was asked, “Doctor, what have we got? A republic or a monarchy?”

Franklin responded: “A republic, if you can keep it.”

We kept it. Within hours of the mob's debacle at the Capitol, the Congress met, and in what turned from one of the most partisan to bipartisan sessions in a long time, they quickly affirmed the 2020 election and began the traditional peaceful transfer of power. 

This is What Presidential Leadership Really Looks Like

Since it's been a long time since we've had it, I thought you would appreciate seeing this:

 

What Does Kelly Loeffler's Health Plan Do to Coverage for Preexisting Conditions?

I've been doing health policy for thirty years. I arguably know something about health insurance.

For the life of me, I can't figure out what Kelly Loeffler is proposing under her health plan––particularly when it comes to current protections for preexisting conditions.  

The Supreme Court Will Not Wreck Obamacare Because the "Plane Has Not Crashed"

After hearing the Supreme Court's oral arguments this morning over the constitutionality of the Affordable Care Act (Obamacare), I can double down on my prediction the Court will not wreck Obamacare. 

The Supreme Court Will Not Wreck Obamacare

This is an update of an article originally posted in September.

With the Supreme Court due to hear arguments this week on a case brought by a number of Republican state attorneys general that could throw out the entire health care law, and with conservatives now having a 6-3 majority on the Supreme Court, there is great concern among ACA/Obamacare supporters that this could well mean the end of the health care law.

The Obamacare case currently before the court deals with the 2017 repeal of the law's tax penalty enforcing the individual mandate for people to buy health insurance coverage. In 2012, Chief Justice John Roberts cast the deciding vote in the 5-4 decision upholding Obamacare generally, and the individual mandate specifically, as valid under the Congress' taxing power. After the mandate's tax penalty was repealed in 2017, a number of Republican state attorneys general sued, arguing that since the mandate was no longer tied to a specific tax penalty, it had lost its legal underpinning. They also argued that because the individual mandate was key to a number of the law's provisions that made it a workable system of insurance, the entire law should fall, including preexisting conditions protections.  

What a Biden Win Means to Health Care

Biden has won. 

Presuming the North Carolina and Alaska Senate seats remain in Republican hands,  the Senate will come out no better for Democrats than a 50-50 tie with Vice President-elect Harris being the tiebreaker. And, if Republicans win at least one of the two Georgia run-off Senate races, the Republicans will maintain control and the Democrats will not have the votes to move any partisan health care legislation.

But the Democrats will control the Department of Health and Human Services and the federal government's health care regulatory apparatus.

I will suggest that the health care plan Biden campaigned on can be summarized into three primary parts:

• Fixing the Obamacare/Affordable Care Act (ACA) individual health insurance subsidies for the middle class. 
• Giving Medicare the power to negotiate prescription drug prices.
• Creating a government-run individual health insurance plan option called the Public Option.
  

Trump Claims to Be Able to Guarantee the Coverage of Preexisting Conditions by Fiat

For more than twenty years we debated ways to protect people from preexisting conditions limitations in health insurance. We finally got those protections when the Congress passed, and the President signed (and the Supreme Court upheld), the Affordable Care Act, or Obamacare.

So, after twenty years of national public policy debate and hard-fought Congressional and Presidential approval, how does Trump conclude he can restore these protections should the Republican Supreme Court suit overturn them, with a simple executive order?

The Supreme Court Will Not Wreck Obamacare

Now that it appears certain that the Republicans will approve a new Supreme Court justice in the coming weeks, there is great concern among Obamacare supporters that this could well mean the end of Obamacare.

That concern is being amplified in the hyper partisan environment in the ramp-up to the election––it makes for good scare tactics.

The Obamacare case currently before the court deals with the 2017 repeal of the law's individual mandate for people to buy health insurance coverage. In 2012, Chief Justice John Roberts cast the deciding vote in the 5-4 decision upholding Obamacare generally, and the individual mandate specifically, as valid under the Congress' taxing power. After the mandate repeal in 2017, a number of Republican state attorneys general sued, arguing that since the mandate was no longer tied to a specific tax penalty, it had lost its legal underpinning. They also argued that because the individual mandate was key to a number of the law's provisions that made it a workable system of insurance, the entire law should fall, including preexisting conditions protections.  

Would the Biden Health Plan Work?

IF the Democrats capture the White House, keep the House and take over the Senate the Biden health care outline stands a good chance of being enacted.

The Biden health care proposal directly takes on the big things that haven't worked in Obamacare.

Why Are Trump and the Republicans So Afraid of Competition When It Comes to Drug Prices?

President Trump recently signed two executive orders directly related to prescription drug prices in the U.S.

One order would allow the "reimportation" of prescription drugs from Canada. This longstanding idea would allow U.S. pharmacies and drug wholesalers the ability to pay generally much lower prices for their prescription drugs by getting them from Canadian suppliers who benefit from government management of the system. Many consumers have been buying direct from Canadian pharmacies for years since current prohibitions have not been enforced against individuals.

Kamala Harris Has Had Some Difficulty With the Health Care Issue

Kamala Harris has had some notable difficulty with the health care issue.

At a Democratic debate in June 2019, the candidates were asked, "Who here would abolish [employer-provided] health insurance in favor of a government-run plan?'

Harris enthusiastically raised her hand––joined over the two evenings of the debate by Sanders, Warren, and de Blasio. Not a surprise since she had already signed on to Bernie Sanders' single-payer health bill.

But the next day she walked that hand raising back. This from NBCNews.com:

Kamala Harris was one of two candidates who raised their hands when asked at Thursday night's debate if they would get rid of private health insurance, but the California senator said Friday she'd misunderstood the question.

"No," Harris told MSNBC's "Morning Joe" when asked if she'd work to abolish private health insurance in favor of "Medicare for All" if elected president.

But in her subsequent answers, she struggled to clarify her position about the role of private insurance under her plan, something that has become a pattern in recent months as Democratic candidates look to navigate politically charged questions about Medicare for All's policy implications.

Trump Calls for Making Permanent Cuts to Social Security Payroll Taxes

President Trump said over the weekend, "If I'm victorious on November 3rd, I plan to forgive these [payroll taxes for Social Security] and make permanent cuts to the payroll tax."

Currently, employers and employees split the 12.4% payroll tax on the first $137,700 of 2020 earnings and also split the 2.9% Medicare tax on all earnings. The self-employed pay the entire tax.

Trump not only wants to suspend the Social Security tax during the pandemic crisis, he says he wants to make permanent cuts to the tax.

First, the only people who pay these taxes are people who still have their jobs and their earnings. With millions unemployed it can be argued that it would make more sense to increase deficit spending by providing help directly to those who don't have any earnings––the unemployed.

But the bigger question revolves around the suspension of funding to Social Security––particularly permanent cuts.

Both the Medicare and Social Security trust funds are running out of money––both face an inability to pay full benefits if their problems aren't solved by either increasing funding or cutting benefits. That is projected by the Congressional Budget Office to happen for Medicare in 2025 and Social Security in 2031.

So, with Social Security solvency teetering, why would you cut the taxpayer provided funding source?

Well, That's a Fine Fiscal Mess They've Gotten Us Into––Fiscal Irresponsibility and Hard Hearted Republicans

The Covid pandemic has led to extraordinary government spending.

I have no doubt that it is necessary in order to avoid not only further economic collapse but massive suffering. Sure, there are some people making more in unemployment benefits than they made working and have spent the summer partying at the beach and ignoring social distancing rules.

Remember, the $600 a week additional unemployment benefit was originally the Trump administration's idea.

But I have no doubt there have been more families that have been able to put food on the table had it not been for this assistance. Emergency action gets really messy.

Republicans seem only to be able to see the partying and have a blind eye to the suffering. 

Is the Federal Government Prepared to Give 300 Million Coronavirus Vaccine Injections in Early 2021?

Are any of the world's governments and drug companies ready to give a billion or more injections in 2021?

Anyone who believes that our economy will be able to fully open up before a vaccine is not only developed but deployed is dreaming. Will you take a vacation without being vaccinated? Sit at a bar? Attend a business meeting or convention? Go to a movie?

After watching our federal government constantly playing from behind these past few months, I don't see any evidence the White House is thinking about the logistics necessary to vaccinate everyone in America––or the diplomatic issues that are going to occur when the rest of the world wants to get their hands on that vaccine.

Best Review of Practical Information on the Coronavirus I Have Seen

Dr. David Price, an ICU physician at Weill Cornell Medical Center on the front lines in New York City, held an informal briefing for his friends and family on his experiences and recommendations for regular people.

It is the most comprehensive and practical primer on the epidemic that I have seen and I highly recommend it to you.

You can access it here.

A Step By Step Plan to Manage the Pandemic and Reopen the Country

I sense that the discussion on where we go next, among those who truly know what they are talking about, is centering on a phased approach that responsibly balances both medical safety and reopening of our economy.

My last post directed you to David Katz's op-ed which generally outlined such an approach.

The American Enterprise Institute (AEI) now has a more lengthy paper authored by a number of experts, led by former FDA Commissioner Scott Gottlieb.

Their plan has three key phases:

1. Slow the Spread - This is essentially where we are in the nation's various lock downs. "These measures will need to be in place in each state until transmission has measurably slowed down and health infrastructure can be scaled up to safely manage the outbreak and care for the sick."
2. State-by-State Reopening - "Individual states can move to Phase II when they are able to safely diagnose, treat, and isolate COVID-19 cases and their contacts."
3. Eliminating Physical Distancing Restrictions and Other Phase II Measures - "Can be lifted when safe and effective tools for mitigating the risk of COVID-19 are available, including broad surveillance, therapeutics that can rescue patients with significant disease or prevent serious illness in those most at risk, or a safe and effective vaccine."

I will suggest that we are so far behind the curve in making testing readily available and supplying health care providers with their equipment needs, that it will be months, not weeks, before "transmission has measurably slowed down and health infrastructure can be scaled up to safely manage the outbreak and care for the sick."

But, I will also suggest we will not be able to get back to anything resembling normal until we have a vaccine, mass produce it, and have made it available to the general population. Hearing experts tell us that all of this won't likely occur for one to two years makes it necessary to come to an agreement on what Phase Two will look like and when we can move to it.

You can see the full AEI report here.

A Plan to Quickly Confront and Defeat Coronavirus Without Collapsing the Economy?

What America lacks right now is a plan as we veer into one reaction to this pandemic after another.

I am not an epidemiologist so I offer no professional opinion on just what that plan should be.

But, if you haven't yet read the op-ed in the NY Times by David Katz of Yale University, you should.

An excerpt:

The data from South Korea, where tracking the coronavirus has been by far the best to date, indicate that as much as 99 percent of active cases in the general population are “mild” and do not require specific medical treatment. The small percentage of cases that do require such services are highly concentrated among those age 60 and older, and further so the older people are. Other things being equal, those over age 70 appear at three times the mortality risk as those age 60 to 69, and those over age 80 at nearly twice the mortality risk of those age 70 to 79...

The experience of the Diamond Princess cruise ship, which houses a contained, older population, proves the point. The death rate among that insular and uniformly exposed population is roughly 1 percent...

The clustering of complications and death from Covid-19 among the elderly and chronically ill, but not children (there have been only very rare deaths in children), suggests that we could achieve the crucial goals of social distancing — saving lives and not overwhelming our medical system — by preferentially protecting the medically frail and those over age 60, and in particular those over 70 and 80, from exposure...

If we were to focus on the especially vulnerable, there would be resources to keep them at home, provide them with needed services and coronavirus testing, and direct our medical system to their early care. I would favor proactive rather than reactive testing in this group, and early use of the most promising anti-viral drugs. This cannot be done under current policies, as we spread our relatively few test kits across the expanse of a whole population, made all the more anxious because society has shut down.

This focus on a much smaller portion of the population would allow most of society to return to life as usual and perhaps prevent vast segments of the economy from collapsing. Healthy children could return to school and healthy adults go back to their jobs. Theaters and restaurants could reopen, though we might be wise to avoid very large social gatherings like stadium sporting events and concerts...

A pivot right now from trying to protect all people to focusing on the most vulnerable remains entirely plausible. With each passing day, however, it becomes more difficult. The path we are on may well lead to uncontained viral contagion and monumental collateral damage to our society and economy. A more surgical approach is what we need.

Will the Trump Administration's Testing Snafus for Coronavirus Be Their Political Version of the Democrats' Catastrophic Launch of Obamacare?

As I have watched the Trump administration fumble the ball on getting mass coronavirus testing available to communities, I am reminded of the way the Obama administration fumbled their own ball during the Obamacare launch in 2013:

• Repeated statements on how well things were going in the face of facts that did not match their rhetoric.
• Not having a handle on what could go wrong and what did go wrong from beginning to end.
• Delays that led to a public lack of confidence in the administration.

The difference this time is that the Obamacare fiasco was ultimately brought under control and, while people not being able to sign up for their health insurance for a few weeks was not a small deal, it wasn't the life and death scenario we are facing today.