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.

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.  

Health Care Special Interests Four Hundred Billion - Consumers Zero

That's the Congressional health care score card for December.

As the year winds down and must pass year-end spending bills are completed––and with that any chance of attaching and approving health care legislation––the special interests have won big and consumers have lost big.

Employers, unions, and insurance companies won big with the repeal of the "Cadillac" tax on high cost benefit plans at a cost of $200 billion over ten years as well as the repeal of the health insurance tax (HIT), and the 2.3% medical device tax sales tax.

The total cost for repealing just these things will add about $400 billion to the deficit over a decade and are part of a mammoth $1.4 trillion spending bill larded up for lots of different interests.

The Trump/Republican 2020 Health Care Plan

The Republicans don't yet have a health care plan less than a year before the 2020 elections.

But based upon their 2017 Obamacare repeal and replace efforts, as well as a major document recently issued by the House Republican Study Committee, what might a Republican plan look like?

Elizabeth Warren Backs Into the Public Option and Effectively Takes Medicare for All Off the Table for Democrats in 2021

Medicare for all is dead because Democratic voters aren't buying it.

Fixing Obamacare and adding a public option is the health care policy territory first staked out by Democratic Presidential candidate Joe Biden.

Writing about Biden's plan recently on this blog, I said:

IF the Democrats capture the White House, keep the House, and take over the Senate, no matter who they elect as President, this Biden health care outline, not Medicare for all, will likely be the plan Democrats embrace in 2021.

Not even I thought Elizabeth Warren would act so quickly to move off her only days-old detailed Medicare for all plan and onto about the same place all of the leading Democratic candidates, save Bernie Sanders, sit on health care––just fixing Obamacare and adding a public option.

Obamacare is "Stable" at an Incredibly Unstable Place

The Democrats Want to Move Beyond Obamacare Because We Have No Other Choice

 

Before I start talking about the presidential candidates' health care plans, let's review just exactly where we are with the Affordable Care Act (Obamacare).

There is Now No More Support for a Medicare For All Single-Payer Health Care Than There Was in 1977, or 1993, or 2009

Buy HMO Stocks––They're a Bargain

The more things change the more they stay the same.

With many of the Democratic presidential candidates' flirtation with Medicare for all, the topic is once again front and center going into the 2020 presidential campaign.

Just like it was when Jimmy Carter ran on a Medicare for all platform in 1976––and it turned out there weren't the votes for it in 1977 even though Carter had a filibuster-proof 61 Democrats in the Senate and a whopping 292 Democratic House seats. In fact, Carter failed to move any significant health care legislation.

In 1993, the Clintons didn't even try to move a single-payer plan even though the Democrats controlled 57 Senate seats and 258 House seats because only about half of the House Democrats favored a single-payer system.

The same for 2009 when both Hillary Clinton and Barack Obama ran on health care platforms during the primaries that looked a lot like the eventual Obamacare because again only about half of the House Democratic caucus favored a single-payer program.

Now in 2019 we are in the very same place we were in 1977, 1993, and 2009––only about half (118 as of September 6th) of the House Democratic caucus now supports the Medicare for all proposal introduced by Progressive Caucus Chair Pramila Jayapal (D-WA).

Where Does The Health Insurance Reform Debate Go From Here?

See my post at Forbes

What Neither the Republicans Nor the Democrats Understand About Obamacare

The 2018 Elections Were Not About Obamacare--They Were About Health Insurance Security 

 

The 2018 midterm elections weren't a tsunami for Democrats--more like a blue wave hitting a red wall.  

 

Democrats are claiming the election vindicated Obamacare because they were successful in gaining control of the House of Representatives by criticizing losing Republicans for their votes to repeal the Affordable Care Act--including its key consumer protections.

 

My sense is that both Democrats and Republicans have missed the critical point.

Both sides don't understand that this was not about Obamacare. It was about health insurance security.

The Preconditions Necessary for a Bipartisan Solution to Obamacare

It is now clear that Republicans cannot unilaterally tackle Obamcare.

But, I will suggest, it is also clear that both Republicans and Democrats can't even begin to have conversations about fixing the health law until they can agree on broader principles.

See my op-ed at CNBC.com.

September: A Full Plate for Congress and Enormous Uncertainty for the Obamacare Exchanges

My comments on CNBC this morning.

The Number of People in the Off-Exchange Individual Health Insurance Market Plunged 29% in the Last Year

Is the individual health insurance market stable?

With Trump threatening to make things worse in the individual health insurance market, was it stable even before he made his threats?

See my op-ed in the National Review.

Strike Three! A Statesman and Two Adults––Republicans Fail to "Repeal and Replace" Obamacare

The latest attempt by Senate Republicans to "repeal and replace" Obamacare––the “skinny” plan––failed early this morning on a vote of 49-51.

The deciding vote came from John McCain (AZ), joined by Republican Senators Collins (ME) and Murkowski (AK).

Trying to pass the “skinny” bill was a fool’s errand. How did McConnell think he was going to do any better bringing 240 House Republicans—including the Freedom Caucus—into a process that he could get no more than 45 Republican votes for in his own Senate?

Lindsey Graham (R-SC) had earlier said the “skinny” plan was a “half assed” bill whose only purpose was to keep what had been so far a horribly failed process alive—just before he voted for it.

Now what?

The focus now has to be on what will happen to the failing Obamacare exchange markets.

Will there be a bipartisan effort to shore them up?

I will suggest that there are two pre-conditions for any Congressional bipartisan solution:

1. Democrats will have to admit the problems with Obamacare are more than “imperfections”––they will have to admit that Obamacare has been a dismal failure for those who have no choice but to buy their health insurance in the individual health insurance market and make too much money to qualify for a subsidy––40% of American households make more than 400% of the federal poverty level, which is the cutoff point for subsidies.
2. Republicans will have to admit that most American households not eligible for Medicare, employer-based health insurance, or the pre-2014 Medicaid program, cannot afford to buy health insurance on their own—even if we had 2013 premium rate levels.

Will Trump make things worse in the Obamacare insurance exchanges?

Probably:

Strike Two––The Republican Obamacare "Repeal and Replace" Fiasco

Three strikes and you're out.

On Monday, Senate Republicans approved proceeding to debate on "repealing and replacing" Obamacare by a vote of 50-50-1, with Vice President Mike Pence casting the deciding vote.

Strike One
Yesterday, Senate Republicans failed to approve the bill they had been working on for over a month, which included the Cruz amendment that would have bifurcated the individual health market into separate healthy and sick pools. The vote was 43-57. Of course, all Democrats voted no. The nine Republicans voting against the leadership bill included Collins (ME), Corker (TN), Cotton (AR), Graham (SC), Heller (NV), Lee (UT), Moran (KS), Murkowski (AK), and Paul (KY).

Interestingly, West Virginia’s Capito, who had expressed lots of reservations about the Senate bill, did not vote against it.

The list of those voting no included both the most conservative and the most moderate. Both Maine and Kansas have not expanded Medicaid. Yet, Collins and Moran both voted no, at least in part, because of the impact the long-range caps on Medicaid would have on the large senior populations (nursing home payments) benefiting from the baseline Medicaid program in their states.

Lee and Paul voted no because the Senate bill didn’t go far enough to reduce the cost of insurance. Paul’s objective is complete repeal generally wanting to go back to 2013. Lee also wants a wide-open market.

The rest, in one way or another, just saw the Senate bill as leaving too much trauma in its wake, with the CBO estimating that 22 million fewer would ultimately be covered, and are generally are calling for a return to the "regular order" committee process and bipartisan negotiations with Democrats. The problem with that approach is that most of the 43 Republican Senators that voted for the bill want nothing to do with an agreement that makes Senate Democratic Leader Chuck Schumer happy.

All of this was made more complicated this week when the Senate parliamentarian ruled key provisions in the Senate bill out of order under budget reconciliation rules. These included the six-month lockout substitute for the individual mandate, association health plans, and going from 3:1 age rating to 5:1 age rating.

Strike Two
Repeal, with a two-year period within which to create a replacement, also failed, on a 45 to 55 vote. This time the Republican no votes included Alexander (TN), Capito (WV), Collins (ME), Heller (NV), McCain (AZ), Murkowski (AK), and Portman (OH).

The Last Attempt:
Now, McConnell will likely proceed to pass a “skinny” bill that only repeals provisions that arguably have unanimous support among Republicans: Repealing the medical device tax, the employer mandate, and the individual mandate.

His purpose is to just pass something that would keep this alive by having a bill to take back to the House for a conference. His hope is that he can ultimately hash out an agreement with the House. But that is nuts. The House bill is arguably even more conservative than the Senate bill. What makes McConnell think by bringing the Freedom Caucus back into these discussions that he can find a way to keep his moderate Republicans onside?

No one knows if this “skinny” strategy has 50 votes and won’t until the vote is taken.

Even if McConnell can pass the "skinny" option, I just can’t see a viable end game here for Republicans on their own.

There is also a zero chance of any kind of bipartisan agreement so long as a substantial majority of Republicans––as well as the Twitter in Chief––find a “bailout” of Obamacare unacceptable.

Let me also suggest that the Jeff Sessions fiasco has relevance here.

President Trump has said repeatedly that Obamacare is imploding. Any attempts now by the Secretary of HHS to administratively shore it up would likely put Secretary Price in the same boat that Attorney General Sessions is sitting in right now.

And, if we needed any more complications, the Anthem CEO’s comments this morning won’t help. He said, “We don’t believe we have been heard,” when referring to the largest Blue Cross carrier’s warnings to Congress and the administration about the precarious state of the individual health insurance market. He also said uncertainty over whether the $7 billion in low-income cost sharing subsidies would be paid by the Trump administration would lead to 20 points more in rate increases on top of the average 20% rate increases Anthem has already applied for. He also said that Anthem would consider getting out of more states if the Obamacare insurance exchanges aren't quickly stabilized.

The Anthem comments just underscore that the only thing a successful "skinny" strategy on the part of Republicans could lead to is a 2018 individual market fiasco, particularly for the individual market participants who don't get a subsidy.

If you had set out to design the perfect nightmare you couldn’t do it this well.

What's Really Behind the Cruz Amendment to the Republican Senate Plan to Replace Obamacare?

A Cunning Strategy to Back Door Risk Pools and Market Segmentation 

 

Ted Cruz has offered an amendment—since included in the latest Republican Senate draft—that would enable health insurance plans to offer stripped down coverage outside the current Obamacare compliant individual market. Anytime spent covered by them would be considered a break in service and subject the consumer to the six-month lockout provision should they want to get into the standard market. Carriers offering these plans could not deny pre-existing conditions but could up-rate sicker people.

Critics, including the health insurance industry trade associations, have come out against the idea because it would bifurcate the market into two separate pools—the healthier “Cruz pool” and the standard individual market subject to all of the current Obamacare consumer protections.

The Senate Republican Obamacare Repeal and Replace Bill Will Not Reduce the Cost of Health Insurance

At the core of Republican objectives for the "repealing and replacing" of Obamacare is bringing down the cost of health insurance––not just the premiums but the out-of-pocket costs people pay as well.

If implemented, the Senate Republican bill may actually end up increasing costs compared to Obamacare.

How ObamaCare Could Become ZombieCare

The individual health insurance market is becoming more unstable as last year's rate increases are beginning to take their toll on the health of the risk pools––particularly among the almost half of the consumers in the market that are not eligible for subsidies.

The Trump administration is making an already bad situation worse.

President Trump is wrong when he says the system will suddenly "explode" forcing Democrats to beg him to fix Obamacare––actually it will be mostly his constituents who will be begging for relief.

See my op-ed at CNBC.com