As he launched his Covid-19 Task Force this week, President-elect Joe Biden moved quickly to turn his health care campaign promises into policies in preparation for entering the Oval Office in January. In addition to ending the pandemic, Biden plans to build on the Affordable Care Act (ACA) by expanding access to and affordability of insurance coverage, creating a public option, and lowering Medicare eligibility to age 60.
Biden also proposes to lower drug costs, end surprise medical billing, address long-term services, expand mental health services, increase funding to community health centers and state Medicaid programs, address maternal mortality and its impact on Black women, improve rural health care, work with providers to improve health outcomes and quality, and protect consumers against price increases resulting from provider consolidation. But his ambitious agenda will likely face some stiff headwinds.
First, the Supreme Court today began hearing oral arguments in Texas vs. California, which may lead to the overturning of all or portions of the ACA. While many court observers doubt the entire law will be scuttled, the future of the ACA will not be certain until the Supreme Court rules, which could come as late as June 2021. The court’s 2012 decision in NFIB vs. Sebelius is a reminder of the challenges of trying to predict how the court will rule. In that decision, the court upheld the constitutionality of the ACA but surprised the health policy community by nullifying the law’s mandate for Medicaid expansion, making that decision a state option. The uncertainty about the court’s action on the current ACA case will weigh on the Biden Administration, which must be ready for whatever results.
Many of Biden’s proposals require Congressional action and budget approval in a particularly challenging economic and political environment. Should Republicans maintain their Senate majority following the two Senate run-off elections in Georgia, the Biden Administration can expect resistance to many of its proposals. While the President-elect and new Congress will undoubtedly work to address the nation’s first priority of curbing the ongoing pandemic and in so doing so jumpstarting the economy, the new Administration is expected to fight as hard for health care reforms that Biden promoted on the campaign trail.
As the debates unfold and Congressional roadblocks arise, states will have new opportunities to advance health care reforms and innovations – giving the new Administration a temporary safe harbor from the headwinds of Congressional opposition. The Biden Administration can, through regulatory reforms, Medicaid and 1332 state innovation waivers, and discretionary funding, enable states to implement some of his proposals and invest in other innovative health policies and programs as states continue to serve as the nation’s laboratories of innovation
Access to Affordable Coverage
State and federal marketplaces: Biden proposes to strengthen the ACA by:
- Eliminating the “cliff” that makes individuals with incomes exceeding 400 percent of the federal poverty level (FPL) ineligible for advanced premium tax credits (APTC);
- Limiting what people spend on health insurance to 8.5 percent of their incomes; and
- Making the benefit plan richer, basing APTC tax credits on gold plans instead of less robust silver plans.
The Biden Administration may provide greater funding for outreach and extend open enrollment and special enrollment periods – now offered by only state-based marketplaces – throughout the federal marketplace (healthcare.gov).
Medicaid enrollment: The federal Public Health Emergency, now set to expire Jan. 20, 2021, is expected to be extended, and with it the mandate enabling states to maintain their current Medicaid enrollment. Biden may use the Public Health Emergency’s authority to temporarily increase APTCs, though that raises questions about the impact on consumers and carriers when the emergency ends. Biden is also expected to seek to help state and local governments by increasing federal funding for Medicaid.
Complementary state strategies: Prior to the pandemic, several states had increased insurance premium subsidies available to consumers, but current revenue shortfalls make that unlikely in most states in the near future. However, the federal government can move quickly to overturn regulations and other guidance that has impeded state-based marketplaces and new coverage initiatives. In the next week, the National Academy for State Health Policy (NASHP) will release a comprehensive document, developed with input from state-based marketplaces, that outlines regulatory fixes that the Biden Administration could implement, including:
- Immediate changes that would protect consumers from Internal Revenue Service penalties during the pandemic and restore anti-discrimination protections;
- Remove enrollment disincentives for legal immigrants;
- Eliminate the double-billing requirement for non-Hyde abortions;
- Protect the integrity of the individual insurance market; and
- Rescind 2018 federal guidance on 1332 waivers to ensure that all coverage available through the waivers is as comprehensive and affordable as the ACA’s.
Public option: Biden proposes a federal public option, offered through the health insurance marketplaces, that would have the purchasing power to ensure affordable prices and be available to the individual market and employees for whom employer coverage is too costly. The public option would auto-enroll individuals with incomes up to 138 percent of the FPL. States that have expanded Medicaid would have the option of moving individuals into a premium-free public option plan or keeping them in Medicaid.
Complementary state strategies: Washington State has enacted a public option, which is offered on its exchange, that is currently being phased in. New Mexico and Colorado have attempted the same. At issue is how to make sure the plans provide a competitive pricing advantage. NASHP has developed a hospital cost tool to help state officials easily evaluate hospital finances. The tool also provides information to inform discussions about how to set hospital prices as a percent of Medicare under a public option. The Biden Administration has broad authority to use funding through the Center for Medicare & Medicaid Innovation to advance public options and approve 1332 or Medicaid waivers that could support different models, including a Medicaid buy-in initiative.
Impact on Prescription Drug Pricing
Negotiate Medicare drug prices: The Biden plan seeks legislative authorization to use Medicare’s purchasing power to negotiate drug pricing using a model similar to Germany’s, in which insurers and manufacturers negotiate ceiling prices based on comparative effectiveness research or else face binding arbitration.
Limit launch prices for drugs without competition or that are abusively priced. An independent review would determine the value of specialty, high-cost drugs and recommend a price similar to those found in other countries. Medicare, private plans operating in the marketplace, including the public option, would have access to these prices
Limit price increases for bio-similars and generics to medical care inflation rates. Manufacturers would need to adhere to the limits or pay a tax penalty.
Support drug importation from Canada. President-elect Biden supported state initiatives to import drugs. Currently, six states (VT, FL, CO, ME, NM, and NH) have enacted importation laws.
Complementary state strategies: Recently issued federal rules authorizing importation require some revision to support state implementation efforts. Also, states would benefit from federal assistance in communicating with the Canadian government.
NASHP has developed model state laws that mirror the Biden proposals. One uses international pricing to set a ceiling that applies to what commercial payers in a state would pay for certain high-cost drugs and has already been introduced in Pennsylvania. Other states are expected to follow. Should the Biden Administration succeed in pegging Medicare rates to international prices, states could benchmark to those rates.
Another NASHP model law uses the Institute of Clinical Effectiveness Research’s (ICER) list of unsupported drug price increases and establishes tax penalties for manufacturers whose drug prices are not supported by clinical evidence, according to ICER. A third model law gives authority to state attorneys general to take legal action in cases of generic drug price gouging. All three state model laws have been developed with legal guidance but would benefit from collaboration with the US Department of Justice and other federal agencies.
These Biden proposals would significantly expand access to affordable coverage and curb drug prices, but they are expected to face strong headwinds as the new Administration works to manage the pandemic, awaits the Supreme Court’s decision on the future of the ACA, and confronts a possible Senate majority that could oppose much of the Biden agenda.
State actions alone cannot replace nationwide, consistent policy as proposed by the President-elect, but their initiatives and innovations can begin to plant the seeds should the Administration be unable to immediately overcome political and stakeholder opposition, and state efforts can help build momentum for future federal reforms.