By TAYLOR J. CHRISTENSEN
Without the full support of congress behind him, President-Elect Joe Biden will probably not have an opportunity to sign any major system-altering healthcare legislation. But, if Democrats can gain a majority in the senate–either this election cycle or next—healthcare reform will be high on the agenda. Let’s take a critical look at what Joe Biden would push to accomplish.
For this evaluation, I am relying solely on information that Joe Biden has committed to on his official campaign website. He has many pages talking about a variety healthcare issues, such as the pandemic, gun violence, and the opioid epidemic. But the main page that reviews his plans for the healthcare system as a whole is here. Consider giving it a read through first, because what follows will only be summarizing and evaluating the key big-picture components of his plan.
Joe Biden is not pushing for Medicare for All. He instead wants to keep the Affordable Care Act (i.e., the ACA, or “Obamacare”) and fix the parts of it that are not working so well. To understand the rationale of his proposed changes, we first need to review where we are at now with the ACA.
There are many parts to the ACA, but its main thrust was to increase insurance coverage. What kind of numbers are we working with? Below are some 2019 data, rounded for simplicity. And note that I am excluding the 60,000,000 people who are over age 65 and therefore on Medicare.
The under-age-65 people fall into one of four insurance groups . . .
Employer-sponsored insurance (160,000,000 people) if they are lucky enough to work for an employer that provides benefits.
Medicaid (70,000,000 people) if their income is low enough to qualify.
Private insurance from the “private market” (10,000,000 people) if they make too much money to qualify for Medicaid and do not have an employer that provides benefits.
Uninsured (30,000,000 people) if they do not get insurance from their employer, their income is too high to qualify for Medicaid, and they do not want to pay for insurance from the private market.
Remember, those are from 2019, so they are post-ACA numbers. Prior to the implementation of the ACA, the uninsured number hovered around 45,000,000 people. What did it do to reduce the number of uninsured people? There were many ways, but here are the two biggest ways:
First, it allowed states to liberalize their eligibility criteria for Medicaid. This is known as a “Medicaid expansion,” and it offered federal funds to pay for most of the costs associated with all the new Medicaid enrollees. That accounts for about 12,000,000 of the 70,000,000 people who are currently on Medicaid, some of whom were previously uninsured, and others of whom were previously on private insurance. But Medicaid expansion was ruled optional by the supreme court, so not all states chose to expand their Medicaid programs.
Second, it created a tax (also called a “health insurance mandate”) for anyone who did not have health insurance. This was to push the uninsured who did not qualify for Medicaid to buy insurance. And because everyone was going to be required to buy insurance, the government had to make sure it would be affordable for everyone, so they promised to help cover the cost of insurance premiums for anyone under 400% of the poverty level. Additionally, to prevent insurance companies from taking advantage of the government’s willingness to help pay for people’s insurance premiums, they made a rule that insurers have to charge everyone the same premium without respect to pre-existing conditions (although that premium can be adjusted up or down to a limited extent depending on a person’s age and smoking status).
So, an easy way to summarize the ACA’s second way it was trying to increase insurance coverage is by saying it was attempting to shift uninsured people into that private market. The ACA even created a nice website (healthcare.gov) to make it extra easy for people to shop for insurance plans on the private market by listing them all there side by side in a standardized fashion, and the website went so far as to pull in people’s tax information to calculate their premium subsidy right up front as well.
While Medicaid expansions were predictably effective at lowering the number of uninsured people in the states that chose to do that, the mandate did not work so well–most of the healthy uninsured who did not newly qualify for Medicaid still did not buy insurance.
This was for a variety of reasons. Some people who were not on health insurance when the ACA’s mandate took effect did not even realize they were choosing, by default, to pay that tax, so it had no motivating impact on their insurance status. Other people wanted to buy insurance to avoid paying the tax, but unless they qualified for premium subsidies, they found that private market premiums were unaffordable, so it made more sense for them to just risk continuing to be uninsured and pay the tax.
The summary of the ACA’s effects on the private market, then, is that it created a perfect storm of sick people getting insurance and healthy people not getting insurance, which drove premiums higher and priced out even more people. Then, in 2017, the mandate was eliminated, which further aggravated these issues.
All these factors help explain why we continue to have 30,000,000 people uninsured in spite of the ACA’s efforts.
With all this in mind, the natural solution becomes fairly obvious: To shift the uninsured into the private market, restore and strengthen the mandate and get rid of the 400% poverty level limit on premium subsidies and make them more generous.
And that’s exactly what Joe Biden would do. Except for the reinstating the mandate part, which would probably not be popular nor even possible. I guess he hopes that if his subsidies are generous enough, he will get the healthy people into the market even without a mandate.
How generous is he making the subsidies? Healthcare premiums will be limited to no more than 8.5% of any individual or family’s income, regardless of income. Currently subsidies kick in at around 10%. And not only that, but he is also planning on benchmarking these subsidies based on gold level plans rather than silver (meaning out-of-pocket costs, especially deductibles, will be a lot lower). This will certainly entice at least some of those 30,000,000 people into buying health insurance.
But he has gone further than that. I suspect he feels that insurance companies do not truly competitively price their plans, because he also intends to create a new government-run insurance company that would offer its own plan (known as the “public option”) in the private market alongside all the other private insurers’ plans on healthcare.gov. As the thinking goes, if the public option ends up being way cheaper than all the private plans, private insurers will lose much of their market share and will be forced to offer lower prices.
This private option would also be made available to other groups, such as employees whose employer does not provide health insurance, and it would even be offered for free to low-income uninsured people in states that have not expanded Medicaid.
Now you know the major points of Joe Biden’s healthcare plan, plus the relevant context to show why he chose them. Part 2 of this series will critically evaluate that plan to show what he got right and what he got wrong or missed altogether.
Taylor J. Christensen is an internal medicine physician and health policy researcher who blogs about how to fix the healthcare system at clearthinkingonhealthcare.com.