Build Back Better Act’s Healthcare and Paid Leave Reforms
Face Uncertain Future

The fate of healthcare, drug pricing and paid leave reforms in Democrats’ sweeping climate and social safety net package, the Build Back Better Act (BBBA, HR 5376), is hanging in the balance after the measure failed to win over a key Senator late last year. But Democrats haven’t given up on trying to revive the bill, and while its paid leave proposal seems all but dead, some of its health and drug pricing provisions could survive.

The main, but not only, obstacle is Senator Joe Manchin (D-WV), who announced his opposition to the BBBA days before Christmas, citing the bill’s $2.2 trillion cost and potential to overheat the economy. While Manchin says he’s still open to talks, Democrats will have to seriously trim their ambitions to get Manchin’s vote, essential to pass the filibuster-proof budget bill in a 50-50 Senate. Those talks will have to wait a few weeks as partisan fights over the filibuster and voting rights now take center stage in Congress.

Democrats first proposed spending $6 trillion in the reconciliation package and then $3.5 trillion, while Manchin said his ceiling was $1.5 trillion. Ultimately Manchin and President Biden reached agreement on $1.75 trillion, but House Democrats passed a package that would spend over $2 trillion. During negotiations, Democrats spent weeks debating whether to fund more programs for shorter time frames or fewer for longer. They settled on the former, but Manchin opposes that approach.

Manchin’s desire to have both spending and revenue measures in the package cover the full 10-year budget window means the BBBA as drafted will have to be substantially scaled back to accommodate his concerns. Some liberal Democrats are casting doubt on that possibility, but party leaders seem ready to try, including Biden, House Speaker Nancy Pelosi (D-CA), and Senate Finance Committee Chair Ron Wyden (D-OR). Moreover, there’s broad agreement across the different camps that the bill’s Affordable Care Act (ACA) and drug pricing reforms should stay.

For his part, Manchin has signaled support for the bill’s ACA subsidy expansion, which would make permanent the temporary (2021-2022) expansion/increase of the subsidies. It also lowers the affordability threshold for the law’s employer mandate from 9.5% to 8.5% through 2025.

Manchin is opposed, however, to extending private coverage to the approximately 2.2 million who would otherwise be eligible for Medicaid in a dozen states that have declined to expand the program under the ACA. He believes that would not be fair to states like his that already chose to expand Medicaid under the previous terms with less government aid. Current BBBA language would temporarily let individuals with household incomes at or below 138% of the federal poverty level receive an ACA subsidy even if they have been offered affordable, minimum value employer-sponsored coverage. The employer penalty would not apply.

He’s voiced support for the BBBA’s plan to let Medicare negotiate prices on certain drugs, though he has concerns about bill details regarding how those negotiations would work and how many drugs would be affected. The bill wouldn’t extend Medicare-negotiated prices to employer plans, but a separate provision would require drugmakers to rebate to the government any profits made from increasing the price of their products beyond the level of general inflation. The prices employers pay would factor into calculating the rebate, which could help slow future price increases. The fact that these provisions raise significant revenue may bode well for their survival.

The BBBA’s proposal for a new entitlement program guaranteeing up to four weeks of paid family and medical leave (reduced from 12 weeks in prior versions of the legislation) will almost certainly be left out of any deal. The plan would leave the current patchwork of state and local laws in place and raises a host of operational issues for employers, who will continue to push for a nationally uniform compliance option. Manchin has said he believes that paid leave legislation could garner bipartisan support if it's done outside of the budget reconciliation process.

Whether Democrats can recreate a bill that can cross the finish line is unclear, but time is not on their side. The next few months probably represent the best – and possibly last for some time – chance to act on their priorities before the mid-term political season and the possibility that they may no longer control both chambers of Congress after November’s elections.

Geoff Manville
by Geoff Manville

Partner, Mercer’s Law & Policy Group

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