House Democrats Reveal Health, Paid Leave Policies in Budget Package

Draft bills to add new benefits to Medicare, create a government-run paid family and medical leave benefit for US workers, and boost penalties for mental health parity violations were unveiled this week by key House committees. The proposals come as Democrats begin advancing a series of bills through congressional committees for inclusion in their sweeping $3.5 trillion budget package designed to carry out President Biden’s “American Families Plan” and move through Congress under special budget rules without Republican support.

The draft legislation released this week does not include proposals to allow Medicare to directly negotiate prices for prescription drugs or to extend the expanded Affordable Care Act subsidies enacted earlier this year, but those measures will likely be rolled out and considered by House committees next week. A major concern for employers is whether a proposal let the government negotiate drug prices will extend those negotiated prices to private plans. A proposal to lower the Medicare eligibility age to 60 may also be considered but faces long odds. 

Draft bills released this week by the Ways and Means Committee include a measure to add dental, vision and hearing benefits under Medicare. Vision benefits would become available to beneficiaries in 2022, while hearing benefits would take effect in 2023. Dental benefits would not become available to beneficiaries until 2028.

The committee’s paid leave proposal largely resembles draft legislation released by Ways and Means Chairman Richard Neal, D-MA, in late April. It would create a new entitlement program guaranteeing up to 12 weeks of paid family and medical leave beginning in July 2023 for all workers, which would be available through either a public program administered by the Department of the Treasury, existing state paid leave programs, or employer programs. 

Funding for these benefits would come from general federal revenues, and eligible employers could receive partial reimbursement from the government for paid leave benefits they provide to their workers instead of the benefits their workers could receive from the Treasury program, under certain conditions. Notably, the new draft increases the potential reimbursement for eligible employers to 90% from 40% in the original proposal, but also adds to employer eligibility requirements job protection during leave, a formal appeals process, and a surety bond for self-funded programs.

The measure provides a “grandfathering” option for states with already-enacted laws that meet the federal standard and allows those programs to be reimbursed by the Treasury. The legislation does not preclude any new state and local paid leave laws, but such “non-legacy” states would be ineligible for federal reimbursement.

Meanwhile, plan sponsor groups, including the American Benefits Council and the ERISA Industry Committee, and their members – including Mercer – continue to urge Congress to support employers’ role in offering these benefits and create a nationally uniform compliance standard. Achieving these goals will be a challenge, however, given opposition to a nationwide compliance standard from lawmakers from states with existing paid leave programs.

Also unveiled this week by the Education and Labor Committee is draft legislation related to enforcement of the Mental Health Parity Act. The proposal would give the Department of Labor authority to levy civil monetary penalties against health insurers and plan sponsors for mental health parity violations.

It’s not yet clear how the Senate Democrats will advance their proposals, and the party has not yet settled some basic questions around their reconciliation plans, including the size and cost of a package and how much of it will be paid for. Wide gulfs remain between moderates and progressives on central pieces of the package, including expanding Medicare and bolstering the ACA. Though Democrats can pass party-line legislation under the budget reconciliation process, they cannot lose any votes among their own members in the 50-50 Senate and no more than three in the narrowly divided House. Democratic congressional leaders hope to see the entire package passed by the end of the month, but that timeline could slip as different factions within the party battle over how to resolve their differences.

Geoff Manville
by Geoff Manville

Partner, Mercer’s Law & Policy Group

Katharine Marshall
by Katharine Marshall

Principal, Mercer's Law & Policy Group

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