With the presidential election in full swing, one question keeps popping up in virtual meetings with clients: “What would healthcare look like with Joe Biden in the White House?” The Biden campaign has a website specifically devoted to his health care policies. In this post, I’ll focus on a few key elements of his proposals that will be of most interest to employer plan sponsors.
Lower Medicare eligibility to 60, allow buy-in for younger individuals. I’m starting here because this change would definitely help people who want to retire before age 65 but don’t because medical insurance is too expensive, and could reduce employer spending if fewer retirees remained in employer plans under COBRA. While Biden has aired this proposal publicly, it should be noted that specific references to lowering the Medicare eligibility age have very recently been removed from the Biden health website.
Preserve and build on the Affordable Care Act. Currently, individuals with incomes at or above 400% of the poverty level do not qualify for a subsidy on the public exchange, which has made exchange coverage unaffordable for many in the middle class. Biden’s plan to address affordability issues would eliminate the 400% income cap and lower the limit on the cost of coverage from 9.86% of income to 8.5% for everyone buying coverage on the public exchange. In addition, his plan will base the tax credit on the more expensive gold plan rather than the silver plan.
Add a public option. Biden’s public option would be an option similar to Medicare that would reduce costs for patients by negotiating lower prices from hospitals and other health care providers with better coordination between a patient’s doctors to improve quality of care, and would cover primary care without any co-payments. Reading between the lines, it appears this public option would be built on some part of the Medicare chassis – perhaps Medicare ACO networks or Medicare Advantage plans. Pricing for this type of option is unknown.
Multiple prescription drug cost controls. These include allowing Medicare to negotiate prescription drug prices, limiting preferred pricing during launch of new drugs, limiting pharma price increases to inflation, allowing patients to buy prescription drugs from other countries, and eliminating pharma tax breaks for advertisement spending.
Stop surprise medical bills. The Biden Plan would bar health care providers from charging patients out-of-network rates when the patient doesn’t have control over which provider the patient sees. That would address cases where a patient goes to an in-network hospital but doesn’t realize a specialist at that hospital is not in their health plan. However, the plan does not specifically address bills from emergency room doctors, who are almost always out of network.
Use antitrust laws to address consolidation of providers. The Biden plan specifically calls out “the concentration of market power in the hands of a few corporations that is driving up prices” for all health care purchasers.
The $100 billion dollar question: How to pay for these proposals to make healthcare more accessible? The Biden Plan would go after the capital gains tax rules for the wealthy and roll back some of the 2017 cuts in income tax rates. The capital gains and dividends exclusion is the second largest tax expenditure in the entire tax code: $127 billion in fiscal year 2019 alone.
Parting thoughts. Please keep in mind that campaign platforms lack crucial details and that Congress will have the last word on nearly all of these proposals. As we know from prior health care proposals, the devil is in the details. Speaking of details, there are a number of references on the Biden health site to “options to your current employer plan” that might be more affordable. In a future blog post we will “do the math” to see just how competitive the options would need to be in order to be more attractive than employer-sponsored coverage.