Democrats spent much of the 2020 presidential primaries debating how best to expand public health insurance. They discussed whether they should enroll everyone in public coverage – Senator Bernie Sanders’ preferred policy – or give everyone the choice to do so, the public option plan supported by President Joe Biden.
Candidates have repeatedly proposed a future in which private insurers play a minor role in the United States’ healthcare system – or no role at all.
Sign up for the New York Times newsletter The Morning
But the Biden administration’s first major legislation, if passed in the Senate, goes in the opposite direction: it proposes to spend billions to expand private health insurance coverage to millions more Americans.
The American Rescue Plan, a $ 1.9 trillion stimulus package that the House approved last week, would increase government subsidies to health insurers to cover recently laid-off workers and those who purchased their own coverage.
The new subsidies do not exclude future legislation that could make public plans more available. Some congressional advisers say they are already laying the groundwork for including a public option plan in a legislative package scheduled for later this year. And the stimulus package introduces an incentive for states to expand public coverage through Medicaid, although it is unclear whether any states will accept it.
The decision to start subsidizing private insurance shows how often it can be the path of least resistance when lawmakers want to expand coverage. The changes can fit perfectly into a pre-existing system and tend to garner support from the health sector (which benefits).
“The policy of expanding public coverage in a way that transfers people to public insurance gets complicated very quickly,” said Karyn Schwartz, senior researcher at the Kaiser Family Foundation. “There are very real losers: the suppliers who would see their payments go down.”
Private health plans cover 176 million Americans, exceeding the number of combined Medicare and Medicaid enrollments. The stimulus plan would likely increase private insurance enrollments by a few million people with the new subsidies it offers to those who buy their plans.
The American Rescue Plan spends $ 34 billion expanding the Affordable Care Act grants for two years. The changes would make upper-middle-income Americans eligible for financial aid to buy plans on the Obamacare market and increase subsidies that already go to low-income registrants.
The stimulus package also subsidizes private health insurance premiums for newly unemployed workers. They typically have the opportunity to acquire health benefits from their former employers through a federal program called COBRA, which can often be prohibitively expensive because the employer is no longer paying a portion of the worker’s premium.
The legislation that the Chamber approved would cover 85% of COBRA premiums until September. The Senate plans to increase the amount to 100%, which means that the government would bear the total cost of the premiums. The Joint Taxation Committee estimates that the most generous version of the Senate will cost $ 35 billion.
There is still no estimate of how many people would obtain coverage under the Senate plan, but the Congressional Budget Office estimated that the original version of the House would reach 2.2 million former workers.
These policies have progressed easily and with little opposition. The healthcare industry has generally supported the changes because private healthcare plans often pay higher prices for doctors and hospitals. Democrats who support expanding public coverage often describe these changes as something accessible – the changes they could quickly make to expand coverage.
But some progressives questioned the decision to refer patients to private health plans, which will cost the government more because of the high prices they pay for care.
“I don’t think that’s the most efficient way to do this,” said Pramila Jayapal, a Democratic Congresswoman from Washington State, who is the primary sponsor of the House’s Medicare for All bill. She proposed legislation that would have allowed unemployed Americans to transition to Medicare, rather than following the plans of their former employers.
This has not progressed. Nor does it have a Sens plan. Tim Kaine and Michael Bennet to create a version of Medicare, which they call “Medicare X,” available to all Americans.
In recent years, Democrats have increasingly embraced the idea of a vast expansion of public health benefits. The public option would give all Americans the option to enroll in a Medicare-like plan, and a Medicare for All program would move everyone to a government health plan.
Research shows that public support for each idea is also growing, with the public option tending to rank more favorably than Medicare for All.
These types of expansion of public coverage tend to cause political division in Washington. Often, they attract strong opposition from the healthcare industry for the same reason that advocates like the policy: they would be disruptive and significantly reduce the fees paid to hospitals and doctors.
A report by the Kaiser Family Foundation this week estimated that total health care spending for those with private insurance would fall by $ 350 billion in one year if these private plans paid claims on Medicare fees.
“You can’t take $ 350 billion from a system and expect it to look the same,” said Schwartz, author of the report. “Every time I pass a hospital, I see a major construction project. You would probably see less of that. “
In the coming years, Democrats are likely to face more decisions on how to expand coverage. The new grants from the Affordable Care Act expire at the end of 2022, creating a figurative cliff on which the premiums would rise again if Congress did not act.
Democrats could use the moment to make these changes permanent, further solidifying the role of private health insurance. If subscribers are satisfied with their increasingly subsidized plans – if they realize that coverage is more affordable because the government pays a larger share of the bill – the urgency to expand public coverage may decrease.
“Sometimes the path of least resistance is self-reinforcing,” said Jacob Hacker, a political scientist from Yale who helped develop the public option plan supported by Biden.
But lawmakers may find themselves refusing the price. Making the grant permanent would likely cost hundreds of billions. This could lead the party to think about the cheapest, but most politically challenging, route to expand public plans.
The party’s course may depend on whether Democrats will continue to have a majority in the two chambers of Congress and whether the caucus can unite around expanding public coverage in the same way it did with increased spending on private plans.
“It is telling that they are eliminating the expansion of subsidies and are not dealing with the long-term challenge of, how do you finance this?” Hacker said. “Their plan to support ACA is the path of least resistance, but it is a path that only takes you so far.”
This article was originally published in The New York Times.
© 2021 The New York Times Company