Despite a chaotic Wednesday in D.C. that saw Trump backers storming the Capitol building and threatening to overturn the results of the presidential election, there will, indeed, be a transfer of power on January 20. And as part of that transfer of power, two new senators from the state of Georgia will take their oaths – both of them Democrats.
Both Democrats competing in the state's runoff elections have won their races, meaning there will be a 50/50 split in the Senate between that party and the GOP, since Vice President Kamala Harris will be the tie-breaking vote. It makes it much more likely that President Joe Biden will be able to enact chunks of his agenda. That has implications for the healthcare industry.
For the entirety of his campaign, the former vice president has eschewed the Medicare-for-All proposals floated by the more liberal wing of his party. Medicare-for-All would effectively nullify the private insurance industry in favor of one large, government-sponsored plan that would cover all Americans.
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Instead, Biden prefers to improve healthcare access by strengthening and tweaking the Affordable Care Act, passed in 2010 by former President Barack Obama, under whom Biden served. According to U.S. News and World Report, Biden defines affordable care as being no more than 8.5% of a family's income. The ACA currently defines affordable care as 9.5% of income.
Anyone who purchases coverage on the marketplace would be eligible for a tax credit to keep affordability in the 8.5% range. Biden has said he would peg those tax credits to gold-level plans rather than silver-level plans, which is the current norm. Cost-sharing in the silver plans sits at about 30%, while at the gold level it would be about 20%.
Perhaps the biggest change Biden has supported is the addition of a public option to the ACA, which would be available even to individuals who have employer coverage. The public option would look something like Medicare, the idea being that it would promote competition and lower prices among private insurers.
"I believe we have to protect and build on Obamacare," said Biden in a video on his website. "That's why I proposed adding a public option to Obamacare, as the best way to lower costs and cover everyone. I understand the appeal of Medicare-For-All, but folks supporting it should be clear that it means getting rid of Obamacare, and I'm not for that."
A Biden presidency is expected to impact the business of healthcare in the U.S., and with the Democratic victories in Georgia, the chances are now much greater that his proposed changes will come to pass in some form.
THE LAWSUIT TO NIX THE ACA
The first and most obvious implication for the healthcare industry is that the ACA will remain intact in some form. With years-long Republican opposition to the law and attempts to overturn it in the courts, that wasn't always a given.
In 2018, a lawsuit was brought byTexas and 19 other Republican-led states that was inspired by the end of the individual mandate, a component of the ACA that required people to purchase insurance or face a tax penalty. That mandate was later struck down. In February 2019, U.S. District Court Judge Reed O'Connor agreed that the federal law cannot stand without the individual mandate because if there is no penalty for not signing up for coverage, then the rest of the law is unconstitutional.
President Trump's Department of Justice later agreed with the district court judge, a reversal of the DOJ's earlier opinion in the district court in which the DOJ previously defended all of the ACA other than the individual mandate, including pre-existing condition provisions.
Hospitals, physicians and insurer groups have been united in wanting to preserve the ACA. The American Hospital Association, the American Medical Association and America's Health Insurance Plans are among groups that fought against the lower court ruling.
AHIP said the law impacts not only the individual and group markets, but also other programs such as Medicaid, Medicare and Part D coverage.
"Since its passage in 2010, the ACA has transformed the nation's healthcare system," AHIP said in 2019. "It has restructured the individual and group markets for purchasing private health care coverage, expanded Medicaid, and reformed Medicare. Health insurance providers (like AHIP's members) have invested immense resources into adjusting their business models, developing new lines of business, and building products to implement and comply with those reforms."
Now, with Democratic control of the Senate, even if the Supreme Court rules against the ACA this spring, Biden would be able to rebuild it.
A big part of the ACA was allowing states to expand their Medicaid programs, and while this was initially a requirement for all states, the Supreme Court later ruled that states could opt into Medicaid expansion. This led to a partisan divide, as states with Democratic governors largely expanded their Medicaid programs while Republican-led states did not.
With three Trump appointees sitting on the Supreme Court, it's unlikely that Medicaid expansion will once again be required across the board. But with a Democratic Senate helping to grease the wheels of an incoming Biden administration, the president-elect could offer more incentives for states to do so.
It's unknown at this point what exactly these incentives could entail, but a clue may be found in recent Democratic efforts. In 2019, three Democratic senators introduced a bill that would give states that recently expanded Medicaid the same federal funding as those that had expanded. Under the ACA, a state can choose to expand Medicaid to all individuals up to 138% of the Federal Poverty Level.
From 2014 to 2016, the federal government picked up the full cost of the expansion. After that period the contribution began to dip, and last year states had to pay 10% of expansion costs. But a state that expanded Medicaid after 2014 doesn't get the same matching rate.
With the ACA here to stay and a new president waiting in the wings, that could all change.
DRUG PRICE NEGOTIATION
When it comes to lowering drug prices, the two major parties have adopted different approaches. Pursuing a "most favored nation" approach, President Trump signed an executive order this past autumn aimed at lowering drug prices, which calls for Medicare to pay the same price for certain prescription drugs that other countries pay.
It effectively repealed a previous executive order that was nearly identical in concept, but that Trump held back on to see if he could negotiate a better deal with drug companies. The newer executive order expanded the list of drugs covered to include both Medicare Parts B and D, the idea being that Medicare would not pay more for drugs than the lower prices paid by other countries.
"The focus of any reforms must be on lowering costs for patients, ensuring patients' access to medicines, addressing the misaligned incentives in the pharmaceutical supply chain and protecting the critical work being done to end COVID-19," said Ubl. "Unfortunately, instead of pursuing these reforms the White House has doubled down on a reckless attack on the very companies working around the clock to beat COVID-19.
"The Administration has chosen to pursue the most favored nation policy – an irresponsible and unworkable policy that will give foreign governments a say in how America provides access to treatments and cures for seniors and people struggling with devastating diseases," he said. "What's worse is that they are now expanding the policy to include medicines in both Medicare Part B and Part D, an overreach that further threatens America's innovation leadership and puts access to medicines for tens of millions of seniors at risk."
Ubl advocated for using existing trade enforcement tools to protect American innovation.
President-elect Biden favors a different approach. According to Reuters, Biden's plan is to allow Medicare to negotiate drug prices. He has support from Congressional Democrats to pass such legislation, with the Congressional Budget Office estimating that the move could cost the healthcare industry upwards of $300 billion by 2029.
That would likely be ameliorated somewhat by the creation of a government-run health insurance option, which could lead to more Americans being able to afford more drugs, boosting demand for the pharmaceutical industry's products.
ELIMINATION OF COST-SHARING FOR COVID-19 PATIENTS
Biden will take office during a tumultuous time in American history, exacerbated by a global pandemic that has made the business and practice of healthcare monumentally difficult in the U.S.
One area in which the incoming administration could address this difficulty is cost-sharing for COVID-19 patients. Biden and two Democratic-led chambers of Congress may make a push for eliminating cost-sharing, a move that has been pursued to some degree by private insurers such as Cigna and Humana.
In 2020, Cigna waived cost-sharing and copayments for a time, while Humana waived costs for coronavirus treatment as well as subsequent treatment, including inpatient hospital admissions. Humana covered member responsibility under the plan benefits for COVID-19-related services, whether treatment is delivered by in-network or out-of-network providers.
Aetna and Humana are covering inpatient hospital stays, which is not mandated. And Humana's initiative to move patients more quickly from hospital to post-acute care clears needed bed space.
With Georgia's runoff elections in the books and a Democratic Congress amenable to Biden's policy positions, the incoming administration could bump things up a notch.
"Biden believes we must spend whatever it takes, without delay, to meet public health needs and deal with the mounting economic consequences," reads a statement on the president-elect's website. "The federal government must act swiftly and aggressively to help protect and support our families, small businesses, first responders and caregivers essential to help us face this challenge, those who are most vulnerable to health and economic impacts, and our broader communities."