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Is Biden opting out of a ‘public option’ for the Affordable Care Act?

Is Biden opting out of a ‘public option’ for the Affordable Care Act?

Picture of Trudy  Lieberman
(Photo by Brendan Smialowski/AFP via Getty Images)
Lurking behind the empty campaign promises is the behind-the-scenes lobbying of the health care industry.
(Photo by Brendan Smialowski/AFP via Getty Images)

Last summer a headline in The New Republic signaled an ominous prediction for the American way of health care. “Health Reform Is Being Slashed Into Oblivion,” the headline read, while the story by staff writer Libby Watson offered a cogent argument why significant fixes to the Affordable Care Act like the public option (a public health insurance plan) and capping hospital and provider charges were not in the cards. The New Republic piece linked to a story in The Hill from August 2020 noting that some Congressional Democrats expect “to start next year with a more modest package of fixes to Obamacare that did not include a public option in an effort to get some early points on the board.” 

How prescient both stories turned out to be! 

Biden’s blueprint for health reform offered during the 2020 presidential campaign hit all the right talking points to make would-be voters think that maybe, just maybe, a new president would embrace big changes for health coverage. As I reported last October, Biden’s core strategy was to build on the Affordable Care Act and further expand coverage through a public option, an idea scrapped during the ACA debate because of fierce opposition from medical and insurance interests. The various public option proposals vary, but the plan touted by Biden would give Americans the option of buying into a health plan run by the government, rather than private insurers, with subsidies for those who qualify. The plan would theoretically lead to lower prices, with the government using its clout to negotiate better deals with providers and hospitals.

Biden also envisioned such an option would be used to further nudge holdout states to expand Medicaid. Biden’s campaign envisioned automatically enrolling people who would otherwise be eligible for Medicaid (if the states had expanded their programs) in the public plan, and states that have already expanded would have a choice of either moving their residents from the expansion group into the public plan where they would pay no premiums as long as states paid their share of the cost, or keeping them in Medicaid. In November, I reported it was too early to tell if this would happen.

Today the federal public option is stuck in the legislative mud with little prospect that politicians will dig it out anytime soon. Biden’s proposed budget didn’t include any funding for such a plan, and his administration has punted the issue to Congress, asking them to instead devise a public. Washington Sen. Patty Murray, who heads the Senate health committee, and her counterpart in the House, Rep. Frank Pallone of New Jersey, sent a letter in late May to lawmakers, the health care industry, patient advocates and others asking for input on future public option legislation, but that action hardly signals an immediate Congressional groundswell of support.

While the federal push appears to have stalled, some states are adopting their own policies. Washington state offered a public option this year, but so far fewer than 1% of those in the individual market have chosen one, most likely because premiums are high. The state’s option did little to control premium costs. Indeed, The Washington Post reported the high premiums were a result of a “failure to cap payment rates to health care providers.” As the bill’s sponsor told the paper, “The hospitals just would not take lower rates.” Meanwhile, Nevada just passed a law authorizing a public option. The insurance plans won’t be available until 2026, when  more studies are done.

Small changes made to the Affordable Care Act earlier this year in the American Rescue Plan Act in response to the pandemic and the loss of job-based insurance for nearly 8 million workers and 7 million dependents may have cemented the ACA into  America’s health care arrangements. The minor changes to the ACA allow people with incomes over 400% of poverty ($106,000 for a family of four) to receive subsidies to buy a policy. They also increase financial assistance to those with incomes between 100% and 400% of poverty to help them buy coverage. The increased subsidies are available for two years, but ACA supporters are banking they will become permanent, assuming, of course, the Supreme Court rules favorably on the health law — a ruling is expected later this month.  

Biden’s Secretary of Health and Human Services Xavier Beccera recently touted robust growth among the ACA plans, tweeting in response to the latest enrollment figures: “The historic numbers released today speak to the success of the Affordable Care Act and our country’s need for quality, affordable health care. Potus’ American Rescue Plan was a leap forward.”   

To which Potus replied: “Great news folks. We hit record high enrollment. 31 million people now have coverage through the Affordable Care Act.”       

Would a federal public option further solidify the ACA’s coverage gains and tackle affordability? To assess a public option’s prospects, I rang up Jacob Hacker, a political science professor at Yale and an early proponent of a public option back in 2009 and 2010 when it surfaced as an alternative to what became the Affordable Care Act. “The public Medicare program through which three-fifths of beneficiaries receive coverage is the closet thing we have to national health insurance,” he told me. (Medicare Advantage plans account for the remainder of the program.) “We should use it as a platform for expanding coverage. I believe a public option is the only realistic way to achieve the core aims of a universal Medicare system.”      

Hacker believes that people who do not have employer coverage should be able to buy into Medicare. Right now, though, he said, “You can only get subsidized private insurance, and we know that private insurance can’t control costs or ensure broad access to providers in the way Medicare can.” He explained that “expansion of Medicare Advantage is undermining the foundation for a true public option” and that “we should be making public Medicare better by adding prescription drug coverage to Medicare and reducing out-of-pocket costs rather than letting private Medicare Advantage plans siphon off more and more of its beneficiaries.” 

The fear is that if more and more people leave traditional Medicare, the only people left will be older and those with serious illnesses. Medicare could become, in insurance terms, a “declining risk pool,” in which the price of coverage for those remaining will become prohibitively high.

Hacker’s observations help explain why two other big and very popular Biden campaign proposals are going to be a heavy lift. One would allow Americans age 60 to 64 to join Medicare (right now age 65 is the cutoff) and the other would let the government negotiate Medicare drug prices with pharmaceutical companies, a move that would significantly lower drug prices for all Americans. Those ideas appear dead for now and may be for the foreseeable future. And some health policy experts have questioned whether lowering the Medicare age would really solve any problems.

For instance, STAT News’ Washington correspondent Rachel Cohrs reported in late April that even though the President had just urged Congress to let Medicare negotiate lower prescription drug prices, “It’s an empty call to action.” She noted the president instead “had snubbed drug pricing policy in his sweeping proposal to reform the social safety net — a move that leaves it out of one of the few policy packages that has a meaningful chance of clearing Congress this year.”

Lurking behind the empty campaign promises, of course, is the behind-the-scenes lobbying of the health care industry, along with its very public PR campaigns aimed at preventing presidential promises from being fulfilled. Sponsored content, which closely resembles legitimate news stories in form and presentation, can easily confuse readers unfamiliar with a given advocacy group, which is precisely the point.

The health care industry has long been opposed to a public option. The system’s big players — hospitals, drug companies, insurers and doctors — fear that a public option would be a stepping-stone to national health insurance, with the government in a position to curb the runaway costs of medical care eating away at the U.S. health system.

The Partnership for America’s Health Care Future, whose members include drug companies, hospitals, and big insurance companies, sponsored such content on Politico in early June sending this message: “Let’s Build on What’s Working Not Start Over with the Public Option or Medicare at 60.” The message continued: “Creating government health insurance systems like the public option and opening up Medicare to younger Americans could increase costs and threaten access to the quality care Americans rely on.”

The President, members of Congress, their staffs, and Beltway policy makers understand messages like that, or at least the lobbying dollars behind them.

Veteran health care journalist Trudy Lieberman is a contributing editor at the Center for Health Journalism Digital and a regular contributor to the Remaking Health Care column.

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Here we go again with the backsliding. When will America wake up and acknowledge the astronomic wasteful spending in our health care system while still leaving so many without access to basic health care services? Let's face it - we are a greedy, everyone-out-for-themselves culture. Until we start sending people to Congress who have the sense to open their eyes and see how other countries have accomplished this, many (who our system really serves) will continue to fatten their wallets as people continue to suffer and die.


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