Seth Wenig/AP Photo
Inside Bellevue Hospital in New York
If some version of Biden’s American Family Plan becomes law, it would be a truly transformative moment. By providing child care assistance, universal pre-K, paid family leave, and much more, combined with the elder care supports in the previous American Jobs Plan, Democrats would effectively be creating the bones of an entirely new welfare state, one that is common in most of the industrialized world, paid for by taxes on the rich. It would provide a broad range of help to millions to families, particularly around the care and support they need to survive and thrive.
But one thing is notably absent, and that is health care.
In the White House fact sheet, the Biden team talks about health care campaign promises —like reducing prescription drug prices, creating a public health insurance option, and lowering the Medicare eligibility age to 60—but none of them are actually in the plan. While Biden talked at length about the need to lower prescription drug prices in his address before Congress, he made clear that this would be some future goal “in addition” to the Families Plan, not part of it.
The single major health care provision included in the Families Plan is a permanent increase in Affordable Care Act insurance exchange subsidies, at a cost of $200 billion over 10 years. While this provision will make health insurance more affordable for 13 million Americans, it does so in the least cost-effective way possible, and does little to address health care issues for the other 315 million Americans.
The relative absence of health care provisions from the plan is not due to a lack of public desire. For the past few years, health care costs constantly rank among the top issues for voters. Democrats led with health care and won back the House in 2018. And inter-party debates over health care policy dominated the 2020 primary. Importantly, Gallup also found that building on the ACA was one of the least popular reforms under discussion. Reducing drug prices and lowering the Medicare age both garner more popular support.
One can only conclude that Biden doesn’t want to take on the power of the hospitals, drug companies, and doctors right now.
The lack of health care improvements is also not due to an absence of interest from within the Democratic caucus. A broad cross-section of both progressive and moderate House members are pushing for lowering the age of Medicare and improving its coverage. And House Speaker Nancy Pelosi has been pushing hard to include her own provision, negotiated last year among all factions of the House Democratic caucus, to lower drug prices for most Americans.
Neglecting health care also isn't about deficit concerns. Many of Biden’s campaign promises on health care are huge cost savers for the federal government, which could help pay for the overall plan. Adding a public option only to the insurance exchanges would likely save enough money to more than pay for Biden’s $200 billion improvement to exchange subsidies, and would generate hundreds of billions more in new revenue if employers were allowed to buy in. The Congressional Budget Office found the Democrats’ drug price negotiation bill from last session, HR 3, would save $456 billion, more than enough to cover a broad range of improvements to Medicare.
One can only conclude that Biden doesn’t want to take on the power of the hospitals, drug companies, and doctors right now. The one major health care provision in Biden’s proposal is among the least popular, with the narrowest set of beneficiaries. The sole thing that makes it stand out is that the health care industry loves it. The subsidies go directly to private health insurance companies, so that more people can afford care at hospitals and other providers, and prescription drugs. To the industry, it is purely more money and customers for them with no downside.
By contrast, reducing drug prices, establishing a public option, or allowing people over 60 to join Medicare would all force different health care companies to stop overcharging patents. Employer-based insurance pays an incredible 1.6 to 2.5 times more than Medicare for the same care; no provider wants to see their patients shift from more expensive coverage to less expensive. Insurance companies don’t want to lose the patients. And drug companies don’t want to lose the ability to charge whatever they want for their products.
It is worth noting that Biden didn’t even include federalizing Medicaid expansion in hold out Republicans states. Such a move would be a net winner for most health care providers. While it would significantly increase coverage and reduce the amount of uncompensated care hospitals face, it would move a small number of subsidized private insurance customers making just above the poverty line to Medicaid, which pays lower rates.
With his decades of political experience, Biden seems to have concluded that building multiple new transformative social programs while taxing rich people and corporations is a significantly easier political lift than telling hospitals and drug makers they should make slightly less money so regular people aren’t crushed by the cost of care. Given the history of health care reform efforts in this country, it is tough to argue that Biden’s assessment of hospitals and pharmaceutical companies’ political power is off. (The cynic would add that one of the tight inner circle of Biden aides, Steve Ricchetti, is a former health care lobbyist, and his brother is a lobbyist who has been engaging the White House on behalf of health care companies.)
By excluding every health care provision which could possibly upset anyone in the health care industry, Biden has likely improved the chances of some version of his plan passing by 30 percent but also decreased the chances of any other major health care reform passing in the next two years by 90 percent. It protects the power of health care lobbyists from infecting the significant investments in infrastructure, broadband, climate, education, and child development in the overall package, but it lessens the possibility of making any broad improvements on health care. Democrats are only likely to pass one or two major bills on partisan lines before the 2022 midterms, and if a health care provision isn’t included in this coming bill it is hard to see how it makes it into another.
The only silver lining for health care activists is that making the enhanced ACA subsidies permanent will make some state-based reforms less challenging. And state-based reforms might be the only option left.
