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Former Vice President Joe Biden speaks about combating the coronavirus crisis, at the Hotel Du Pont in Wilmington, Delaware, March 12, 2020.
Joe Biden has begun to signal. In the past few days, the presumptive Democratic nominee has made a handful of symbolic gestures about his priorities on policy, his intentions on staffing, and his style of messaging ahead of November’s showdown with Donald Trump.
Chief among them has been his overtures to the party’s left wing and the Bernie Sanders flank of the electorate, after the senator conceded late last week. (Biden’s camp has also trial-ballooned Cabinet members, most of whom would not exactly qualify as progressive appeasement.) To that end, he trotted out what was supposed to be a signature concession on health care. As Greg Sargent and Paul Waldman wrote at The Washington Post, Biden is now proposing lowering the Medicare eligibility age to 60, the “first big overture to Sanders voters.”
That may well be true, though Sanders voters are famously not overwhelmingly represented within the 60-to-64 age bracket. But there’s another group that stands to benefit greatly from such a proposal: the insurance industry. And it’s not the only time that Biden has signaled in the past few days that he holds their interests close to his heart.
It will surprise no one that coronavirus is not good for business. But for the insurance industry in particular, which thrives when the fewest possible people are seeking and receiving medical care, coronavirus has created a dreadful set of conditions. Right now, hundreds of thousands of people are seeking medical care simultaneously. Because hospitals and medical facilities are at or beyond capacity, elective surgeries, a veritable golden goose for the industry, have ceased almost entirely. Because of mass job loss and a mounting nationwide recession, many people who are getting treatment currently ultimately won’t pay their bills. Coronavirus, according to estimates, will cost insurance companies tens if not hundreds of billions of dollars in additional expenses.
That’s basically a worst-case scenario for Blue Cross Blue Shield, Aetna, and the like, which had, until recently, been enjoying record profits. Now, these added costs threaten to rain on that parade. It’s part of the reason why reports have indicated that premiums are set to skyrocket next year, by up to 40 percent. Insurance companies are getting whacked, and they’re going to let businesses and consumers absorb some of that hit.
For the insurance industry, which thrives when the fewest possible people are seeking and receiving medical care, coronavirus has created a dreadful set of conditions.
What does Joe Biden’s proposal do for them? People aged 60 to 65 are the single-highest-risk group left in the private insurance pool, because of their relative old age, which means they cost the most to cover. Getting those people off the rolls of the private insurers, and shoveling them into the hands of the government, would lower costs significantly. Under Biden’s proposal, the insurance companies would offload this profit-threatening liability onto taxpayers, via Medicare. Moreover, these near-seniors tend to have and use private insurance above and beyond other groups: 60-to-64-year-olds are already some of the best-insured people on the private market, with rates of uninsurance less than half that of people in their late twenties.
Biden can argue for his proposal not by noting that it will pad the bottom line of the insurance companies, but by claiming that 60-to-65-year-olds are actually low-risk, low-cost enrollees compared to the 65-plus demographic, which will lower individual costs for Medicare. And that’s correct! But if the primary concern were lowering individual cost and risk for the Medicare program, expanding eligibility to younger groups would save far more. As Ryan Cooper wrote at The Week, making Americans aged 0 to 26 eligible would accomplish that much more effectively. Actually, literally any other grouping of ages would accomplish it more effectively.
That’s not all. On Here’s the Deal, his sapless new podcast that’s ostensibly part of the solution to his profound deficit of youth support, Biden used last week’s episode, just the show’s second at that point, to bring on Michigan governor Gretchen Whitmer as a guest. For 21 minutes, Biden and Whitmer extol the virtues of bipartisanship, which, as Alex Shephard wrote in The New Republic, feels like “at least 15 minutes longer than they should.” In the days since, Whitmer has been floated repeatedly as a finalist for Biden’s vice-presidential pick.
Whitmer is a woman, she’s a popular governor, she’s from a swing state, and she wouldn’t cost Democrats a Senate seat. There may be some tactical advantage in picking a running mate from a must-win state like Michigan, though the science on that isn’t entirely clear. What is clear, however, is the message that picking Whitmer would send to the insurance industry.
Restoring the status quo, in this case, means assuring the insurance companies they’ll be made whole once the crisis is complete.
Whitmer has been a vocal opponent of single-payer, saying in 2018, “It’s not a real option right now,” when Democrats in House races all over the country were running on it. More importantly, she’s also the daughter of Richard Whitmer, who served as president and CEO of Blue Cross Blue Shield of Michigan between 1988 and 2006. The company’s current CEO, Dan Loepp, was the first to encourage her to get into politics. That relationship was not lost on Loepp’s company, which marshaled $145,000 in a fundraiser for the younger Whitmer’s benefit, more cash than the company has raised for any Michigan gubernatorial candidate in the past decade. Whitmer was Blue Cross Blue Shield’s second-largest political expenditure after the House Republican Campaign Committee.
Again, there are reasons Biden would do these things independently, and there may be real upsides, for him and for his voters, in doing so. But make no mistake—the health insurance industry knows when its number is being called. And this is, in essence, what Biden has been pledging all along with his restorationist approach to health care. Restoring the status quo, in this case, means assuring the insurance companies they’ll be made whole once the crisis is complete.
That gesture is largely in lockstep with House Democrats, who yesterday unveiled a pitiable proposal to provide a federal subsidy for 100 percent of COBRA costs. COBRA allows laid-off workers to keep buying into their health insurance plans, paying their employers’ contribution on top of their own premiums. It’s exceptionally and often prohibitively expensive—over $20,000 a year, on average, per family.
That COBRA expansion, at its core, is an insurance industry bailout. Democrats are proposing to make exorbitant payments, in full, to private insurers, to keep some percentage of laid-off workers on the ex-employers’ private health plans (it won’t, however, pay those workers’ deductibles, and doesn’t answer the question of how someone without an income is going to afford a multi-thousand-dollar deductible to actually use that coverage). That amount of money could easily be rerouted to any number of actually effective public insurance programs, expanding public plans by increasing the federal assistance percentage to Medicaid to induce states to expand their Medicaid programs, or routing resources to Medicare or Tricare. Instead, the proposal is a thinly veiled and cost-inefficient insurance industry giveaway; if its primary purpose was to help laid-off workers, it would have to have been passed weeks ago. The COBRA legislation stands in stark contrast to the recent proposal from Sanders and Rep. Pramila Jayapal (D-WA) that would have the feds cover all coronavirus-related medical expenses for everyone, though perhaps the former bill will be more appetizing for Senate Republicans.
As with so many other sectors of the economy, coronavirus has exposed the profound inadequacy of the already-faltering insurance industry. The combination of the Democrats’ anointing Joe Biden as their nominee, while telling exit-pollsters in every state that voted that they support Medicare for All, has muddled the Democrats’ course of action. It’s possible Biden will change direction on health care, as he works with some Sanders people to broker a passable platform. But if the past few days are any indication, the insurance industry has good reason to believe that candidate Biden has their best interests in mind.
