Eager to make use of their narrow, but still potentially powerful, majorities in the House and Senate, congressional Democrats are pursuing an assortment of legislative options aimed at tightening the federal government’s grip on health care.
Their efforts coincide with White House legislative initiatives directed at codifying changes to the nation’s health-care system and – when that proves unavailing – using executive orders and the administrative rulemaking process to bring about the transformation the Biden administration seeks. This includes rolling back Trump-era regulations designed to bring flexibility to Medicaid and the Affordable Care Act (Obamacare) and expanding health care coverage options.
The first step was undertaken in March with the enactment of the American Recovery Act, the Biden administration’s $1.9 trillion COVID-19 recovery bill. Among other things, it increased Obamacare subsidies for those already eligible for them, allowed people with higher incomes to become eligible for the subsidies, and limited the size of Obamacare premiums as part of overall household income. These temporary measures are scheduled to expire at the end of 2022.
Now, progressives in the House and Senate are eyeing a massive Medicare expansion as the next step on what appears to be a path ultimately leading to a single-payer system. Roughly 100 congressional Democrats, led by Rep. Pramila Jayapal (Wash.) and Sen. Bernie Sanders (I-Vt.) want to lower the eligibility age for Medicare to either 55 or 60 (see related article, TBA), expand the range of services Medicare covers, and grant the government new powers to negotiate prescription drug prices directly with pharmaceutical companies.
But in his April 28 address to Congress, during which he unveiled his $1.8 trillion American Families Plan, Biden made no mention of expanding Medicare. Instead, he pledged to seek more subsidies for people purchasing health insurance, Including making the expanded Obamacare subsidies contained in the American Recovery Act permanent. Undaunted, Sanders, Jayapal, and their progressive allies said they will forge ahead on Medicare expansion, prescription drug pricing, and other health care policies and plan to use the American Families Plan as their legislative vehicle, the Washington Post reported (April 30). During the 2020 presidential election, candidate Biden supported lowering the Medicare enrollment age and expanding the program’s services.
Prescription Drug Price Controls
Meanwhile, in the House, Speaker Nancy Pelosi has thrown her weight behind H.R. 3, a bill that would fundamentally change how prices of prescription drugs are determined under Medicare.
The bill would allow the Health and Human Services (HHS) secretary to seek – through direct negotiations with pharmaceutical companies – lower prices for up to 250 prescription drugs covered under Medicare Part D each year. Under the bill, the negotiated costs to consumers would be capped at 120 percent of the average market prices in Canada, France, Germany, Japan, and the United Kingdom. Negotiated prices would be extended to insurers that offer Medicare Part D plans and to commercial insurance carriers and group health care plans, though those entities could negotiate their own discounts.
The negotiations laid out in H.R. 3 are not entirely voluntary. Drug manufacturers that refuse to participate in negotiations or won’t agree to the government’s desired price would face a noncompliance tax of 65 percent of the gross sales of the drugs which can increase 10 percent each quarter to a maximum of 95 percent.
While opposition from the pharmaceutical industry (and Republicans) was to be expected, objections raised in another faction could portend a rocky road to passage. In late May, a group of ten moderate House Democrats, led by Rep. Scott Peters of California, sent a letter to Speaker Pelosi stressing the importance of not weakening drug companies’ ability to develop new medicines. The Washington Times (May 20) reported that Pelosi’s office is still confident the bill will pass, but the Democrats’ thin majority will not allow for many defectors.
The Playbook
Regardless of the fate of the drug-pricing bill, that measure is part of a larger strategy pursued by congressional Democrats and the White House, according to the Heritage Foundation’s Nina Owcharenko Schaefer. Writing in The Daily Signal (March 22), she describes their playbook as follows:
“First, use federal funding to mask the real cost of the plan. Liberals plan to do this by throwing subsidies both at insurers, to hide the cost of coverage, and at the states, to coerce them into expanding their already overstretched Medicaid programs.
“Second, consolidate enrollment in government programs by encouraging states to use an individual mandate and auto-enrollment system. This is intended to put more people on the Obamacare exchanges and to push states to add and keep more people on their Medicaid programs.
“Third, curb access to non-government-approved alternatives by restricting and effectively eliminating access to affordable, non-Obamacare-style options.
“Finally, strip away flexibility by linking federal dollars to federal policies. The more federal control of the dollars, the more federal rules, and restrictions. The result is a one-size-fits-all standard.”
Schaefer’s point about curbing access to non-government-approved, non-Obamacare-style health care options goes to the future of short-term plans (STPs). Earlier this year, Congress passed, and President Biden signed into law, a bill (H.R. 1875) sponsored by Rep. Kathy Castor (D-FL) that eliminates the exemption for STPs from what Castor refers to as “the ACA’s consumer protections.” Derided as “junk plans” by Castor, STPs are intended for people who do not want or cannot afford comprehensive health insurance or are seeking temporary coverage. Some 3 million people are enrolled in STPs. STPs are bare-bones plans for healthy people at a fraction of the cost of plans on the Obamacare exchanges.
Democrats Face an Obstacle
Complicating the legislative path for Democrats was a surprise June 2 ruling by Senate Parliamentarian Elizabeth MacDonough that will limit the use of budget reconciliation to only one more bill, or package of bills, this year.
Budget reconciliation requires a simple majority to pass and is not subject to a filibuster. The ruling effectively means that Senate Majority Leader Chuck Schumer (D-NY) will not be able to divide up the American Jobs Plan (infrastructure/Green New Deal bill) and the American Families Plan, including Medicare expansion and lowering prescription drug prices, into two or more reconciliation packages. Schumer will have to choose one package for this year, and what is left out must wait till 2022.
Bonner R. Cohen, Ph.D., (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research.