Debate among Democrats on the size and scope of their Democrat-only reconciliation package threatens to derail their biggest opportunity to make progress on long-held health care priorities.
But not only is the Democrat-only social spending bill in jeopardy, but disagreements over topline spending also threatens to derail the bipartisan infrastructure package. Progressives in the House want to wait to vote on the bipartisan infrastructure deal until the Senate has approved the Democrat-only reconciliation package, but nine moderate Democrats are pushing Speaker Pelosi to pass the infrastructure bill now as finding consensus on the social spending provisions could take months.
As House Democrats continue to battle it out, the Senate is moving forward with drafting the reconciliation package. It approved a topline $3.5 trillion budget resolution last week. The resolution directs the relevant committees to draft legislation to be included in the budget reconciliation package that will only require a simple majority, and Democratic votes, to pass. But requiring only Democratic votes still requires stitching together a constituency that includes both Congresswoman Alexandria Ocasio Cortez, D-N.Y., in the House and Senator Joe Manchin, D-N.Y – which currently seems elusive.
The health care provisions taken together are estimated to cost more than a third of the $3.5 total spending. They include:
With health care, getting Democrats on the same page is never easy. Arizona Senator Kyrsten Sinema has already voiced her opposition to a package of that magnitude. So as the Democrats continue to debate what should be included, it is important that they consider the costs, impacts and potential pay-fors.
Senator Bernie Sanders, I-Vt., and progressive Democrats are leading the push for the inclusion of dental, vision and hearing coverage to be covered under the traditional Medicare program. While Medicare Advantage often covers dental, vision and hearing care, the traditional fee-for-service program, in which two-thirds of beneficiaries are enrolled, doesn’t. Adding dental, vision and hearing benefits to Medicare Part B would benefit millions of American seniors that currently can’t afford dental, vision and hearing services. While beneficiaries pay premiums for Part B, it’s largely subsidized by taxpayers. Which means the largest expansion of the Medicare program since the creation of Part D would come with a hefty price tag: roughly $358 billion over 10 years — but once fully phased in, it would cost roughly $80 billion per year. However, this provision that the Democrats are considering would impact the largest number of Americans — somewhere around 40 million seniors would be newly eligible for these benefits. Liberal Democrats have been outspoke proponents of expanding Medicare to cover dental, hearing and vision and a bill in the House that would do so has 76 co-sponsors.
Democrats are also pushing to make the expanded subsidies for ACA plans approved in the COVID-19 relief law permanent. The American Rescue Plan expanded health insurance exchange subsidies to cover those making more than 400% of the federal poverty level (FPL) and increased the amount of subsidy for those making between 100-400% of the FPL. These enhanced subsidies make private coverage more affordable for the roughly 14 million people who buy coverage through the exchanges. However, it too, comes at a cost. It would cost roughly $165 billion over 10 years. And while these subsidies make coverage more affordable, they also flow to private insurance companies and hospitals with no mechanisms in place to reduce health care costs — which is the highest of all comparable countries. This has broad support across the Democratic coalition — including the more conservative Blue Dogs.
In red states that have not expanded Medicaid, roughly 2.5 million people have incomes that are too low to qualify for subsidies for ACA plans, but do not meet the qualifications for Medicaid under the traditional program (being disabled, pregnant, or a child). Closing the so-called “Medicaid gap” is a priority for the Biden administration. Democrats are seeking a way to get these people coverage even if their states don’t expand the Medicaid program. The budget reconciliation package proposed creating a new federal program that would cover those in the Medicaid gap if their state hadn’t expanded the program. Depending on how it is structured, it could cost $300 billion over 10 years. Democrats in the New Democrat Coalition have said that closing the gap is a top priority but haven’t explicitly endorsed creating a new program to do so.
President Biden has proposed a $400 billion Medicaid funding increase for long-term care benefits as part of his American Jobs Act. The proposal would increase funding for long-term care and make it easier for states to use Medicaid resources on in-home care rather than at a facility. President Biden is trying to thread the needle between signaling that long-term care needs a dramatic increase in investment and not fleshing out the details to generate opposition. This was not included in the bipartisan infrastructure deal and now is being considered for the final reconciliation package.
Progressive Democrats see the reconciliation package as an opportunity to act on long-held goals, like expanding Medicare. They want to use the all-Democrat deal to lower the age of eligibility. However, it seems unlikely that the more conservative Democrats in the House and the Senate would support this effort and, to-date, there isn’t a formal cost estimate from the Congressional Budget Office (CBO). Roughly 8% of people 60-64, 1.6 million people, are uninsured and would benefit from an expanded Medicare program. However, if the program is expanded as is, it could also be cost effective for many people with commercial insurance to enroll in Medicare instead. This would make the expansion extraordinarily expensive. A more cost-effective way to expand coverage would be to allow people to buy into Medicare, covering the cost of their premiums. There could be a premium subsidy similar to that of the ACA but not as fully subsidized as the traditional program. This could help more people get access to the benefits of the program (lower prices, comprehensive coverage) without draining federal coffers.
Lowering the eligibility age faces an uphill battle. Not only is it extraordinarily expensive, but it is also is vehemently opposed by hospitals who prefer higher paying private insurance to Medicare rates. Senator Bernie Sanders, I-V.T., has long pushed to expand Medicare. However, he doesn’t have the support of all the other 49 Democrats that would be required to approve it. He is likely including this in the initial draft as a negotiating tool to press for other priorities (like a dental benefits expansion).
President Biden proposed $30 billion for future pandemic preparedness in his American Jobs Plan. President Biden had pushed for proactive investment to restock the Strategic National Stockpile, invest in vaccine development, and finance in U.S. production of personal protective equipment. But in an effort to squeeze a multitude of Democratic policy priorities into the $3.5 trillion reconciliation package, some are pushing to reduce pandemic preparedness funding to $5 billion. This seems shortsighted after the U.S. was unprepared for COVID-19 and ravaged by the novel virus.
The only health care provision Democrats are considering that would lower health care spending is authorizing Medicare to negotiate drug prices for beneficiaries and private plans. One proposal being considered, H.R. 3, requires the Secretary of the Department of Health and Human Services (HHS) to negotiate the price of at least 50 brand-name drugs without generic competitors starting in 2025 and would make the negotiated price available to both Medicare and private payers. The CBO projects that Medicare drug negotiation would save $400 billion. However, the leverage to negotiate with drug manufactures comes from the government’s ability to refuse to cover a drug if it is too expensive. This may limit or delay the availability of some drugs for seniors in the Medicare program. It is likely that pressure from beneficiaries or specific advocacy groups may limit the government’s ability to refuse to cover certain high-cost drugs. If this is the case, the savings will likely be less than $400 billion. While this is the pay-for for many of the Democratic priorities, at this point it’s unclear if Democrats will come to an agreement on the best policy to reduce the cost of prescription drugs. Senator Ron Wyden, chairman of the Senate Finance Committee, and President Biden have also endorsed Medicare drug negotiation which suggests that it’s a priority to find a path forward to reduce the costs of prescription drugs but other Democrats are concerned that limit drug prices would also limit drug research and development.
As Democrats are working to reach a consensus on which health care provisions to include in their reconciliation package, they should consider how to reduce the topline number while achieving as many of their policy goals as possible. The savings from Medicare drug negotiation may not be as high as projected, depending on how the program is structured, so it is vital to include other ways of reducing health care costs. Program expansions should be accompanied with cost saving measures to reduce overall health care spending and make affordable health care coverage a reality for every American.
