Biden, If Elected, Plans to Put Obamacare on Steroids

Democrats Hold Unprecedented Virtual Convention From Milwaukee
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August 18, 2020

Democratic presidential soon-to-be-nominee Joe Biden envisions a dramatic expansion of Obamacare if elected, returning the controversial program to the public eye and likely igniting a renewed legislative battle over medical care.

Biden's health care plans will be front and center during the Democratic National Convention's Tuesday evening festivities, which will include a live discussion of the Affordable Care Act conducted by Biden himself. This emphasis signals the candidate's seriousness about expanding on the major legislative achievement of predecessor Barack Obama.

To that end, Biden's campaign has floated a proposal projected to cost over $2 trillion over 10 years and add $800 billion to the national debt, much of which would amount to a transfer to already wealthy seniors and to the insurance companies that originally backed the ACA.

That plan would face resistance from conservatives. Dean Clancy, a senior health fellow with the libertarian Americans for Prosperity, described Biden's plan as one "that puts our health care decisions in the hands of insurance companies and government bureaucrats rather than patients and providers," criticizing it for reducing consumer choice—a likely avenue of attack in a future legislative battle. An even bigger challenge is likely to come from the far left, for whom Biden's opposition to Medicare for All has been anathema, and who would likely hold the key to future legislative passage.

The plan that the DNC will cheer Tuesday night, then, faces steep odds for its actual implementation. The plan on which Biden may stake his legacy appears designed to please none—a telling predictor of how the candidate who has run as a dealmaker could struggle to govern.

At the core of Biden's plan are two proposals meant to increase the affordability and availability of health insurance, with the goal of expanding coverage to an additional 18 million Americans. The more prominent of these is the introduction of a "public option," possibly through Medicare—a proposal supported by congressional Democrats but ultimately scrapped during negotiations over the Affordable Care Act.

Under the Biden plan, the public option would be made available on the ACA's exchanges. It would also seek to enroll residents of states that have not accepted federal Medicaid expansion, any American making below 138 percent of the Federal Poverty Level (of whom roughly nine million are uninsured), and—by lowering the Medicare eligibility age—Americans 60 and above. This last proposal is likely to be particularly controversial, as it would represent a taxpayer subsidy of an age cohort with one of the highest median incomes.

The Biden campaign claims that a public option will "reduce costs for patients by negotiating lower prices from hospitals and other health care providers." But it's unclear if that would be true in practice—states that have attempted their own public options, including Vermont, New York, and Washington, have seen their expected price efficiencies evaporate, causing plans to stall out.

For this and other reasons, Manhattan Institute health care policy scholar Chris Pope told the Washington Free Beacon, the public option will likely attract big headlines, but actually be less impactful than Biden's other proposed change: a major transfer of government money to the health care system through a subtle change in Obamacare's structure.

The Biden plan would make three alterations to encourage Americans to buy into ACA exchange plans: lower the share of annual income that a plan can cost to 8.5 percent, eliminate the cap on income after which exchange purchasers can receive a tax credit against their insurance purchase, and calculate the size of tax credits based on the exchanges' gold plans, rather than silver plans. The net effect would be to increase the share of money going from government, rather than consumers, to health care service providers.

"The insurers would love being given more government money, the hospitals would like insurers having more money to pay them with, doctors would like having more money in the system, even the drug industry would like more money being thrown at them," Pope said. "It's like getting the band back together with the coalition that enacted the Affordable Care Act. Who doesn't like more money?"

To mitigate the added expense of both of these approaches, the Biden plan would restore the 39.6 percent top tax rate on capital gains, cut by the 2017 Tax Cuts and Jobs Act, which the right-leaning Tax Foundation projects would raise $450 billion over 10 years, about 20 percent of projected cost.

Biden would also try to realize savings by permitting the public option to set drug-price caps, which would in turn likely reduce life-saving drug innovation, as public insurers—35 percent of the market—refused to shell out for expensive pills.

"It would basically mean that high-cost drugs no longer get developed," Pope said. "Over the long sweep, it means fewer drugs, and it means that the existing drugs face less competition from newer drugs."

In addition to its proposed overhauls to health insurance, Biden's health care plan contains a host of culture-war policies, focused primarily on "reproductive justice." He counts among his policy goals repeal of the Hyde Amendment—which prohibits federal funding of abortion, and which Biden supported until 2019—as well as contraceptive coverage through Medicare, federal funding of Planned Parenthood, and the re-repeal of the "Mexico City policy," which prohibits NGOs from receiving federal funding if they provide or advise abortion, and which President Donald Trump reimplemented upon taking office.

Biden's shift left on abortion issues, and particularly his flip-flop on the Hyde Amendment, is widely viewed as an effort to consolidate support from the Democratic Party's left flank, who vehemently opposed Biden in the primary. But Biden's choice to hang his hat on Obamacare expansion may still prove politically untenable.

The ACA has a barely positive approval rating in the general population, while Democratic primary voters overwhelmingly preferred Medicare for All in exit polls, even in states Biden won. In other words, Republicans dislike the program Biden wants to build on, while Democrats would have much preferred the more-radical alternative.

That suggests that even with a Democrat-controlled Congress, "Bidencare" could be dead on arrival. The potential for strife over the future of health care may encourage a future president Biden to veer away from the issue—or may become the defining fight of his presidential career.