Joe Biden made his presidential campaign all about healthcare. Just don't expect a public option anytime soon.

  • Democrats made the 2020 election all about healthcare, and are prepared to expand the Affordable Care Act. 
  • The Senate races aren't over yet, but Republicans' apparent hold on the upper chamber would create an insurmountable hurdle to Democrats' most ambitious healthcare goals.
  • There's still trouble ahead even if Democrats win control of the Senate. Members don't agree about how to create a government plan that would compete with private insurance — a key promise by President-elect Joe Biden.
  • Progressives are pushing for Democrats to leverage Medicare to get health insurance to everyone in the US, but centrists want a privatized public option more like Medicare Advantage. 
  • "We are going to have to work really hard to fight back on that," Rep. Pramila Jayapal of Washington said.
  • Visit Business Insider's homepage for more stories.

President-elect Joe Biden's campaign pledge to create a new type of government health insurance is poised to hit major roadblocks within his own party. 

Even if Democrats secure the Senate majority — a scenario that likely rests on the outcome of two early January runoff races in Georgia — the party will struggle to unite their progressive and centrist flanks on creating a so-called "public option" that would give people the option of buying a Medicare-like plan instead of private health insurance. The idea is sometimes known as "Medicare for all who want it." 

Progressives want Democrats' next steps on healthcare to guarantee coverage for everyone, and they also envision government insurance being a big part of achieving that goal. But Democratic leadership under House Speaker Nancy Pelosi is focused on improving the Affordable Care Act, which Biden helped pass and implement when he was vice president during the Obama administration. 

While Democrats say they agree that they eventually need to create a new health insurance option, they don't agree on when to pass a bill or what a public option would look like. They've introduced at least five versions of a public option in Congress. 

"The most immediate need is to make sure that everyone gets healthcare," Congressional Progressive Caucus co-chair Rep. Pramila Jayapal of Washington told Insider. 

When Biden begins his presidency, the showdown over how to expand healthcare coverage in America will be one of the first major challenges he'll face in bringing his deeply fractured party together. 

Progressives see an opportunity for the party to expand the number of people covered by government insurance even if they can't achieve their "Medicare for all" goal to abolish private insurance. In contrast, centrists want a privatized approach. 

But the House's Democratic leaders don't have a plan for a public option. Instead, they want to increase funding for the Affordable Care Act. The 2009 signature law of the Obama era has managed to survive multiple legal challenges and several repeal attempts during President Donald Trump's term. It's facing another round of oral arguments before the Supreme Court on Tuesday.

Biden frequently presented himself as a centrist during his race to the White House, but much of his presidency will be about bridging the divide in his party. That divide will extend not only to healthcare but on issues from climate change to adding more lifetime appointments to the Supreme Court.   

Democrats don't agree about the public option

During his campaign, Biden gave contradictory answers about what kind of public option he supported. In both debates against Trump, the Democratic nominee said the plans would only be available to the poor. 

But the public option spelled out on his campaign website, and the one he described in the primaries, would be offered only to people with higher incomes as an alternative to private insurance. 

Even under a Democratic sweep that gave them the presidency and a new Senate majority, voters shouldn't expect a public option getting a floor vote for at least another two years because members didn't agree on the approach to take and would first want to understand potential unintended consequences of the policy, according to a senior House Democratic aide involved in the discussions. 

Instead, the aide said, Democrats plan to hold hearings on the topic and would likely encourage pilot programs in states. 

That was not the understanding of the Democratic party's left flank, which expected details of a public option to come together within months.

Should Democrats take control of the Senate, progressives say they plan to push the party to support lowering Medicare's eligibility age to 55. Medicare now covers people starting at age 65, as well as others who qualify because of a disability. Biden has endorsed lowering eligibility to age 60. 

Progressives also want Medicare to become a bigger part of the ACA. They want even younger adults who shop for ACA plans to have the option to choose Medicare instead, and oppose letting private insurance administer the public option. 

"We are going to have to work really hard to fight back on that," Jayapal said. 

An eight-person group of progressives and centrists worked together to spell out this recommendation in a 110-page wish list released in July, once Biden was the clear nominee. 

The Biden campaign set up the group but hasn't pledged to take the recommendations. A larger coalition of House centrist already thinks the privatized route would be better. Under that approach, insurance would be paid for by the government but administered by private insurers.

The program would operate like Medicare Advantage, which currently covers about a third of seniors and has been a profit boon for the industry.  

Rep. Ami Berra of California, who chairs the NewDem Action Fund, a group that helps elect centrists, said he doubted that going with a straight-out government plan could even make it through the Democratic-controlled House. 

Leadership is behind what insurers want

Should Democrats win the Senate, the healthcare bill closest to passage in 2021 is the Patient Protection and Affordable Care Enhancement Act, which House Democrats already passed in June to improve the ACA. Pelosi has said the House's legislation show what the party plans to accomplish on healthcare. 

Democratic leaders have said they view a public option as unfinished business on healthcare reform given that they failed to get one into the Affordable Care Act. 

Their ACA enhancement bill, however, doesn't create a public option. Pelosi and her lieutenants in the House also have not endorsed a specific approach.  

Instead, the enhancement bill would mainly increase the number of people with coverage by funneling federal dollars to private insurers on the ACA marketplaces. That way, customers would still pay less for coverage, at least directly. 

Getting that bill signed into law would be a welcome development for the health insurance industry, which lobbied for the change over the past two years and wouldn't fight to defeat the bill. 

"The bill represents the foundation for substantive and reasonable reforms of the status quo," Jim Rother, president of the National Coalition on healthcare that includes insurers, said after the bill's House passage in June. 

But if Democrats tried to pass a public option, insurers and other parts of the healthcare industry would fight to defeat it. Allowing more people to enroll in Medicare would not only take away customers from private insurers. It would also cut how much doctors, hospitals, and pharmaceutical companies get paid for their work.

House Democratic leaders understood this dynamic when they omitted a public option from the bill they passed in June, the senior aide told Insider. Under the ACA enhancement bill, the insurance expansions would be paid for by letting the government negotiate down the price of at least 50 prescription drugs. That would mean an all-out battle from pharmaceutical companies to defeat the bill competing against an all-out battle from insurers to have it signed into law.

"There's a reason they're together: Pharma is pissed but the insurers are with us," the aide said. "If you're going to piss someone off you might as well lift someone else up." 

The election will have the final say

Democrats may not have to blame each other or the health insurance industry if they fail to pass a public option. Instead, the political realities under a GOP-controlled Senate would make major inroads on healthcare policy insurmountable — even those to boost coverage under the ACA. 

As of Friday morning, Democrats had secured 48 seats in the Senate while Republicans won 48 seats. Votes are still being counted in the North Carolina race where incumbent GOP Sen. Thom Tillis had a lead of about 100,000 over Cal Cunningham, the Democrat. In Georgia, two different Senate races appear to be headed for a runoff in January due to a state law that says candidates must receive a simple majority of votes.  

If Democrats wind up with 50 seats in the Senate, they can advance some legislation under a process known as "reconciliation" using a tie-breaking vote from Kamala Harris, the vice president-elect who is expected to soon resign her seat as a California senator. 

This week, health insurance stocks soared under the near-certainty that a divided Congress wouldn't be able to pass major changes to the healthcare system. 

Berra said the House would need to moderate its healthcare reform goals. One option, he said, would be to pass a bill that would automatically enroll people in coverage given that some GOP senators had backed the idea before. 

He even said he thought a small number of Republicans might peel off to support expanding Medicare Advantage to people when they turn 55 or 60 — something some insurers and major employers have signaled they'd be open to getting behind. 

"The fact that we don't have the Senate probably forces the House caucus a little bit more to the center," Berra said, "as opposed to further to the left." 

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