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Biden Possible Health Care Approach

November 2020

A changing administration raises questions and uncertainty about new policies and how they will impact employee benefits and TPAs. The majority in the Senate will determine the likelihood that new Biden policies advance.  Control of the Senate depends on two runoff races in Georgia since no candidate has reached the 50% threshold to win.  We will have to wait until January for the runoff races to see which party controls the Senate. There is also uncertainty surrounding the future of the ACA as the United States Supreme Court hears a case on the ACA’s constitutionality this week.

The SPBA team has been following the proposals released by the Biden campaign and has prepared the piece below for you.

SPBA will strive to educate the health policymakers in the Biden administration on the value of employer-sponsored self-funded plans. 

The Biden campaign has released a variety of health care policy proposals. Although the proposals do not include extensive details of how each policy would work, they provide insights into the health care priorities of a Biden administration.

Employer-Based Coverage

During the last Presidential debate, Biden stated that he supported private insurance and employer-based coverage.  On the campaign trail Biden expressed strong interest in building on the Affordable Care Act, which imposes a penalty on firms with 50 or more full-time employees if they fail to offer those employees the opportunity to enroll in an employer-sponsored plan and one of those employees receives a subsidy through an exchange. If employers offer ACA compliant coverage (affordable and meeting minimum value standards), employees are not eligible for subsidies in the Exchange.  

He has expressed interest in allowing employees to receive coverage on an ACA Exchange even if their employer offers ACA-compliant coverage (meeting affordable and minimum value standards). Whether subsidies would be available to these employees is unclear. 

Historical Perspective – When the Affordable Care Act was initially passed, some predictions were made that employers would drop their health plans and send their employees to the exchanges to take advantage of the subsidies.  This did not happen.   The opposite occurred where employers who had not previously offered a plan preferred to create a plan rather than pay penalty taxes to the government.

The custom-designed plans that TPAs provide for plan sponsors, along with employer cost-sharing will continue to be valued by workers.    

Public Option

Biden does not support a change to a single-payer, Medicare-for-All system.  However, he does support a public option similar to Medicare that individuals and families could purchase with ACA subsidies. Biden has given conflicting information on who would be eligible for the public option. 

According to written material from his campaign, “Whether you’re covered through your employer, buying insurance on your own, or going without coverage altogether, the Biden plan will give you the choice to purchase a public health insurance option like Medicare.”  “If you have coverage from your employer but it is inadequate, Joe will give you the ability to choose a new Medicare-like public option, with the federal government providing enhanced premium subsidies.” 

The public option and subsidized coverage in the Exchanges both would be available to those with employer-sponsored coverage. It is unclear at this time how this would impact the employer shared responsibility requirements and penalties – whether it would imply a repeal of those penalties or if the penalties would remain in place.

During the last Presidential debate, Biden said his public option would only be available to those people who qualify for Medicaid. The vast majority of American people would not be eligible to enroll in the public option, he said.

Expanding Exchange Access Subsidies

The Biden policy calls for eliminating the 400% income cap on subsidy eligibility and reducing the share of income that subsidized households would be expected to pay for coverage in the Exchanges.  The cost of coverage would be capped at 8.5% of income, rather than the current 9.86% of income.  According to the Biden campaign website: “This means that no family buying insurance on the individual marketplace, regardless of income, will have to spend more than 8.5 percent of their income on health insurance.” “If a family is covered by their employer but can get a better deal with the 8.5 percent premium cap, they can switch to a plan on the individual marketplace, too.” 

Currently, subsidies are determined based on the cost of a “silver” plan with a 70 percent actuarial value.  Under the Biden plan, subsidies would be based on the cost of a “gold” plan with an 80 percent actuarial value.

Cost of Expanded Subsidies and the Public Option

The Committee for a Responsible Federal Budget estimates that the expanded subsidies and public option together would cost approximately $1.7 trillion over 10 years.

Surprise Billing

The Biden plan states that he would bar health care providers from charging patients out-of-network rates when the patient doesn’t have control over which provider the patient sees (for example, during a hospitalization). However, the plan does not specify a particular piece of existing legislation he would support, or offer a particular payment methodology for resolving balance bills between the provider and the payer.

It is likely whatever proposal is put forward would build in existing legislation. There are three major bills currently pending in Congress that would address surprise billing. All three would hold the patient harmless for out-of-network bills where there is no practicable ability to choose providers – for example, in emergency care or where there is an out-of-network provider providing services at an in-network facility. In these situations, the patient would only be responsible for in-network cost sharing.

The three bills differ in their payment methodologies – how they would resolve the balance bill between the payer and the provider. Two of the bills would use a benchmark payment, tied to the median in-network rate for that area, for bills under a threshold amount, and allow arbitration for amounts over that amount. One of the bills would allow for arbitration without using a benchmark.

Medicare Eligibility Age

Biden has proposed lowering the Medicare eligibility age to 60.  The Committee for a Responsible Federal Budget estimated this change would cost $200 billion over ten years.

ACA Constitutionality

This week the United States Supreme Court will hear a case on the constitutionality of the ACA.  A final ruling is not expected until the summer of 2021.