President-elect Joe Biden recommitted this week to pushing the health agenda he offered while campaigning, which includes creating a new “public option” insurance plan and lowering the age of eligibility for Medicare from 65 to 60. The election results suggest a different approach — focused on ideas with bipartisan appeal — might serve him better.
The Biden campaign assumed a victory in the presidential race would translate into a strengthened position for Democrats in Congress, and thus ease the way for ideas favored by party activists. It did not work out that way. The former vice president’s victory did not sweep others from his party into office. Republicans picked up seats in House and will hold at least 50 in the Senate (and perhaps 51 or 52). It will be a very heavy lift to pass a public option through either chamber in this environment, and expanding Medicare to early retirees is a nonstarter.
Voters are unlikely to punish the president-elect for recalibrating his agenda to reflect political reality. His opposition to Medicare for All during the primaries signaled he is closer to the political center on health care than others in his party. Moreover, he need not change his official stances; what is required are expressions in public statements of an understanding that his campaign plan is unlikely to get Republican support and other ideas deserve consideration.
There are several reforms that would advance the broad goals he seeks — fewer uninsured and slower cost growth — that could appeal to some Republicans, if presented correctly.
Automatic Enrollment Into Insurance. According to the Congressional Budget Office (CBO), two-thirds of the 30 million people who are uninsured are eligible for subsidized insurance coverage, including 5.1 million who are eligible for either Medicaid or the Children’s Health Insurance Program (CHIP), and nearly 15 million who are eligible either for subsidized coverage through the Affordable Care Act’s exchanges or through job-based plans. Moreover, another 2.6 million people have incomes indicating they could afford to pay for some coverage themselves.
This data suggests that new programs are not the only, or best, answer for the uninsured. The Biden administration should work with Republicans to improve take-up of the coverage options that already exist.
That could be done with an aggressive, state-focused plan on automatic enrollment. The federal government should make it easy for states to identify and place uninsured citizens into existing insurance plans based on income data collected through tax systems and other public programs. Further, employers should be encouraged to ensure all of their workers sign up for coverage if they otherwise would be uninsured.
Individuals placed into coverage could opt out later if they want to be uninsured, but few are likely to do so. The reason they are uninsured is not philosophical opposition to insurance. Rather, signing up can be complex and time-consuming, and thus there are barriers to full compliance.
Price Transparency and Reference-Based Payments. The outgoing Trump administration issued new regulations forcing hospitals and insurers to disclose prices for common medical procedures and services. This is the rare effort of the current administration that enjoys broad bipartisan support because American consumers have been frustrated for years by the absurd opaqueness and complexity of today’s pricing system. While these regulations are welcome, the Biden administration should take the next step and codify compliance with effective price transparency in permanent law.
Price transparency can produce real cost-cutting if done correctly. The goal should be to help consumers see price differences for common services, interventions, and procedures. The federal government needs to require providers — hospitals, physicians, and others — to cooperate in identifying “all in” fees for a standardized list of high-volume clinical interventions. With all providers posting their rates for exactly the same bundles of care, consumers will be able to easily compare pricing before deciding where to get their medical services.
Consumers also need to be rewarded for opting for low-priced care. Price transparency legislation should require insurers to make referenced-based payments for certain services, and share savings with their enrollees when low-priced providers are selected. With reference-based payments, insurers provide something like defined contributions for certain services, which encourages providers to lower their fees and rewards consumers when opting for low-priced care.
Value-Based Purchasing. The Obama administration made a big push to pay for “value” in Medicare by de-emphasizing unmanaged fee-for-service care. The Trump administration put its own spin on the same ideas. After ten years of fits and starts, it is clear some changes are needed to accelerate progress.
There are too many experiments now underway in Medicare, and not enough systemic change. The Biden administration should work with Congress to make permanent what is working and abandon what has failed.
Accountable Care Organizations (ACOs) provide a pathway for hospitals and physician groups to run their own managed care plans, and compete with insurance-driven Medicare Advantage (MA). The competition that is already underway needs to be recognized and given structure. ACOs should transition over time into health plans that enroll their participants and have strong financial incentives to deliver better care at lower costs to the consumer. Medicare’s beneficiaries should be allowed to share in the savings that both ACOs and MA plans can deliver.
Unfinished Work from the Current Congress. There was hope in 2019 that the parties could agree on legislation to end surprise billing in health insurance and tighten up the pricing system for prescription drugs without undermining incentives for breakthrough medicines. Both efforts eventually foundered for the usual reasons (partisan politics and interest-group opposition). Even so, there is reason to believe that the start of a new presidency will open up enough political space for bills on these subjects to finally pass.
The U.S. has a mixed, public-private health system that is not amendable to abrupt and dramatic change. The balance of political power in 2021 suggests incremental progress will remain the order of the day. The Biden administration can rack up real and significant achievements that reduce the number of uninsured Americans and slow the pace of rising costs if it recognizes that focusing on bipartisan ideas is their only viable option.
James C. Capretta is a Contributor at RealClearPolicy and holds the Milton Friedman Chair at the American Enterprise Institute.