Biden and big change: is he just getting started?
Updated: Jun 9, 2021
Biden has unveiled his proposed 2022 budget, which reveals his healthcare policy priorities but lacks financial details on his more ambitious policies
By Rachel Galloway - Consultant, RJW&partners
President Biden recently proposed a $6 trillion budget that included plans to invest heavily in infrastructure, healthcare and education. For example, his proposed funding for the Department of Health and Human Services (HHS) included a 23% increase – one of the largest increases seen across departments. However, his current spending requests do not include money for a public healthcare option, which was a key pledge during Biden’s presidential campaign.
This article explores which policies were specifically accounted for in the budget and those which were mentioned but lacked specific costs.
Key healthcare provisions accounted for in Biden’s budget request.
Maintaining increased ACA subsidies: The American Rescue Plan Act, otherwise known as the COVID-19 Stimulus Package, introduced various tax credits, some of which Biden is seeking to extend or make permanent. One of them increased the number of low-income people eligible for income-based subsidies on healthcare. Now those earning 400% above the federal poverty level will not spend more than 8.5% of their income on healthcare. These subsidies are estimated to cost $163 billion over the next decade.
Increased oversight of the 340B drug discount program: the 340B drug program requires the pharmaceutical industry to provide drugs to eligible healthcare providers (so-called “covered entities”) at reduced prices to stretch federal resources further. Biden has proposed $17 million for the operation of program and increased federal oversight. If his request is approved, it would allow the federal government to audit a covered entity’s records to determine how savings generated from the program are used. It would also establish a dispute resolution process, something the industry halted during Trump’s time in office.
Creation of an Advanced Research Projects Agency for Health (ARPA-H): the budget included $6.5 billion to launch a new agency that would focus on accelerating the development of medical treatments by funding high-risk, innovative projects. It is anticipated that the agency would initially focus on treatments for Alzheimer’s disease, diabetes and cancer.
$8.7 billion in funding for the Centers for Disease Control and Prevention (CDC): increased funding for the CDC aims to “restore capacity at the world’s preeminent public health agency” by improving public health data collection, training new public health experts, and rebuilding international capacity to detect, prepare for, and respond to emerging global threats.
Increased spending on rural telehealth, maternity and obstetrics services: the budget proposes $400 million in grants that can be used to expand telehealth services. It also includes $3 billion in funding to expand rural maternity and obstetrics services with the specific aim of placing more early childhood development experts in doctors’ offices that treat a high proportion of child patients covered by Medicaid and Children's Health Insurance Program (CHIP).
Certain healthcare policies, in particular the more ambitious ones included in Biden’s election campaign, were mentioned in the budget but no costs were attached to them. Instead, Biden has requested Congress to act upon them or will look to pass a bill to enact them.
Key healthcare provisions included but not accounted for in Biden’s budget request.
A public option health insurance plan: the proposed budget does not provide detail on how such a change would come about nor the expected costs, only that “the President supports providing Americans with additional, lower-cost coverage choices by creating a public option.”
Extend “Medicaid-like” coverage: Biden is seeking to extend coverage to close the gap left by those states which have not expanded their Medicaid programs to allow individuals to buy Medicaid-like insurance coverage. This would allow eligible low-income individuals or families in non-expansion states to obtain premium-free healthcare from ACA health exchanges. This proposal is paired with financial incentives that seek to ensure states that have expanded Medicaid eligibility maintain their existing Medicaid expansions.
Expand the population eligible for Medicare enrolment: Medicare is a federal healthcare program for those over the age of 65, those with certain disabilities or end-stage renal disease. Biden proposes to allow Americans to enrol in Medicare from the age of 60, which could increase the number of Medicare beneficiaries by around 20 million lives. The budget proposes that this expansion of Medicare would be financed separately from the Medicare Trust Fund.
Improving Medicare coverage: the budget also states that Medicare should be strengthened by improving access to dental, hearing, and vision coverage, but no further details are given.
Allowing Medicare to negotiate prescription drug prices: currently Medicare is prohibited from negotiating prescription drug prices (i.e., drugs covered under Medicare Part D). Instead, private healthcare plans negotiate prices on Medicare’s behalf and administer Part D plans according to federal requirements issued by CMS. It is expected that Biden will seek to pass a bill to permit Medicare to negotiate prices for certain high-cost drugs with pharmaceutical companies, which could see significantly lower prices negotiated for drugs thanks to the strong negotiating power Medicare would hold.
Requiring drug manufacturers to pay rebates if prices rise faster than inflation.
While these more ambitious policies are favored by progressive Democrats, the party only holds a slim majority in Congress so Biden will need to convince the party’s moderates if he is to be successful in enacting these policies. Furthermore, the fact that these latter policies are not accounted for in the budget with estimated costs has created some speculation that they are not a priority for Biden and it remains unclear how he intends to address funding deficits to keep federal healthcare programs solvent in the long term.
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