Joe Biden, the presumptive Democratic presidential nominee, unveiled a top-level view of his healthcare plan in July to criticism from progressives and conservatives alike, with the far-left slamming it as not covering enough Americans and Republicans calling it merely a stepping stone to "Medicare for All" — and that's before the candidate said he supported lowering the age of eligibility for Medicare to 60.
The former vice president contends his plan would insure more than 97% of Americans by introducing a new Medicare-like public option and bolstering the Affordable Care Act by increasing marketplace subsidies. His blueprint is a mixed bag for the industry, which loathes the former but largely supports the latter.
Biden plans to revamp prescription drug pricing and raise taxes to finance his healthcare agenda. But his plan would have a gross cost of $2.25 trillion and add $800 billion to deficits over a decade, according to an analysis from the Committee for a Responsible Federal Budget — not counting the cost of lowering Medicare's eligibility age.
As the coronavirus pandemic continues to highlight the shortcomings of the U.S. health system and millions of Americans lose coverage due to an unprecedented economic shutdown, here's a refresher of the key tenets of the Democratic front-runner's healthcare plan.
1. Lower Medicare age to 60
Though the presidential candidate hasn't released many specifics of this proposal, Biden would lower the age to opt into Medicare, which would make roughly 20 million more Americans eligible for the health insurance program. Currently, those aged 65 and older qualify for full Medicare benefits, though some disabled and chronic disease patients qualify earlier.
The expansion's funding would come from regular tax revenues instead of the shrinking Medicare trust fund, Biden wrote in a Medium post earlier this month. Americans aged 60 to 64 could keep their employer health coverage.
Proponents of lowering the Medicare eligibility age argue it would reduce hospital costs and help both the Medicare and private insurance risk pools, as those age 60-64 are likely to be the unhealthiest population in commercial risk pools. If they're moved into Medicare's instead, they would statistically be among the healthiest, which could lower costs for beneficiaries across the board.
However, research is mixed on whether allowing younger beneficiaries to join Medicare would translate to overall savings. And Biden's plan could result in dramatically lowered reimbursements for hospitals, as Medicare generally pays significantly less than commercial insurance. The loss of commercial payments for adults aged 60 to 64 could decimate a significant revenue stream for providers and prove disastrous for cash-strapped facilities.
And an expansion could also put more stress on a Medicare program that's quickly running out of money. The Hospital Insurance Trust Fund, which finances Medicare Part A, is expected to run dry in just six years if Congress fails to act.
Though a majority of Americans support opening Medicare to more of the population, the move could be a political nonstarter for Biden, especially as the federal government sends billions of dollars to providers to keep them operating during the pandemic.
"The promise of a major handout for baby boomers might help Mr. Biden win votes in November, but it won't fix Medicare's flaws or assist the families that need help the most," American Enterprise Institute Research Fellow Benedic Ippolio and Manhattan Institute Senior Fellow Chris Pope wrote in a Wall Street Journal opinion piece critical of the policy.
2. Install a government-run public option
Biden also backs a new Medicare-like public option. Roughly two-thirds of the public have said they support the alternative coverage as costs continue to skyrocket.
The option would be available for anyone, including the uninsured, beneficiaries in the ACA exchanges and people not happy with their employer-sponsored coverage. The 4.8 million people in states that have not yet expanded Medicaid who would otherwise be eligible would be able to enroll in the public option with no or low premiums and co-pays.
Because Medicare rates are lower than private insurance, the option would be cheaper than many insurance alternatives while still covering essential health benefits, according to Biden. The option could leverage its purchasing power to lower what it pays for medical services, though market clout would depend on enrollment: At best, Biden's option would enroll half the number of people covered today by the biggest health insurance companies, according to one analysis.
Proponents say competition from the coverage could lower the cost of private insurance, too. Industry fiercely opposes public option proposals, with trade associations American Hospital Association and America's Health Insurance Plans arguing they threaten the private healthcare sector, which makes up roughly a fifth of the U.S. economy.
"While Medicare for all would eliminate private health insurance overnight, Biden's public option would eliminate private health insurance over time — leading to higher taxes, worse care and longer waits," the Partnership for America's Health Care Future, an anti-single payer and Medicare expansion group of hospitals, payers and pharmaceutical companies, said in July.
3. Boost the Affordable Care Act
Since the ACA was passed a decade ago, the number of uninsured has shrunk, despite Trump administration efforts to weaken the law. Biden plans to enact a series of measures to strengthen the ACA marketplace, lowering costs for people who buy insurance on the exchanges.
Currently, plan subsidies are based on the cost of a middle-coverage "silver" plan with a 70% actuarial value, where consumers are responsible for 30% of the costs of all covered benefits. Biden is proposing determining the subsidies based on a more expensive "gold" plan with an 80% actuarial value, increasing the size of premium tax credits and reducing deductibles and co-pays for subsidized beneficiaries.
Biden also wants to increase subsidies by reducing the share of income subsidized households pay for their coverage, capping it at 8.5%. Currently, people below 400% of the federal poverty level are capped at 9.8%, and those above that threshold don't have a ceiling.
That, along with the fact that Biden would remove the current cap limiting subsidies to those making 400% of the federal poverty level or below, means no Americans would have to pay more than 8.5% of their annual income toward premiums.
Unlike Biden's public option and more expansive Medicare proposals, payers and providers largely support efforts to make individual market plans more tempting for beneficiaries, hoping the policies will stabilize the exchanges while allowing them to continue operating at higher rates.
4. Stop surprise billing
Surprise billing was in the health policy spotlight for much of last year. The practice, where patients receive unexpected out-of-network medical bills, can be financially devastating. But, despite proposing a series of bills, Congress failed to pass legislation banning the practice as payers, providers and physician staffing groups, some backed by deep-pocketed private equity firms, furiously lobbied for their different preferred fixes.
Biden says he would bar providers from charging patients out-of-network rates in situations where the patient can't control what provider he or she sees, such as emergency surgery or ambulance transport. But the candidate is vague about how exactly he would end the practice, which if halted could save an estimated $40 billion annually.
Payers prefer a method where they pay for out-of-network services based on a benchmark, such as the average Medicare rate for that service in a specific geographic area. That fix is derided by providers as it would lower reimbursement. Providers prefer arbitration, where an independent third party decides what sum the payer will reimburse the provider.
Biden also plans to "aggressively use [the government's] existing antitrust authority" to tackle rampant market concentration, which could bring prices down. Specifics are unclear, but it could just mean directing the Federal Trade Commission to take a hard line approach with future payer and provider mergers and acquisitions.
The debate over surprise billing may rekindle as millions of Americans file for unemployment and lose their employer-sponsored insurance due to the pandemic's financial effects.
5. Prescription drug reform
Spending on pricey prescription drugs has hiked over the past decade, driving employer-sponsored health costs to record highs. One in four people taking prescription drugs say it's difficult for them to afford their medication, according to the Kaiser Family Foundation. There's bipartisan support for the government to step in and lower drug costs but, despite airing a number of proposals, the Trump administration has failed to enact any large-scale policies tamping down on spend.
Biden plans to repeal the exception allowing drug corporations to avoid negotiating with Medicare over drug prices, an idea broadly supported by Democrats and one that almost made it into the ACA. Currently, Medicare doesn't negotiate prices directly with drug companies, though almost twenty percent of Medicare’s overall spending goes toward prescription drugs. Instead, corporate pharmacy benefit managers are in charge of acquiring drugs in the Part D prescription drug benefit.
Allowing the program to leverage its heft to lower prices could save the U.S. a significant amount of money: AARP estimates Medicare could have saved $14.4 billion on medications in 2016 if it had negotiated.
Biden would also limit launch prices for drugs that don't face competition by establishing an independent review board to assess a drug's value based on the average price in other countries, called external reference pricing. Medicare, plans in the individual market and Biden's public option would pay that rate. He would also cap drug price increases to inflation as a condition of participation in Medicare and the public option and allow drug importation from other countries if the drug is proven to be safe.
The Trump administration supported similar measures over the past few years, though fierce pushback from the powerful pharmaceutical industry buried most of the initiatives, including eliminating drug manufacturer kickbacks to pharmacy benefit managers in Part D and instituting an international price index for drug payments in Medicare Part B.