Democratic Presidential Candidates’ Health Care Plans – Joe Biden

Well, the horse race is literally down to two thoroughbreds, thanks to the March 7, 2020 Super Tuesday primaries.  And when it comes to health care, the two leaders, Biden and Sanders, couldn’t be more different.  To understand Biden’s position on health care it’s important to keep in mind that he was at Obama’s side fighting the good fight for the Affordable Care Act.  Thus, he feels ownership, pride, and dedication to this piece of legislation and his plan is to build on the existing legislation rather than replace it.[1]

The core of The Biden Plan to Protect and Build on the Affordable Care Act is a public option, i.e., government subsidized insurance, available to anyone who wants it.  This insurance will be marketed to compete with other plans on the insurance exchanges, and even people getting their insurance through their employer could opt out of employer-based insurance and into the public option.

There are four tiers in the health insurance exchanges: Bronze, Silver, Gold and Platinum.  Bronze plans cost the least but have high deductibles; as much as 60%.  Gold plans cost more but have lower deductibles, about 20%.  Biden proposes to offer a Gold plan as the public option, but heavily subsidized to reduce the cost of premiums and the impact of out-of-pocket expenses.  First, Biden would set a cap of 8.5% of income for the cost of health insurance.  For example, a family earning $90,000 a year would pay no more than $7,650 a year ($637 a month) for the public option.[2]  Biden would also adjust the formulas for tax credits so that people with higher incomes, such as a family of four with an annual income greater than $100,000 would be eligible for tax credits and cost sharing subsidies to reduce out-of-pocket expenses. 

It’s important to keep in mind that the cost sharing subsidies to help cover out-of-pocket expenses are income based, thus the more you make the lower the subsidy.  Although Biden promises savings based on current rates, he does not specify just how much these savings will amount to.  Therefore, a family of four making $70,000 a year might still be confronted with copays and deductibles of $2,500 to $3,500 a year (possibly more); not as bad as it could be, but high enough to prevent many people from accessing health care when they need it because they don’t have the cash to pay these charges.

To increase access to health care, particularly to people living in states where Republican legislatures have refused to expand Medicaid eligibility, Biden would offer those individuals premium-free access to the public option.[3]  States that have already expanded Medicaid can also move their expansion population to the premium-free public option, as long as those states continue to pay their share of Medicaid, which is funded jointly by the states and federal government.

Like most of his Democratic rivals, Biden takes a problem-by-problem approach to fixing the health care system.  For example, he would:

  • Ensure Medicare can negotiate the price it will pay for medications.
  • Set prices for new medications that Medicare and the public option will pay and allow private plans to access a “similar rate.”[4]
  • Limit price increases for medications to the rate of inflation.
  • To enhance competition, allow consumers to purchase their prescription medications from foreign countries.
  • End the tax deduction pharmaceutical companies can claim for advertising.  This might reduce drug company marketing budgets and result in savings that might be passed onto consumers.
  • Accelerate the development and sale of generics.
  • Protect women’s health rights, including expanding access to contraception, fully funding Planned Parenthood, and protecting a woman’s right to choose.
  • Increase spending for community health centers and public mental health treatment.

To fund these initiatives, Biden would raise the top marginal tax rate to 39.6% and get rid of capital gains tax loopholes.[5]  Nonetheless, Biden’s team does not provide a cost estimate for implementing his plan nor does he demonstrate that these tax increases are adequate for covering the cost of the plan.

Plans incorporating a public option assume that this will produce competitive pressure on private insurers forcing them to reduce their costs, and if they fail to do so, they’ll go out of business.  Consequently, the public option will likely lead to single-payer over time, as more people and businesses opt out of the private insurance market and into the public option.

The public option is also based on the belief that consumers want a choice of plans, i.e., they will favor the public option if it is indeed an option and not forced on them.  Politicians who favor the public option are also concerned that the single-player plan such as proposed by Bernie Sanders is too radical a change.  For example, the health insurance industry might be more willing to compromise on a public option even though it would compete against them, but they will assuredly and doggedly fight creation of single-payer.  Having fought for the ACA, Biden is well aware of the opposition he will face from the insurance industry, Republicans, and conservative media and thus he’s pragmatic about actually getting such legislation passed.

Biden estimates that employer-based insurance, private insurance on the exchanges, the public option, and government programs such as Medicare and Medicaid, will extend health insurance to 97% of the U.S. population.  Based on current population estimates, this would cover 320 million Americans, but still leaves 10 million out in the cold; hardly universal health care.

There are considerable differences between how Biden and Sanders want to provide affordable health care to the American people.  What unites them is recognition that the current system of delivering and paying for health care is not working, while at the same time the current system is getting more and more expensive.  (That’s why the proposal I’ve laid out in my book addresses these systemic problems systemically, i.e. by addressing these issues through comprehensive reform rather than incrementally.)

Assuming that one of them actually wins the presidency, he’ll still have an upward battle getting health care legislation passed.  In the next article I’ll describe some of these obstacles as well as strengths and opportunities that could help move health care legislation forward.

[1] Biden isn’t in step with the 100 or so members of the House Democratic Medicare-for-All Caucus who favor replacing the ACA with single-payer.

[2] That’s actually less than what a couple on Medicare with Medigap insurance pay, but Biden has not indicated whether these subsidies and caps would apply to seniors.  You would think he would address this, as seniors are among his strongest supporters.

[3] The fact that Biden’s campaign is using the term “premium-free” will likely be used against him by Republicans and conservative media.

[4] Note that Biden does not guarantee that private insurance companies will obtain the same savings, which places them at a disadvantage compared to the public option

[5] As I noted in my last article, don’t shed too many tears for the top ten percent of earners, as prior to 1980 the top marginal tax rate was more than 90%.

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