IF the Democrats capture the White House, keep the House and take over the Senate, no maer who they elect as President, this Biden health care outline, not Medicare for all, will likely be the plan Democrats embrace in 2021 And, with Buttigieg and Bloomberg embracing very similar health care outlines, while Warren backs off her Medicare for all proposal, that looks all the more likely.

1. Policy
Joe Biden's Health Care Plan
Would Fix the Individual Health
Insurance System
28,262 views | Dec 22, 2019, 03:29pm EST
Robert Laszewski Contributor
IF the Democrats capture the White House, keep the House
and take over the Senate, no ma er who they elect as
President, this Biden health care outline, not Medicare for all,
will likely be the plan Democrats embrace in 2021
And, with Buttigieg and Bloomberg embracing very similar health care
outlines, while Warren backs off her Medicare for all proposal, that looks all
the more likely.
The Biden health care proposal directly takes on the big things that haven't
worked in Obamacare.
Here are the things that are most broken in Obamacare:
The individual health insurance premiums and deductibles are, and
have from the beginning of the program, been unaffordable for many
but the most subsidized consumers.
That has led to dramatic anti-selection in the risk pool––particularly
among those who get little or no subsidy.
That in turn has led to a cycle of ever higher and more unaffordable
premiums and deductibles––it isn't uncommon to now see

2. unsubsidized family premiums in the $15,000 to $20,000 annual
cost range with deductibles of $7,000 per person.
That has led to dramatic shrinkage in the number of those covered in
recent years––particularly among the unsubsidized where the
number of those covered fell by 40% during 2016 and 2017.
To counter substantial underwriting losses early in the insurance
exchanges, the insurance companies dramatically increased
premiums until the most highly subsidized and premium insulated
consumers dominated the enrollment and the carriers had the
premiums high enough that they made record profits––they are
slated to rebate $800 million this year because they exceeded the
law's profit limitations.
What has worked is the Medicaid expansion where 12 million people have
gained coverage in the 33 states that have expanded it––likely more states
will do so shortly because public support in one traditionally Republican
state after another––such as Virginia, Nebraska, Maine, Idaho, and Utah––
has grown.
With that backdrop, here is what Democratic presidential candidate Joe
Biden is proposing.
First, he is proposing to fix what he sees as wrong with the Obamacare
individual health insurance market––not proposing a single-payer Medicare
for all plan and thereby not doing away with employer-based care or
tinkering with Medicare as we now have it for seniors.
Biden has a comprehensive plan to make the Obamacare individual market
policies more affordable.
He would:

3. Base policy subsidies on the more expensive "Gold" plans that have
relatively low deductibles, rather then the "Silver" plans that have
higher deductibles. This would dramatically reduce the deductibles
and co-pays subsidized people now face.
Make most families and individuals eligible for premium subsidies by
removing the current cap limiting subsidies to only those who make
less than 400% of the federal poverty level––under his plan all
individual market consumers would pay no more than 8.5% of their
income on health insurance premiums.
Make coverage available to the 5 million low-income consumers in
states that have not expanded Medicaid by offering access to a federal
premium-free option.
The Biden plan directly takes on the most problematic parts of Obamacare
by making individual market coverage affordable––particularly for the
middle-class who are now the ones most hurt by the existing program.
The fundamental reason the Obamacare individual market policies have
seen a long succession of more and more unaffordable rate increases is
because of "anti-selection"––as the prices increase more, and more healthy
people find the coverage unaffordable, and as a result take the risk of
dropping out, leaving the sickest participants behind, and the prices even
higher.
A healthy and efficient risk pool requires about 75% of the market to
participate in order to ensure there are enough healthy people paying into
the pool to pay the claims of the sick. It is likely that as much as 40% of
today's high rates are directly the result of premium loading to counter the
fact that less than 40% of the eligible market ever enrolled. That loading
essentially amounted to the big Obamacare rate increases in recent years
that were in excess of baseline health cost inflation.

4. Ultimately, as enrollment would ramp up under the Biden plan to an
efficient level, the anti-selection premium-load carriers have had to apply to
Obamacare in recent years, because healthy consumers fled the program,
could be reversed as those same healthy consumers returned.
That is a process that would likely take a few renewal cycles as the risk pool
improved and health plans were able to recognize better results. And, I
would expect Democrats would reinstate an incentive for people to carry
insurance as they have done in a number of Democratic states. Separately,
premiums would continue to rise to offset annual health care inflation.
Biden also deals with a number of other health care system issues:
Medicare could negotiate directly with drug companies for lower
prices in that program.
Launch prices for drugs that face no competition would have their
Medicare and individual market prices tied to a process called
"external reference pricing"––based on what a market basket of other
nations are willing to pay thereby bringing U.S. prices more in line
with what is paid in other industrialized economies.
Biden would increase the community health center budget to improve
care for underserved populations.
Biden would pay for his plan by:
Eliminating the 20% flat tax on capital gains for those with incomes
over $1 million and have them pay the top tax rate of 39.6% on capital
gains.
Roll back the Trump tax cuts for the "very wealthy" and restore the
top bracket to 39.6%.
See my related post: Buttigieg and Biden Spend What They Would Gain
Repealing the Republican Tax Cuts on Health Care

5. Biden is also proposing a public option to be marketed alongside the private
individual health insurance options in the insurance exchanges:
Biden goes beyond the historic definition of a public option by making it
available to people beyond the individual health insurance market––even
letting those participating in employer-based care to opt out of their
coverage to take advantage of it.
This is the most controversial part of his plan. Insurance companies,
hospitals, doctors, and other health care providers are likely to cheer his
proposed efforts to make individual market policies more attractive––and
thereby enable insurers to sell more policies in a more stable market and
have those private policies pay providers for more care at commercial
reimbursement rates.
But effectively putting Medicare in direct competition with the insurance
companies and paying providers at Medicare rates––about 50% lower than
commercial rates for hospitals and 20% less on average for doctors, and
much less for certain specialties––will be a much heavier political lift.
Most Democrats now regret that they didn't include the public option when
they passed Obamacare in 2010 and found themselves in bed with the
insurance industry as Obamacare floundered in the face of unaffordable
premiums for the middle-class.
If Democrats can't get to Medicare for all in 2020, and as I said in an earlier
post I don't believe they can, they will surely settle for nothing less than a
public option.
"Whether you're covered through your employer,
buying your insurance on your own, or going without
coverage altogether, the Biden Plan will give you the
choice to purchase a public option health insurance
option like Medicare...by negotiating lower prices
from hospitals and other health care providers."

6. IF the Democrats capture the White House, keep the House and take over
the Senate, no matter who they elect as President, this Biden health care
outline, not Medicare for all, will likely be the plan Democrats embrace in
2021.
More on how I see the public option playing out if Democrats sweep the
2020 elections: The Public Option's Silver Lining?
Other related posts:
Obamacare is "Stable" at an Incredibly Unstable Place
There is Now No More Support for a Medicare For All Single-Payer Health Care Than
There Was in 1977, or 1993, or 2009
Medicare for All––the Bernie Sanders and Elizabeth Warren Health Care Plans
Robert Laszewski
I spent 20 years in the health insurance marketplace and another 25 years inside the
Beltway. I ran two health insurance businesses before coming to Washington, DC to…
Read More
Site Feedback Tips Corrections Reprints & Permissions Terms Privacy
© 2020 Forbes Media LLC. All Rights Reserved. AdChoices
ADVERTISEMENT
Follow