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Chris Pope: Giving Up on Reform

A second Biden administration would likely have limited ambitions when it comes to health policy. Health-care policy has been a major political battleground in recent years. More than two-thirds of Americans say that the nation's health-care system has major problems. From 2003 to 2023, the average health-insurance premium paid by employers surged from $9,068 to $23,986–and everyone expects this cost to keep rising.

President Obama attempted comprehensive reform with the Affordable Care Act, but the legislation caused as many problems as it solved. Though Trump and the GOP won elections while denouncing Obamacare, they have been unable to repeal and replace it with anything significantly better. While the Biden administration has spent billions of dollars to patch up the ACA, it, too, has achieved little fundamental reform, and seems set to be even less ambitious if elected to a second term.

Four years ago, a debate over rival proposals for a comprehensive overhaul of American health care dominated the Democratic primary. Vermont senator Bernie Sanders denounced the system as "totally broken, dysfunctional, and cruel," proposing to limit expenses by making the government the sole purchaser of medical services. Other candidates debated how to expand public financing and whether to retain a role for private insurance. Few dared to defend the status quo.

Biden would eventually win his party's nomination and the White House with a relatively modest set of proposals: reduce the age of Medicare eligibility from 65 to 60, allow working Americans to buy into a Medicare-like public health insurance option, and extend that coverage free of charge to low-income adults in states that have not expanded Medicaid.

The most ambitious of these proposals predictably never came close to being enacted. As his Build Back Better plan shrank into the Inflation Reduction Act, costly promises for Medicare to provide health care for Americans in their early 60s and to expand the program's benefit package to pay for dental care were abandoned.

The Biden administration made no serious effort to establish a federal public option plan, though funding was provided for some states to experiment with their own arrangements. Nor was free coverage extended to poorer residents of Medicaid non-expansion states–even though Biden owed his initial control of Congress to the January 2021 election of senators Raphael Warnock and Jon Ossoff from Georgia.

Biden's aversion to major health-care reform has been most clear in his band-aid fix for Obamacare. His administration has done nothing to remedy the incentives that lead healthy individuals to drop coverage, insurers to flee the individual market, and premiums to soar. Instead, Congress simply provided thousands of dollars of extra federal subsidies per enrollee, even though much of this assistance went to wealthy enrollees and half of it merely inflated the premiums that insurers charged.

Providing such hefty subsidies to Americans without an offer of employer-sponsored health insurance did help enrollment in the individual market recover somewhat–but only at the cost of creating an entitlement in disguise, rather than a functioning insurance market. In 2023, 79 percent of enrollees received subsidies (up from 44 percent in 2015), at an average cost of $20,739 per enrollee gaining coverage. Such subsidies will likely impede genuine reform by making any unsubsidized insurance market established uncompetitive.

Like many other politicians, Biden has been burned by unpopular health-insurance reforms in the past, and his second term would be unlikely to involve much beyond an attempt to make the expansion of these subsidies permanent. Though his recent budget proposed establishing Medicaid-like coverage for low-income households in non-expansion states, it is hard to see his administration achieving this after failing to do so when fiscal constraints were looser.

In his recent State of the Union address, Biden promised more action to reduce drug prices, but nothing to reduce the cost of hospital care or physician services–which account for a much larger share of health-care expenses. Donald Trump recently caused consternation among Senate Republicans by suggesting that he wants to push for alternatives to Obamacare. But in practice, he has been similarly short of specific suggestions.

Chris Pope is a senior fellow at the Manhattan Institute.

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Posted: March 29, 2024 Friday 11:14 AM