What Does the Biden Victory and a Divided Government Mean for Healthcare?

Pandemic Response

The first priority of the Biden Administration will be to respond to the pandemic and to pass a COVID relief bill. The bill could be smaller if Republicans maintain control of the Senate. With Democrats controlling the White House and Republicans the Senate, a divided government is likely to mean a smaller fiscal stimulus package than had been anticipated.

House Democrats are targeting a $2.2 trillion package. Senate Republicans introduced a smaller $500 billion spending package that included assistance for small businesses and federal unemployment benefits. But Democrats blocked it after the measure omitted $1,200 stimulus checks and assistance for states.

Analysts expect a deal of up to $1 trillion. That deal is down from the $2 trillion stimulus package that Americans anticipated if the Democrats had captured a majority in the Senate. But it is expected to include elements that are essential to the recovery, including increased unemployment benefits and additional funds for struggling small businesses under the Paycheck Protection Program. It's unclear if the next package would include stimulus checks.

A divided government could also further impede an agreement on a fresh infusion of aid for the economy. The longer Congress waits on passing a stimulus package, the more small businesses will go bankrupt, and people won’t have the ability to make their rent or mortgage payments.

Several analysts are concerned that some Republicans will have little incentive to push a package through during a lame-duck session at the end of 2020. That said, some Republican officials have signaled they want to strike a deal before the end of the year.

Senate Majority Leader Mitch McConnell said he supported Congress passing a new stimulus package before the end of the year instead of January, as he previously stated. The Senate returned from recess Monday, November 9.

Affordable Care Act (ACA)

Despite the pressure from the Progressives to offer free healthcare, President-elect Biden will likely stay true to what he really believes in, building off the Affordable Care Act. He wants to find a lower cost plan alternative within the exchange structure.

The focus on a COVID relief bill will buy Mr. Biden time to figure out the details of a public option before he must push hard to get it to happen. It's likely that a public option could pass in the spring of 2022, assuming an effective vaccine is in broad deployment, and the pandemic is finally under relative control.

Given the millions of people out of work and may have lost their healthcare, Mr. Biden would focus on expanding ACA subsidies and helping uninsured Americans in states that didn't expand Medicaid. Passing any effective plan to expand access to health insurance will be difficult. Expanding coverage, whether through a public option or increasing access to ACA plans, would be expensive and may lead to reimbursement cuts somewhere. It will require bipartisan negotiation.

Supreme Court Case California v. Texas

The fate of the Affordable Care Act lies in the Supreme Court's hands, and there's not much President-elect Joe Biden can do about it. The justices heard oral arguments Tuesday, November 10, which seeks to overturn the health reform law. A decision isn't expected until the first half of 2021.

By the time Mr. Biden takes office on January 20, it may be too late for his administration to have much influence on the court's decision. And while lawmakers could take steps to render the case moot, they are unlikely to do so in a divided Congress. Control of the Senate depends on the runoffs in January for the two Georgia seats.

The continued existence of the Affordable Care Act is central to Mr. Biden's health care policy proposals. Mr. Biden has laid out a comprehensive plan to build on the Affordable Care Act, lower health care costs, and expand coverage.

Home and Community-Based Services

President-elect Biden has proposed a significant new initiative to encourage state Medicaid programs to expand home and community-based care for low-income older adults and younger people with disabilities. While the proposal is ambitious, it addresses the Medicaid population's long-term care needs in an exceedingly complicated way. It still leaves considerable gaps in Medicaid-based care and does nothing for the millions of people who need long-term supports and services but are ineligible for Medicaid.

Mr. Biden's initiative goes well beyond the more modest suggestions made just weeks ago by a joint task force with progressives. It also is much more specific. He promises to spend $450 billion to enhance Medicaid home-based care, and Mr. Biden says he’d clear 800,000 people from the program’s waiting lists for such community care. But it might be less effective than it first appears.

One flaw is that Mr. Biden seems to focus on only one Medicaid long-term care problem—waiting lists. But a state can end waiting lists by limiting the number of home-based services it provides. In other words, it merely could give less care to more people. To avoid this, Mr. Biden vows to infuse new federal dollars into a new home care program and fund new innovative models in community care. That might encourage states to shift from the current complex system of multiple federal waivers into a single new model. Currently, the federal government requires states to offer Medicaid long-term care to nursing home residents only. The states can receive waivers from the feds that allow them to provide home-based care, but the special programs are complex for both states and consumers.

On a positive note, Mr. Biden identifies a wide range of services that could be funded with this new model, including primary medical care, transportation, adult day programs, home-delivered meals, and home renovations (such as wheelchair ramps). In many states, some of these supports are provided by Medicaid managed care programs. Oddly, he does not include housing in his list. Currently, Medicaid pays for room and board in nursing homes but not in any other care settings.

Mr. Biden also proposes to increase pay for direct care workers, though he does not say by how much. A significant pay increase likely would eat up much of the additional funding.

Summary

A Biden administration is more inclined to expand the insurance exchanges and Medicaid expansion under the Affordable Care Act and control prescription drug prices through regulation. At this point, his recognition of the need may be more important than the details of his solution. But as for Congressional action, it is much more likely we will be facing gridlock––even if Democrats eke out a slim Senate majority.