It was less than a year ago that the Democratic presidential candidates were locked in a furious debate over whether to fortify the Affordable Care Act or to replace all existing insurance arrangements with a government-run “Medicare for All” plan.
Now, the prospects for either approach seem remote, at least in the short term.
At best, Democrats in 2021 will have 50 votes in the Senate, and that will include relatively conservative Democrats likely to be skeptical of far-reaching, necessarily expensive health care legislation. At worst, Republicans could maintain their majority for another two years. Georgia will decide that with its Jan. 5 runoff.
But President-elect Joe Biden will still have some tools for improving access to health care. The power of executive action is considerable, as outgoing President Donald Trump has demonstrated in the last four years.
Trump and his lieutenants significantly altered the kinds of health coverage available to Americans, and what they had to pay for it, by rewriting the rules for private insurance on HealthCare.gov, for example, and allowing states to introduce work requirements for Medicaid enrollees.
The effects were not always straightforward, and federal courts blocked a number of them. But even before COVID-19 threw the economy and employer health insurance arrangements into disarray, the percentage of Americans without health insurance was on the rise for the first time since full implementation of the Affordable Care Act in 2014.
Biden and his newly announced choice to run the U.S. Department of Health and Human Services, California Attorney General Xavier Becerra (D), will have their chance to undo what Trump has done. They’ll also have opportunities to bolster the ACA, so that it offers more financial assistance to low- and middle-income Americans buying insurance, potentially making the program even more generous than it was under President Barack Obama.
Biden’s philosophical approach will, of course, be much different from Trump’s. That alone will make a difference. Trump understood this: One of his first actions after being inaugurated in 2017 was to issue an executive order directing agencies to find ways around the ACA’s rules. The Biden administration can also decline to defend Trump policies in court, where many of them are still tied up.
Executive action has trade-offs, including more government spending in some cases or opposition from health industry groups. It also takes time to roll back or rewrite existing rules and regulations. But with effort and patience, executive action could help millions. Here’s how.
Canceling Medicaid Work Requirements
Trump has taken aim at Medicaid, the joint federal-state health program for low-income people, throughout his presidency. The Republicans’ Obamacare replacement bill that failed to pass the Senate in 2017 included significant cuts to the program, as have Trump’s annual budget proposals.
Progressives ― and so far the federal courts ― have objected to Trump’s policy requiring some Medicaid enrollees to prove they have jobs, are looking for work or are engaged in some form of volunteer work. These “work requirements” are modeled on those from other public benefit programs, such as federal food assistance. Those who fail to comply risk losing their medical coverage.
The Trump administration invited states to apply for federal permission to impose work requirements in January 2018, and 19 states accepted the offer. The current administration maintains that the policy’s aim is to encourage Medicaid beneficiaries to get jobs and obtain employer-sponsored benefits.
But there are few people on Medicaid who are physically able to work who don’t have jobs. The biggest measurable effect of work requirements has been fewer people with coverage. Before a federal court blocked it, Arkansas implemented work requirements that promptly led to 18,000 people losing benefits. The Supreme Court will hear an appeal of the rulings against work requirements next year.
“There's a lot that can be done through executive action.”
- Sabrina Corlette, Georgetown University
Biden can act sooner if he chooses. States obtained permission to impose work requirements, along with other Trump-approved policies such as monthly premiums and copayments for medical care, via Medicaid’s “waiver” process, through which the federal government allows states to customize their Medicaid programs.
Those waiver approvals can be unwound under certain conditions, said MaryBeth Musumeci, associate director of the Program on Medicaid and the Uninsured at the Henry J. Kaiser Family Foundation in Washington.
For a start, Biden’s Centers for Medicare and Medicaid Services could simply dismiss the seven pending applications for work requirements. And the federal government has the authority to cancel the 12 previously approved waivers.
This is rarely done, Musumeci said, but Biden can make a good case that a Medicaid policy that results in coverage losses doesn’t comport with the program’s legal requirement to provide medical care, which also was a central part of the court rulings against work requirements.
“When you look at the evidence, I think there is more than enough justification,” Musumeci said.
This process could drag on, however, if states contest the decision to do away with work requirements, and especially if they take the matter to court, she said.
Unmaking Federal Regulations
Trump implemented many of his health policies through the federal rulemaking process. Reversing formal regulations takes time ― a minimum of 180 days, except in emergencies ― during which time the government must field comments from the public. Biden’s team will have a lot to review before making decisions about which regulations to undo, which to revise and which to leave in place.
Regulations related to discrimination against LGBTQ people in the health care sector illustrate the process. In 2016, the Obama administration published a regulation, stemming from language in the ACA, to prevent unfair treatment based on sex, gender identity and sexual orientation by health care providers. Trump reversed that regulation three years into his presidency. If Biden decides to restore protections for LGBTQ patients, it will likely take time.
Progressives also will be watching to see what Biden does about Trump’s so-called public charge rule, a regulation that would threaten the immigration status of lawful immigrants who use public benefit programs. A federal appeals court struck down the regulation this month, but the issue remains live. Biden could cancel the regulation and withdraw from the federal government’s defense of the policy in court.
Limiting Short-Term Plans To The Short Term
The Trump administration also spent a lot of time rewriting the rules for private insurance ― most conspicuously, when it loosened rules on “short-term/limited-duration plans,” which had long existed as a stopgap for people who are between jobs or otherwise need a bridge between one coverage option and another.
The Obama administration, just before leaving office, finalized rules limiting short-term plans to durations of three months. Under the new Trump administration rules, people can effectively hold on to these policies for up to three years.
The Trump administration touted short-term policies as a new, cheap coverage alternative because their premiums are typically lower than what buyers will find on HealthCare.gov or one of the state-run exchanges like Covered California. But that is because the plans can have large gaps in coverage, exposing beneficiaries to catastrophic medical bills; in addition, insurers can ― and do ― deny short-term policies to people with preexisting conditions.
Not long after the Trump administration rule took effect, there were news stories of unwitting consumers discovering the benefit gaps as soon as they got sick and had large medical bills. The old, Obama-era restriction sought to prevent that from happening, and the Biden administration could bring it back, although doing so would require extra time because the existing regulation involves three different executive branch departments: Health and Human Services, Labor and the Treasury.
Another potential complication will be familiar to anybody who remembers the controversial rollout of HealthCare.gov back in late 2013. People who now have short-term plans might be angry if they can’t renew them, because they haven’t had a major medical issue and don’t realize how thin their benefits are.
Making The Affordable Care Act More Affordable
Short-term plans and other coverage alternatives wouldn’t seem so attractive if the options on the exchanges were less expensive. Making that insurance more affordable was the primary focus of Biden’s campaign proposal, and while most of that proposal would require legislation, there are steps he can take now through executive action.
He could start by reversing two regulatory adjustments that the Trump administration made ― one to the formula for calculating private insurance tax credits, another defining what kind of insurance qualifies as “Bronze,” “Silver,” “Gold” or “Platinum” coverage.
These modifications functionally reduced the amount of financial assistance people could get while simultaneously lowering the standards for what insurance covers. A Trump change to the rules for “essential health benefits” in insurance had similar effects.
“The Trump administration was very good at this death-by-a-thousand-cuts approach, making all of these little rule changes here and there that add up to something bigger,” said Aviva Aron-Dine, vice president for health policy at the Washington-based Center on Budget and Policy Priorities. “I think there is an opportunity to sort of do the same in reverse, making financial assistance and insurance coverage more adequate.”
Improving Choice By Reducing It
A major focus of the Trump administration was increasing the options available to insurance buyers ― in part, by rolling back yet another set of Obama administration rules that restricted the kinds and numbers of plans that insurers could offer on HealthCare.gov.
But research has shown repeatedly that insurance buyers struggle when there are too many choices, because coverage is so hard to compare. The whole point of the Obama rules, which went into effect just as he was leaving office, was to simplify choices, as successful state-run exchanges like California’s have done for years.
Trump got rid of that rule, and today nearly half of all HealthCare.gov customers have 50 or more insurance choices, according to David Anderson, a research associate at the Duke-Margolis Center for Health Policy based in North Carolina.
“The Trump administration was very good at this death-by-a-thousand-cuts approach.”
- Aviva Aron-Dine, Center on Budget and Policy Priorities
“This is what I do for a living and what I do for fun, but if I had to look at 50 choices, I probably wouldn’t make a catastrophic choice but I wouldn’t make the optimal choice either,” Anderson said. “And if I’m not making the optimal choice, I guarantee you my little sister isn’t making an optimal choice.”
Reinstating the Obama rules would simplify the choices. It would also most likely translate into more financial assistance for consumers, as the analyst and writer Jon Walker has pointed out, because insurers have learned to game the current rules ― and the way that the law calculates subsidies ― in ways that ultimately leave people with less money for buying coverage.
Insurers would likely complain, and maybe even threaten to pull out of HealthCare.gov markets as they did in 2015 and 2016, at a time when many carriers were losing money. But the markets have settled down and insurers are making money now.
“It’s a fundamentally profitable business space,” said Anderson. “It’s hard argument to make that modest regulation, bringing us functionally back to 2018 and 2019, is going to drive out massive numbers of incumbent insurers.”
Fixing The Family Glitch
The Biden administration can do more than simply undo Trump administration changes. It can improve upon the ACA in ways even the Obama administration never did. One obvious place to start would be with the law’s definition of “affordability” and how it applies to certain families.
Under the ACA, people are not eligible for subsidies at HealthCare.gov or in a state-based exchange if an employer offers “affordable” insurance, which the law defines as premiums that work out to less than 9.8% of household income.
But under an Obama administration regulation, that threshold applies to the cost of an employer policy for a single employee only. If an employee wants family coverage, and the cost of a family policy versus an individual policy pushes the price above 9.8% of household income, that family still isn’t eligible for subsidies.
The result is that several million families can’t get insurance unless they pay a lot more than 9.8% of income on premiums. Those families either struggle with high costs, or remain uninsured ― a situation known as the “family glitch.”
The Biden administration could rewrite the rule to make family members eligible for subsidies. That would help a few million people save several thousand dollars a year in premiums, and a few hundred thousand previously uninsured would get coverage, according to an estimate that Urban Institute researchers produced in 2016.
A more ambitious version of the fix, under which the employee could also get subsidies, would probably require legislation.
Boosting The Subsidies
Another potential way to boost subsidies would require action at both the state and federal levels ― and involve Medicaid, as well. The Biden administration could alter some of the rules around Medicaid waivers so that states could use federal Medicaid funding to supplement private insurance subsidies, effectively bolstering them in a way that the states of Massachusetts and Vermont already do.
This kind of change might raise more legal complications than some of the others. But if this use of Medicaid waivers could get through the rulemaking process, and if the courts were to uphold it, the benefits would be substantial.
“In Massachusetts, this has been a huge part of why they’ve succeeded in coming closer to universal coverage than any other state,” said Stan Dorn, a senior fellow at the Washington-based liberal health care advocacy group Families USA. “Insurance is substantially more affordable for low- and moderate-income people in Massachusetts than elsewhere in the country.”
And while the Biden administration might struggle with some of the regulatory hurdles to boosting subsidies, it wouldn’t face much in the way of interest group opposition. Insurers, employers and other industries that might fight other changes are likely to welcome these, because they stand to benefit if more people get government help buying insurance.
In fact, the main trade-off would be in the form of higher federal spending, perhaps as much as a few billion dollars a year. But that’s a pittance relative to what the federal government already spends on health care every year, and it would provide tangible, meaningful help to Americans in desperate need.
“I think the Biden administration can actually do a tremendous amount in its first year to make more people eligible for coverage and make coverage more affordable for many families,” said Sabrina Corlette, a research professor at Georgetown’s Center on Health Insurance Reforms in Washington. “I know there’s a lot of disappointment among progressives that things didn’t more clearly break the Democrats’ way in the Senate, but I would say, don’t get disheartened, because there’s a lot that can be done through executive action.”