Implications for the Affordable Care Act under the Biden administration

Few would have predicted the world-changing events of 2020. Predicting the fate of the Affordable Care Act (ACA) over the next four years under President Biden seems untenable given how much uncertainty we have lived with. Even so, there is general consensus among many experts about the current healthcare landscape. Value-based healthcare and Medicare Advantage programs will continue to expand. Additionally, healthcare technology investments in digital solutions, interoperability, revenue cycle management and technologies that support value-based solutions and Medicare Advantage will continue to be necessary.

Political Fights Over the ACA Unlikely
In a recent article, Susan DeVore, CEO of GPO Premier, predicts the ACA’s fate is unlikely to be in question any longer. She cites the narrow margins by which the Democrats hold the House and Senate, plus Americans’ weariness with political infighting. “Sweeping changes to the Affordable Care Act will be off the table—probably not for 200 years, but certainly for the next two years and more likely four,” she says.

While broad changes may be off the table, incremental changes that strengthen the law, especially those that have bipartisan support from Republicans, are quite likely. Presenting to the virtual assembly of the J.P. Morgan Healthcare Conference in December, Andy Slavitt, former acting administrator of the Centers for Medicare and Medicaid, echoed DeVore.

“I don’t think Biden is looking to pick big divisive fights,” he said. “He ran on uniting the country and I think that is going to be important to him.” Instead, he sees Biden allowing the federal health agency leaders his administration appoints the flexibility to decide which health care challenges they should focus on. This includes leaders at the state level and at agencies like CMS and the CMS Innovation Center. He does expect actions around Medicaid coverage expansion.

High Court Ruling
However, it is possible the Supreme Court could rule the ACA unconstitutional. An article in the LA Times noted that the comments of several justices seem to indicate the law is safe, and Biden has promised that regardless of the case’s outcome, he will enact reforms to expand healthcare coverage for Americans. Writers of a report by Health Research Institute at PricewaterhouseCoopers (PwC) predict that Democrats will develop a replacement should the Court strike down the law. Even so, they advise healthcare executives to “scenario plan for this unlikely yet potentially highly disruptive event.” The decision is expected by June.

Biden’s Proposals and their Feasibility

The plan Biden presented during his campaign includes:

• Expanding ACA coverage to lower-income individuals in states not expanding Medicaid
• Reducing ACA premiums for people of all incomes
• Lowering the age for Medicare eligibility from 65 to 60
• Introducing a public option that would in effect enable anyone to participate in a Medicaid-type coverage

However, his ability to achieve these goals may be hobbled by the effort necessary to vaccinate the country and unwind Trump-era changes to the ACA. Some of Trump’s changes are supported by states and other constituents. For example, removing short-term and association-offered coverage, which was enabled by Trump, may disgruntle those who are now enjoying these plans. A similar dynamic is in effect with Medicaid block grants, the first of which was launched in Tennessee recently, and Georgia’s replacement of healthcare exchanges with private broker offerings and commercial websites.

Other Trump administration initiatives align sufficiently with Biden’s goals and enjoy enough bipartisan support to likely be retained. According to the PwC report, these include efforts that support digital solutions to healthcare industry challenges like interoperability regulations and streamlined reviews for health tech tools, along with Trump’s Digital Health Center of Excellence.

Congressional action will be required for Biden to implement his plan in full, although executive orders are an option to make some changes. His first executive order was to reopen HealthCare.gov enrollment for an additional 90-day ACA enrollment window (beyond the usual 30 days) starting February 15. This is in an effort to attract new enrollees, including those who have lost their jobs and employer-sponsored coverage during the pandemic.

A Rider to the Coronavirus Relief Package
Expanding coverage and reducing premiums are currently on their way to implementation with passage of the $1.9 trillion coronavirus relief bill, known as the American Rescue Plan. The bill was signed into law on March 11 and includes provisions to make the most substantial changes to the ACA in more than 10 years. It increases subsidies to ACA Marketplace enrollees in 2021 and 2022 and provides Americans who receive unemployment benefits at any time this year a benefit in the form of premium tax credits and cost-sharing reductions. According to CMS, four out of five enrollees will be able find a plan for $10 or less per month – after premium tax credits – and over 50% will be able to find a Silver plan for $10 or less.

The Public Option and Lowering Medicare Eligibility Age
The less politically and financially feasible items among the tenets of Biden’s plan include the public option and expanding Medicare by lowering the eligibility age. He’s proposed a Medicare-like public option in an effort to cover individuals outside the 36 states where Medicaid has been expanded and to make ACA marketplace options more affordable for more people. Enacted, it could pave the way to Medicare-for-All, a single payer system.

Allowing Americans over age 60 to participate in Medicare would expand the program’s rolls by an estimated 23 million, which could put a strain on Medicare program finances.

Additionally, moving more individuals to government plans creates financial challenges for providers. Currently, private payers reimburse at nearly twice the rate of CMS. When Elizabeth Warren proposed a healthcare-for-all type plan during her campaign in 2019, the American Hospital Association argued “hospitals are already paid far less than the cost of caring for Medicare patients” and that further cuts “could threaten access to care and hospitals’ survival.” Larry Leavitt, executive vice president for health policy at the Kaiser Family Foundation predicts, “The healthcare industry would fight a public option with everything they have,” and few healthcare policy or industry experts interviewed in the PwC report expected it had a high probability of enactment. One of these, David Merritt, an executive vice president at America’s Health Insurance Plans, pointed to the negative consequences of introducing competition for commercial insurers and said, “The public option would really be an unnecessary addition to the ACA.”

Implications for Providers, Payers and Those Serving Them
The ACA is one driver of our complex healthcare system, as are the continuing trends, such as value-based care, revenue cycle management, increased affordability of health insurance, and interoperability and access to data. Mike Leavitt, former HHS secretary under President George W. Bush, advises in his blog that companies serving providers and payers define and redefine their markets. “Identify opportunities to merge, partner, or launch new lines of business to meet changing and evolving needs. In 2020, there have been new entrants into healthcare, along with provider consolidation and new partnerships in some cases hastened by the pandemic. Don’t assume demand will be the same as it was pre-pandemic.”

Unless the Supreme Court strikes down the ACA, it will remain in place for the foreseeable future and will see expansion. Regardless of the ACA’s fate, the economic factors driving change in healthcare will continue to demand the efficiencies enabled by technology. Medicaid and Medicare beneficiaries will continue to seek the savings and convenient coverage options enabled by managed plans like Medicaid Advantage. Value-based care will continue to expand as health systems and practices seek efficiencies. Opportunities will be rich for healthcare technology investors and companies working to support both these trends and solutions that enable improved interoperability, easier data access and a health system that moves beyond compliance into more patient-centric care.

Photo: marchmeena29, Getty Images

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