Democratic presidential candidate Joe Biden has taken a strange attack line against his rivals. He claims supporters of Medicare for All want to “get rid of Obamacare,” while he is “building on Obamacare.” Yet by his own logic, his plan would effectively “get rid” of over half of Obamacare.
Biden’s newly released health-care plan is long on promises but relatively short on details, making a full analysis difficult. But the first big component of it is:
All Americans will have a new, more affordable option.The public option, like Medicare, will negotiate prices with providers, providing a more affordable option for many Americans who today find their health insurance too expensive.
Biden’s plan would also significantly increase subsidies for individuals buying insurance on their own, and let people with employer insurance get access to the subsidies, which Obamacare explicitly prohibits. Also, while promoting his plan Biden made a bold promise: “If you like your health-care plan, your employer-based plan, you can keep it. If in fact you have private insurance, you can keep it.”
It will prove very tough to keep all these promises. If the new public option does use the government’s full power to negotiate significantly better rates with providers, it will likely drive most private insurers out of the market. Combined with significantly improved subsidies for the public option or private coverage, many employers would likely drop their current health plans. The Lewin Group did an analysis of the Americare bill in 2007, a public option plan which fully exploited the government’s ability to negotiate low prices, and offered very similar cost sharing and premium caps to BidenCare’s model. Lewin projected that the public option would be so appealing, all employers would eventually stop offering coverage as nearly everyone signed up for it.
It seems unlikely that Biden would attack Medicare for All, but instead call for a Medicare-like plan that would wipe out nearly all private insurance over time. Obamacare preserved employer coverage by purposely making the exchanges an inferior alternative. But the more you improve the alternatives to employer coverage, the more you risk unraveling it.
There are ways to try to square this circle, but it would involve adding very significant provisions to the plan which Biden makes no mention of. A very large and restrictive employer mandate, like the one used in Japan, could prevent companies from dropping their current coverage. But then the public option won’t in practice be a real choice for everyone. Similarly, adopting an all-payer plan (setting uniform prices for all insurers) would keep private insurers on a more equal footing, while also making the public option a real improvement over the status quo. But the way Biden describes the public option as negotiating for lower prices implies that all-payer is not part of the equation.
The only other way to kinda sorta keep the spirit of these conflicting promises would be for Biden to purposely make the public option not as good as it could be, by limiting how hard it negotiates prices. This is what the original House public option proposal did in 2009, and it’s likely what Biden has in mind. It would have paid rates lower than commercial insurers but slightly higher than Medicare. It was projected to earn a significant but not overwhelming share of the market.
Biden could go this route, but it creates a problem for the third big element of his proposal—his plan to deal with Republican states refusing to expand Medicaid:
Biden’s plan will ensure these individuals get covered by offering premium-free access to the public option for those 4.9 million individuals who would be eligible for Medicaid but for their state’s inaction, and making sure their public option covers the full scope of Medicaid benefits. States that have already expanded Medicaid will have the choice of moving the expansion population to the premium-free public optionas long as the states continue to pay their current share of the cost of covering those individuals.
While Biden frames moving millions from the Obamacare Medicaid expansion to the new public option as technically optional, this design would ensure that every state would take that offer almost immediately. Medicaid on average pays lower rates than Medicare, and the new public option would very likely pay more than Medicaid does. Providers will strongly push state legislators to make this move, and state legislators would love to be free of needing to run Medicaid programs, while collecting higher local taxes from providers (because they would enjoy higher reimbursements through the public option than Medicaid).
Biden could have the public option negotiate lower provider rates, to give states an incentive to keep their Obamacare Medicaid expansion. But a low provider rate would attract millions with employer-sponsored insurance and effectively eliminate those systems. The more Biden tries to keep employer-based plans above water, the less the public option fulfills the promise of a “better” and “more affordable” option, and the more likely all Medicaid expansion gets folded into it. So one will have to go, either the employer-based system or the Medicaid expansion.
Effectively getting rid of the Medicaid expansion would be a massive change to Obamacare. The Medicaid expansion is responsible for well over half of Obamacare’s reduction in the uninsured, and half of the new spending. According to the Congressional Budget Office, the Medicaid expansion covers 12 million people, while just nine million buy coverage via the exchanges.
Of course, one can argue that Obamacare contained many provisions beyond just the coverage expansion sections. The law included a wide range of changes, inlcuding calorie count posting requirements for fast food restaurants, new rules for approval of generic biologics, provisions about health-care training, funds for expanding community health centers, creation of the National Prevention, Health Promotion and Public Health Council. But just like Biden’s plan, congressional Medicare for All bills would leave a very large number of these sections of the Affordable Care Act in place. Both Medicare for All and BidenCare build on these provisions.
Biden criticizes Medicare for All for moving all of the people who gained coverage via Obamacare onto a new federally-run government insurance plan, when his proposal would likely move the vast majority of people currently covered by Obamacare onto a new federally-run government insurance plan. Biden’s promise that people can keep their plan does not include millions on Medicaid.
Biden’s current plan is a collection of well-sounding but semi-conflicting promises without the core components needed to even try to make them hold together. He is hoping the media will buy his strange rhetorical game, where new laws effectively superseding roughly 80 percent of an existing one count as “getting rid of it,” but new laws that supersede roughly 57 percent count as “protecting it.”