Where Would A Public Option Leave Brokers?

By Susan Rupe

One of the overriding questions in the upcoming election is: What will happen to health care under a Trump or a Biden presidency? And what would a public option do to health insurance brokers?

Although there are many answers to that question, the one thing they all have in common is that the makeup of the new Congress will determine whether the president’s health care proposals see the light of day.

That was one conclusion reached by two analysts from Mercer, who discussed the possible health care scenarios with InsuranceNewsNet.

What Employers Need To Know About Biden’s Health Care Policies

In a recent blog post, Tracy Watts, Mercer’s national leader for U.S. health policy, outlined a few key elements of Democratic candidate Joe Biden’s proposals that will be of most interest to employer plan sponsors.

Add a public option. This proposal would have the biggest potential impact on employer-based health care and those who sell health benefits.

Biden’s public option would be an option similar to Medicare that would reduce costs for patients by negotiating lower prices from hospitals and other health care providers with better coordination between a patient’s doctors to improve quality of care, and would cover primary care without any copayments.

Reading between the lines, Watts said, it appears this public option would be built on some part of the Medicare chassis – perhaps Medicare ACO networks or Medicare Advantage plans. Pricing for this type of option is unknown.

Where would the public option leave health brokers?

Watts said it’s possible that, as the Affordable Care Act permitted brokers to sell individual coverage, a public option also could be sold by brokers.

Another consideration, she said, is that the public option might cost less than employer-based coverage and how that would impact the small group market.

“There's not enough detail for us to know if the public option might have some type of small group component to it. Because that's the part of the market where there's less flexibility. If you're a small group, you're buying pretty much whatever product the insurance company has filed. So I think you should keep an open mind on it because more options means more potential to consult with your client on those options.”

Ultimately, Congress will need to pass legislation to make that public option a reality, said Geoff Manville, Mercer’s senior director of government relations.

“Congress will need to address whether the public option would be available to everybody - including employees who are offered job- based coverage. And then the question is whether Congress will give the public option what it needs to become really dominant, which is, the ability to force all providers into the system. There's legislation that will do that, but that's a critical question that Congress is going to have to answer.”

Preserve and build on the Affordable Care Act. Currently, individuals with incomes at or above 400% of the poverty level do not qualify for a subsidy on the public exchange, which has made exchange coverage unaffordable for many in the middle class. Watts said Biden’s plan to address affordability issues would eliminate the 400% income cap and lower the limit on the cost of coverage from 9.86% of income to 8.5% for everyone buying coverage on the public exchange. In addition, his plan will base the tax credit on the more expensive gold plan rather than the silver plan.

Lower Medicare eligibility to 60, allow buy-in for younger individuals. Watts said this change would definitely help people who want to retire before age 65 but don’t because medical insurance is too expensive. Lowering the Medicare eligibility age could reduce employer spending if fewer retirees remained in employer plans under COBRA, she said.

Multiple prescription drug cost controls. These include allowing Medicare to negotiate prescription drug prices, limiting preferred pricing during launch of new drugs, limiting pharma price increases to inflation, allowing patients to buy prescription drugs from other countries, and eliminating pharma tax breaks for advertisement spending.

Stop surprise medical bills. The Biden plan would bar health care providers from charging patients out-of-network rates when the patient doesn’t have control over which provider the patient sees. That would address cases where a patient goes to an in-network hospital but doesn’t realize a specialist at that hospital is not in their health plan. However, the plan does not specifically address bills from emergency room doctors, who are almost always out of network.

Watts said the “$100 billion dollar question is: How to pay for these proposals to make health care more accessible?” The Biden plan would go after the capital gains tax rules for the wealthy and roll back some of the 2017 cuts in income tax rates. The capital gains and dividends exclusion is the second largest tax expenditure in the entire tax code: $127 billion in fiscal year 2019 alone.

Trump’s Second Term Health Care Priorities

In advance of the Republican convention, the Trump campaign posted their second-term agenda – Fighting for You. The campaign opted not to launch a detailed policy platform. Rather, they released a bulleted list of “core priorities” organized by policy category, including seven health care-related goals:

Cut prescription drug prices
Put patients and doctors back in charge of our healthcare system
Lower healthcare insurance premiums
End surprise billing
Cover all pre-existing conditions
Protect Social Security and Medicare
Protect our veterans and provide world-class healthcare and services

“If Trump wins and Democrats control the Senate, I think some of the Trump agenda could move forward in a modified form,” Manville said. “There could be some limited support for some tweaks to the ACA and certainly expanded public health and preparedness funding and transparency.”

Reflecting back on Trump’s current term, Watts and Manville said, it appears the President and Republicans have largely moved on from their unsuccessful legislative bid to repeal and replace the Affordable Care Act -- although they continue to support a lawsuit heading for the Supreme Court that seeks to kill the law. While the divided government of the past two years has precluded major legislative changes, the President has used the “power of the pen” to sign executive orders and advance numerous regulatory proposals (some prompted by the COVID-19 pandemic) aimed at supporting telehealth; easing restrictions on health savings accounts; promoting association health plans; lowering drug costs; and improving health care cost transparency.

Here are the biggest open issues Mercer’s report said will need to be addressed should the President win a second term:

If not the ACA, then what?The Supreme Court is scheduled to hear oral arguments on California v. Texas on Nov. 10, immediately following the election. In 2016, the Republican platform was repeal and replace – but what will happen if the ACA is struck down during a second Trump administration is a huge unknown. Mercer noted that preserving protections for people with preexisting conditions – currently guaranteed by the ACA -- is on Trump’s list of core priorities.
What about access to care for the growing number of uninsured?A number of workers lost their employment based health insurance during the pandemic. The Mercer report said the President’s policy list is silent on the issue of what to do about those who lost their coverage.
What does “patients and providers back in charge” mean?Reading between the lines, this could be another way of promoting the idea of competition and price transparency, the Mercer analysis said.

Will employers and their plan members benefit or pay more as a result of these policy goals? It’s hard to tell who would benefit and who would pay, the Mercer report said. There is always a delicate balance between the reimbursement for services under Medicare and Medicaid and the under commercial plans supported by employers. As a general rule, actions that lower spending on public health programs tend to drive up cost in employer plans.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.