It’s safe to say that with any White House transition, change is inevitable. And, we’ve already seen a fair share of changes in healthcare. In Week Three of RESOLVE Increments, we were fortunate to welcome Janet Trautwein, CEO of the National Association of Health Underwriters (NAHU), as our keynote speaker. We’ve had Janet with us before, and I’m not sure I know of anyone who can do such a great job of shining a light on what is going on in Washington and at the state level, legislatively, relative to healthcare.
NAHU is a non-partisan group that represents the interests of health insurance professionals in Washington and at the state level, seeking to promote affordable and responsible financing of private healthcare. They’ve been in existence for 100 years, and Janet herself has been in D.C. since 1997. So, she’s seen how things work in multiple administrations and has a great sense of who the players are, what the playing field looks like today and how that impacts employers and your healthcare benefits.
Below is an edited summary of Janet’s talk. To watch the full replay and gain access to the presentation and resources, go here.
Politics and Policy are Interwoven
Something to recognize before addressing the current administration is this: politics and policy are interwoven. They cannot be separated. And, politicians in Washington and in your home state cannot be expected to act logically or exactly as you want them to act. Their logic is driven by Washington (or state) politics, the unique situation in their home district and their political persuasion. Right now, in Washington, Democrats control the House, Senate and White House. However, that does not mean they can just do what they want.
The Majorities are Narrow
The majorities during the Trump administration were narrow. Now, they are even more so. In the Senate, the split is 50-50, with a tiebreaking vote of 51 being held by Vice President Kamala Harris. This is only the third time in our country’s history that a 50-50 split has existed. And, it has resulted in a unique power sharing agreement between Majority Leader Chuck Schumer and Minority Leader Mitch McConnell. This agreement dictates how committees are split and what issues are brought to the floor. The interest, from the Democrat’s perspective, is that this might enable some work to be done. We haven’t seen that yet, but we can be hopeful.
Implications of a Narrow Split
The 50-50 split in the Senate could mean it will be tough for some legislation to make it through. At least three of the 50 Democrat Senators, Kyrsten Sinema from Arizona, John Tester from Montana and Joe Manchin from West Virginia, serve conservative districts. If a piece of legislation brought by Democrats is in any way controversial, it likely won’t get the votes it would need – and that’s if only a simple majority of votes are needed. That’s not the case due to something called “Regular Order.”
Regular Order makes introducing legislation even tougher. Under Regular Order, everything brought to the floor, a bill for instance, is subject to any sort of objection (e.g., filibuster, parliamentary hold). It then takes 60 votes in the Senate for action, in the form of arguments, to move forward. In effect, this means it requires a supermajority of 60 votes to get any legislation passed. So, if legislation is going to be slowed, there are a few other mechanisms an administration can leverage to get things done.
Some of this is getting in the weeds, but it’s helpful to understand what is going on at this level when you’re making decisions on your health plans. Reconciliation is the budgeting tool that was used to pass Trump’s tax bill, the Affordable Care Act (ACA) and the Bush tax bills with simple majority votes. It can only be used for revenue/direct spending items. There are three reconciliation options available to be used in 2021 and 2022, and one has already been used to pass the American Rescue Plan. Everything Democrats include in Reconciliation must be amenable to all 50 senators to pass – and that is still no small order.
For reference, the COVID-19 American Rescue Plan calls for generous insurance exchange subsidies that include an adjustment to the premium tax credit guidelines temporarily – for 2021 and 2022 – that eliminates the income cap for premium subsidies. That means that regardless of income, no one in the program would have to pay more than 8.5% of their household income for the benchmark plan. There are additional features of the plan including COBRA, unemployment stimulus and PPP loans, but the bottom line is that you should pay attention to expansion or proposed future legislation of the programs and be clear about how these programs will be paid for.
So, what will likely happen in the near-term relative to reconciliation? Two more reconciliation options are available, and it appears one will be used this year for infrastructure. This sounds like roads and telecommunications and the like, of course. It might also include some healthcare such as a public option or a lowering of the Medicare eligibility age. The public option idea is being talked about, so it’s worth noting that it can be a bit like throwing gasoline on the fire. It can be a huge problem because they operate under a different set of rules than the private market. What it can do is create a situation where choices result in not being a new choice but pushing out the choices already there. I wrote an op-ed on this topic for the Atlanta Journal-Constitution. I would view them with caution.
Other Implications of a Narrow Majority
As we’ve seen in prior administrations where the majority was narrow, Presidents will use executive orders to get certain things done. There are things they cannot do with executive orders, but you might be surprised at what they can do. For example, they can’t change a law that exists or spend a lot of money. The filibuster is also a popular topic with numerous op-ed pieces calling for its removal. It won’t go away – not right now. While Democrats may dislike it, they recognize its absence could hurt them down the road when they do not hold a majority. It is something to watch, though.
In Congress, there could be a push for a Medicare for all, but it’s unlikely to pass given the narrow margins and opposition with the Democratic caucus. The Public Option could be in play too, but again it will be hard to overcome the 60-vote requirement in the Senate. What could happen is a lowering of the Medicare age from 62 to 60. There are issues related to Medicare solvency that could impact that and put it on the backburner. Where we are seeing action on the Public Option is in the states, where plans are being advanced at a rapid pace. We’re watching that closely. Lastly, prescription drug prices will continue to be a hot button topic in Congress.
Medicare is projected to be insolvent in three to four years. Don’t panic if you have parents in their sixties, though. Congress will not let that Medicare go insolvent. To some extent they will be forced to act, because to let Medicare go insolvent would be committing career suicide by alienating the strongest voting bloc – Seniors. Politicians will either cut benefits or throw money at it. They will probably choose the latter. This could mean a payroll tax, some other tax or raising the Medicare eligibility age to match up with social security eligibility. It’s unlikely they will raise the age, but they will look at it. This imperative to do something could impact private insurance – for instance, through the removal of current employer tax preferences. That would create some immediate tax obligations for employers and might result in young and healthy people dropping off plans.
Biden and the 117th Congress on Healthcare
Joe Biden likes the ACA and seeks to expand or improve upon it. He has no interest in Medicare for All. He will seek to create a public option and will look to states for help in that effort. We might also see expanded enrollment periods and tightening of ACA rules, possibly for self-funded health plans. It’s unlikely to affect those of you who already have plans but might affect those looking to do it.
There are a few other possible changes – such as a rescinding or revising of association plans. It will be tough for Biden and Schumer to get anything through in Congress given the extremely narrow majority they have and the Senators I’ve mentioned before who don’t toe their party line. Things won’t just sail through.
Major sections of President Biden’s proposals on drug pricing would also require legislative action. Something to watch is the German pricing model. There is a ton of information out there – I recommend Googling it. The German system is not government run; it’s a negotiated model. Through various entities, they have rules about which drugs can come to market. For instance, does a drug provide a new benefit, or is it just a ‘me too’ drug? It’s the most expensive pricing model among EU countries, but it’s way lower than ours.
Another topic that’s relevant is the Surprise-Billing Ban passed at the end of 2020. This will hold patients harmless from surprise medical bills in emergency and non-emergency situations where they don’t have the ability to choose an in-network provider. There is an arbitration component to this, which is not ideal for employers.
The Supreme Court
You might have heard about the case of California vs. Texas, where the argument went like this: Because the mandate went away, the whole law should go down. In other words, the argument said that the ACA is unconstitutional. While this case loomed large in campaign rhetoric, the oral arguments seemed to indicate that the law will survive when the court rules in July or possibly sooner. In these arguments, every one of the justices spoke. It was interesting and unusual in that regard. If parts of the law are found to be unconstitutional, it could spark some negotiations between the Biden administration and congress on how to preserve the law.
Gain full access to Janet’s talk and resources shared at RESOLVE Increments Week Three here.
This is the second year Janet has spoken at RESOLVE Increments. She continues to be a wealth of information. As mentioned in the Q & A period of her talk, the NAHU website is another resource for employers looking to better understand COVID-related legislation, changes to health care, pending legislation and related issues. If you want to talk to me about your benefits plans or anything you heard or read during this year’s RESOLVE, don’t hesitate to reach out to me directly or on LinkedIn.
Transform Your Mindset: Be the Leader You Aspire to Be
Coming up next! In Week Four of RESOLVE Increments we discussed leading in the new world of work. Join First Person’s Dr. Rebecca Ellis and TEDx speaker and artist Phil Hansen for an interactive session where you’ll learn how to turn your challenges into opportunities and be the leader you’ve always dreamed of. Get your on-demand webinar here.