Back to Obama Care

In many ways, President Joe Biden is promising a return to the Obama administration’s approach to healthcare, with proposed actions including building on the Affordable Care Act (ACA) through incremental expansions in government-subsidized coverage, continuing CMS’ progress toward value-based care, bringing down drug prices and supporting the modernization of the FDA.

The online health insurance marketplace under the ACA, known as Obamacare was reopened by Biden. By September, nearly three million Americans have signed up for health insurance on the U.S. government website Healthcare.gov during a special enrollment period that began on Feb. 15. Biden said altogether 12.2 million Americans are enrolled in coverage under the Affordable Care Act, which is an all-time high. More than four in 10 Americans who gained coverage during the special enrollment period found a plan for $10 or less a month.

Expansion of Healthcare Program

ACA is the federal insurance program to expand Medicare and Medicaid for the elderly and poor. This plan which offers lower costs to consumers is part of President Joe Biden’s broader $1.75 trillion domestic spending package – The Build Back Better Framework.

In specific, the plan:

Strengthen the Affordable Care Act and reduce premiums for 9 million Americans. The framework will reduce premiums for more than 9 million Americans who buy insurance through the Affordable Care Act Marketplace by an average of $600 per person per year.

Close the Medicaid coverage gap, leading 4 million uninsured people to gain coverage. The Build Back Better framework will deliver healthcare coverage through ACA premium tax credits to up to 4 million uninsured people in states that have locked them out of Medicaid. A 40-year-old in the coverage gap would have to pay $450 per month for benchmark coverage — more than half of their income in many cases. The framework provides individuals $0 premiums, finally making health care affordable and accessible.

Expand Medicare to cover hearing benefits. Only 30% of seniors over the age of 70 who could benefit from hearing aids have ever used them. The Build Back Better framework will expand Medicare to cover hearing services so that older Americans can access the affordable care they need.

Biden’s COVID-19 Action Plan

On September 9, the Biden administration announced a new COVID-19 Action Plan, titled “The Path Out of the Pandemic.” Biden is implementing a six-pronged approach to combat COVID-19.

The six approaches include:

Vaccinating the unvaccinated by reducing the number of unvaccinated Americans through regulatory powers and authorities that will increase the number of Americans covered by vaccination requirements, predominately in the workplace. The plan also aims to provide paid time off for workers to receive their vaccinations.

Further protecting the vaccinated through the administration of booster shots this fall to vaccinated Americans, pending authorization of the boosters by the U.S. Food and Drug Administration (FDA) and the CDC’s independent Advisory Committee on Immunization Practices (ACIP).

Keeping schools safely open by implementing new safety protocols for schools that include indoor masking policies, improved ventilation and regular testing for students and staff. The plan also requires staff federally run educational facilities to be vaccinated and calls on states to adopt vaccine requirements for all school employees.

Increasing testing & requiring masks by ramping up COVID-19 testing production, improve at-home testing affordability and expand free testing at community health centers, food banks and pharmacies. Continue to require masking on federal property and on public transportation.

Protecting our economic recovery by providing support to small businesses and individuals affected by the COVID-19 economic fallout through various improvements and expansions on Small Business Administration (SBA) programs such as the Economic Injury Disaster Loan, the Paycheck Protection Program forgiveness process, and the SBA Community Navigator Program.

Improving care for those with COVID-19 by providing federal support to hospitals and other local public health systems.

What can health industry executives expect?

Broadly, healthcare executives can expect an administration with an expansionary agenda, looking to patch gaps in coverage for Americans, scrutinize proposed healthcare mergers and acquisitions more aggressively and use more of the government’s power to address the pandemic.

All healthcare organizations should prepare for the possibility that millions more Americans could gain insurance under Biden. This could mean millions of new ACA customers for payers selling plans on the exchanges, millions of new Medicaid beneficiaries for managed care organizations, millions of newly insured patients for providers and millions of covered customers for pharmaceutical and life sciences companies. The surge in insured consumers could mirror the swift uptake in the years following the passage of the ACA.

Exhibit 1: Joe Biden’s Plan: Likelihood and Impact

Implications on Payers and Providers

Payers in this market should consider how and where to expand their membership and appeal to those newly eligible for Medicare. Payers not in this market should consider partnerships or acquisitions as a quick way to enter the market, with the creation of a new Medicare Advantage plan as a slower but possibly less capital-intensive entry into this market. They should use this opportunity to design more tailored plan options and consumer experiences to enhance margins and improve health outcomes.
Providers have faced some revenue cuts, particularly in the 340B program, and many entered the pandemic in a relatively weak liquidity position. The pandemic has led to layoffs, pay cuts and even closures. HRI expects consolidation in the months ahead as the pandemic continues to curb the flow of patients seeking care in emergency departments, orthopedic surgeons’ offices, dermatology suites and more.
Lawmakers and politicians often use bold language and propose bold solutions to healthcare problems, but the government and the industry itself resist sudden, dramatic change, even in the face of sudden and dramatic events such COVID pandemic.

Conclusion

In response to the COVID-19 pandemic, the Biden administration continues to pursue plans to expand vaccination. Large numbers of workers will be required to be vaccinated. Schools and the economy will remain open. Moreover, the Biden administration is expected to return to Obamacare, dramatically expanding government health coverage. This means that a large number of providers, healthcare management organizations and pharmaceutical companies will enter the market to share in the potential profits.