Biden-Sanders panel pushes public option, targets hospital M&A

• A newly proposed public option would be run by Medicare and theoretically would negotiate rates with providers.
• Several proposals aim to boost enrollment in the ACA marketplaces.
• Increased antitrust enforcement would target hospital “mega-mergers.”

Healthcare recommendations from a panel seeking to unite Democrats ahead of the November elections contain numerous provisions that would directly affect hospitals, including creation of a public option, efforts to stem large mergers and a ban on surprise medical billing.

The wide-ranging plan, which brought together advisers of likely Democratic presidential nominee Joe Biden and former rival Sen. Bernie Sanders, may be adopted as the official platform of both Biden and the party, according to participants. It covers a range of policy areas, with a section on healthcare that was co-chaired by Don Berwick, MD, former CMS acting administrator in the Obama administration.

The central healthcare proposal is a more aggressive version of the “public option” that previously was included in the Biden campaign’s generally worded healthcare proposal. The new proposal would direct Medicare — not private health plans — to administer the government insurance plan that would be sold on the marketplaces created by the Affordable Care Act (ACA) as a way to get closer to universal coverage.

“To achieve that objective, we will give all Americans the choice to select a high-quality, affordable public option through the Affordable Care Act marketplace,” the proposal states.

Specific approaches in the new public option would include:

• Offering a version without deductibles
• Covering all primary care without copayments
• Negotiating prices with physicians and hospitals
• Providing automatic enrollment of “low-income” people not eligible for Medicaid
• Opening eligibility to anyone with employer-sponsored insurance

Policy experts have noted that Medicare does not negotiate rates with providers but instead sets rates that providers must accept if they bill for care provided to Medicare beneficiaries. It remains unclear how any such negotiation would function.

“I would imagine they would be using Medicare and Medicaid as rates that have already been arrived at and accepted among different groups of providers,”  said Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation. “They would use those as a starting point and then have some sort of interaction with providers about it.”

Colorado proposed and Washington approved their own public options, administered by private health plans. Those states are split as to requiring hospitals to participate in plans that set rates as a share of Medicare payments. Establishing a mechanism to compel hospital acceptance of the public-option health plan will be key, Hempstead said.

Hospital advocates have opposed creation of a public option over concerns that it would hurt revenue. A government-run, Medicare-like option would reduce hospital payments by nearly $800 billion over 10 years, according to a study by KNG Health Consulting released by the American Hospital Association and Federation of American Hospitals.

ACA marketplaces would undergo changes

The plan also seeks to build on the ACA by buoying the individual-coverage marketplaces created by the law.

Changes to the ACA marketplaces would include:

• Limiting premiums to 8.5% of enrollees’ incomes
• Eliminating limits on premium subsidies
• Expanding funding for ACA outreach and enrollment programs

Such provisions echo policies California added for the 2020 coverage year. Even though the state spent $429 million to expand subsidies for enrollees earning up to 600% of the federal poverty level, reinstituted an individual-mandate penalty and spent $121 million on marketing and outreach, 2020 open enrollment increased by only about 25,000, or 1.6%. Although 1.5 million Californians were covered for 2020,  another 970,000 who were eligible for coverage remained uninsured, according to an analysis by the UC Berkley Labor Center.

The 2020 California results — after huge spending increases — don’t bode well for similar steps included in the new plan, said Robert Moffit, PhD, former chairman of the Maryland Health Care Commission.

“The lesson is, ‘Don’t do that,’” Moffit said.

More changes to healthcare coverage

The Democratic plan also would implement several emergency measures “until the [COVID-19] pandemic ends and unemployment falls significantly.”

Those provisions include:

Opening ACA marketplace enrollment beyond the normal open-enrollment season

Opening eligibility for no-premium public-option plans for adults in states that have not expanded Medicaid

Medicaid provisions include:

• Adding incentives for states to expand Medicaid eligibility to the extent allowed by the ACA
• Making permanent a coronavirus-related 12% increase in the federal share of Medicaid funding
• Requiring states to maintain current eligibility levels, even in recessions

Other provisions of the plan include:

• Doubling federal spending on community health centers and rural health clinics
• Banning surprise medical billing
• Increasing price transparency “across all payers”
• Reducing paperwork through uniform medical billing
• Using antitrust laws to restrain “mega-mergers” by hospitals
• Lowering the Medicare eligibility age from 65 to 60
• Supporting healthcare workers’ “ability to join a union and collectively bargain”

The pro-union provision appeared to target lower-paying segments of the healthcare sector.

“We believe all employers funded by taxpayer dollars must pay their workers at least $15 an hour and protect workers’ rights to organize,” the report states.