For Biden’s potential HHS pick, priorities include public option, hospital M&A, cost control

• If he wins the presidency, Joe Biden will push for a public option with lower rates for hospitals, an adviser says.
• Increased enforcement of hospital M&A would be likely under Biden.
• Congress this fall likely will approve another COVID-19 relief package worth $1.5 to $2 trillion.

A longstanding Washington, D.C., healthcare policy adviser whom some see as a likely pick to lead the Department of Health and Human Services (HHS) identified leading healthcare priorities of a Biden administration, including pursuit of a national, government-run health plan option.

Chris Jennings, an adviser to Democratic candidate Joe Biden’s campaign and a former healthcare official in the Obama and Clinton administrations, is seen by some healthcare policy advisers as a leading contender to be HHS secretary if Biden is elected. The high-profile consultant has been quiet on social media in recent months, which some see as indicating his candidacy for a senior federal role.

However, Jennings in August addressed the National Academy for State Health Policy meeting and underscored healthcare policy priorities that a Biden administration is likely to  pursue, including a so-called public option, increased antitrust enforcement of hospital mergers and acquisitions (M&A), and price negotiations with hospitals.

Implementing a public option

Jennings highlighted Biden’s proposal to add a government-run public option to all individual health insurance markets, which would offer a lower-cost coverage plan with more generous benefits than the standard Silver tier plans. Eligibility also would be expanded to more uninsured and to those with employer-sponsored health plans.

Widely opposed by health plan and hospital advocates, the public option would be funded through higher federal subsidies and reductions in payment rates to providers.

It would include “a more subsidized benefit package that can access reimbursement rates that are lower than we’ve seen in the employer-sponsored coverage that we see now,” Jennings said.

The public option — including its wider eligibility compared with Affordable Care Act (ACA) marketplace plans — is seen by healthcare policy advisers as an effort to compromise with the more liberal wing of the Democratic Party, led by Sen. Bernie Sanders (I-Vt.), who wanted a single-payer system. Jennings worked on the healthcare policy compromise the camps reached in July.

However, it remains unclear how a Biden administration would negotiate rates with hospitals and other providers, as called for in the plan.

Jennings said he did not think the high-profile role of hospitals in combating the COVID-19 pandemic would undermine a Biden administration’s efforts to target payment rates.

“At some point, it becomes unsustainable when you look at the differences the group marketplace is paying and everyone else in Medicare and Medicaid,” Jennings said. “And you’re seeing states react to that already.”

Washington and Colorado have been moving toward their own public-option plans, although Colorado throttled back its initiative in response to the pandemic.

Scrutinizing hospital consolidation

Jennings also anticipates increased antitrust enforcement of hospital M&A by a Biden administration.

As with the proposal to set lower payment rates as part of a public option, Jennings said he did not expect hospitals to succeed in opposing increased enforcement of M&A.

“I don’t think the issue [of anti-trust enforcement] goes away, but I’m sure the hospitals would want it to,” Jennings said.

Dean Rosen, a partner at Mehlman Castagnetti Rosen & Thomas, questioned whether a Biden administration would undertake much antitrust enforcement of hospital deals.

“The Republicans have been much more willing to take on hospitals than the Democrats,” said Rosen, formerly an adviser to then-Sen. Bill Frist (R-Tenn.).

He cited the “tepid” cost controls in the ACA, which was broadly supported by hospitals. In contrast, the Trump administration has targeted hospitals for savings through cuts to the 340B drug pricing program and price transparency initiatives.

“I would be surprised if there is major antitrust actions or oversights against hospitals, or even hearings,” Rosen said.

Post-acute care changes could be in store

This summer, Biden proposed a $450 billion initiative to encourage state Medicaid programs to expand home and community-based care for low-income older adults and younger people with disabilities. He estimated the program would eliminate Medicaid community care waiting lists for 800,000 people.

However, those who need long-term supports and services but are ineligible for Medicaid would not qualify. Estimates place the number of such people in the millions.

“As much as [the funding] sounds, it quickly gets spent up when you look at these populations,” Jennings said.

In terms of nursing home financing, Jennings said, “There is a great deal of interest in looking at alternatives” to Medicaid funding. Financial challenges include the open-ended nature of such care, whether congressional Democrats would agree to enrollment caps and whether congressional Republicans would authorize more federal funding.

“I want to give a fair and balanced vision of both my excitement [about] the opportunity but also a recognition that there’s going to be a question about resource allocations for all of the priorities that people have going forward, post-COVID,” Jennings said.

Jennings’ caution is justified, said Rosen, because Sanders and other far-left Democrats have warned that they plan to renew their push for single payer and other priorities after the election.

But before a Biden administration could undertake any major healthcare policy initiatives, Jennings said, it will first have to steer the pandemic to a close.

Short-term policies to watch for

This fall, Jennings and Rosen expect Congress to approve another COVID-19 relief package.

However, it’s unclear whether it will include more funding for Medicaid, in which enrollments have increased amid higher unemployment. Jennings said a deal on Medicaid is complicated by differing state positions related to federal requirements on policies like maintenance of effort protections.

“There’s hope, but I think Medicaid [funding] is going to be hard” to include in a COVID-19 package, he said.

Rosen said he expects Congress eventually will provide $1.5 trillion to $2 trillion, with some earmarked to states.

Jennings said he expects Congress also will approve a new round of “Medicare extenders,” which are annually reauthorized provisions that affect Medicare payments to various types of providers.