Deep dive: How health policy is expected play out under the Biden administration
Many of the platform positions advocated by the Biden-Harris team do not directly affect employer-sponsored health plans but will have indirect implications.
Now that the 2020 election is over and the transition is taking place it’s time to take a look at health care policy under the new administration. What’s going to happen to the ACA? Can employers count on COBRA subsidies? And what’s the story with price transparency? People keep asking, how is a Biden administration going to treat health care differently than Trump’s administration? Let’s take a deep dive together.
When it comes to health care policy, the Biden administration is likely to focus on solving significant challenges to the health care system, rather than modifying employer-sponsored coverage. Many of the platform positions advocated by the Biden-Harris team do not directly affect employer-sponsored health plans. However, we can get a glimpse of the implications for plans by looking at the Biden platforms generally supports.
Related: Biden aims to work with Republicans on health legislation
If the Democrats win the two pending Georgia senate elections, they will, with the addition of the vote of Vice President Kamala Harris, be able to use the budget reconciliation process to pass most legislation, including potentially changes to the tax code and to some of the provisions of the ACA. If Republicans retain control of the Senate we may see the Biden administration using the regulatory process to affect policy change rather than legislation.
First up: The COVID pandemic
Employers can expect that the discussions around a COVID-19 relief package could include aid to state and local governments, additional funds for testing and vaccine support, and employer liability waivers.
The first challenge for the new administration will be addressing the coronavirus public health emergency. If a stimulus bill is not enacted during the lame-duck Congress, President-Elect Biden will likely move to enact one. The size and scope of a stimulus package will depend on the state of the economy, scope of unemployment, and the level that the pandemic has reached.
Employers can expect that the discussions around a COVID-19 relief package could include aid to state and local governments, additional funds for testing and vaccine support, and employer liability waivers. And group health plans could be mandated to cover treatment of COVID-19 in addition to testing and vaccines. Although lobbying continues by employer groups to obtain a COBRA subsidy similar to that in the American Recovery and Reinvestment Act (ARRA), the latest bill passed by the House does not contain a COBRA subsidy. The bill instead would allow unemployed workers to obtain subsidized coverage in the ACA Exchanges. We may also see some help for employers with flexible spending accounts to allow money from 2020 to be carried over and be used in 2021.
Employers will also face internal challenges. They must consider whether to adopt policies concerning the vaccine, how to address remote work needs and obtaining needed protection supplies for workers. They will also need to address the significant impact the pandemic is having on the mental health of workers and their families. Paid leave programs under the Families First Act and CARES Act expire on December 31, 2020. Congress could extend or modify these leave programs in a new stimulus bill.
Employers will need to pay attention to leave policies – both paid and unpaid, as more workers will need to isolate or quarantine due to COVID-19 exposure. Employers also need to address technology challenges exacerbated by the pandemic, such as the need to obtain scarce hardware and the increased risk of cybersecurity attacks.
Expanding health care access
Assuming that the ACA structure continues, we can expect that the Biden administration will take regulatory action to strengthen the ACA and attempt to expand coverage.
Once the coronavirus stimulus package is adopted, Biden may turn to other programs endorsed during the election, including overturning the Trump tax cut and expanding the Medicare program to those age 60 and above. To the extent these types of large price-tag proposals are considered, lawmakers will look for ways to pay for them. Often, in these circumstances, they will consider whether to continue or modify the exclusion from taxation for employer-sponsored health coverage. The much-loathed excise tax on high-cost health plans (also known as the “Cadillac Tax”) was repealed but many economists continue to support some sort of tax on employer-sponsored health coverage. The current exclusion from taxation for health coverage is the single greatest tax expenditure in the federal budget. Therefore, it would not be surprising to see some parties attempting to modify it, although this was not part of the Biden platform.
An important bellwether for the Biden administration is the U.S. Supreme Court case of California v. Texas, a challenge to the constitutionality of the Affordable Care Act. The Trump administration asked the Court to invalidate the entire Act because the individual mandate had been reduced to zero by Congress in 2017. However, most observers believe the Court will make a more limited decision that leaves most of the ACA intact.
Assuming that the ACA structure continues, we can expect that the Biden administration will take regulatory action to strengthen the ACA and attempt to expand coverage. Biden has proposed a public option, expanding subsidies to purchase coverage, and modifying the ACA “firewall” to permit employees to choose a subsidized Exchange plan even if they have access to employer-sponsored coverage. But these ACA expansion proposals will be difficult to enact if Congress is divided.
In 2019, employer-sponsored health plans covered 158 million Americans, up from 148 million in 2010 when the Affordable Care Act was passed. Employers have met the challenges of the ACA, including complying with the employer shared responsibility penalty, providing mandated coverage, and adapting to various federal rules implementing these provisions. Plan sponsors also successfully fought back the threat of taxation of health coverage with a forceful repeal of the ACA’s Cadillac Tax.
Restoring employee protections
The Biden administration is likely to focus on civil rights, including diversity and inclusion (D&I) initiatives, LGBTQ rights, and women’s health issues.
Now that the situation has been placed in context, let’s turn to the regulatory environment. During the Trump administration employers worked hard to address long-standing health plan issues, including the cost of prescription drugs, coverage of new treatments such as biosimilars and genetic therapy, and increasing adoption of health savings accounts. On the whole, few regulatory developments began during that administration, although employers did see an increase in enforcement actions from federal agencies. There was a large uptick in health plan audits concerning the ACA’s health mandates, the Mental Health Parity and Addiction Equity Act (MHPAEA), and the privacy and security provisions of the Health Insurance Portability and Accountability Act (HIPAA).
It is likely that the Biden administration will use executive orders to overturn some aspects of the previous administration’s rules. However, in many cases, rules will have to be revised using a full notice and comment process, not merely by an executive order. Consequently overturning certain rules could take a much longer time to see results. The Biden administration is likely to focus on civil rights, including diversity and inclusion (D&I) initiatives, LGBTQ rights, and women’s health issues.
The U.S. Supreme Court decided in Bostock v. Clayton County Court that federal protections against workplace sex discrimination under Title VII of the Civil Rights Act of 1964 extend to discrimination based on gender identity and sexual orientation. The Biden administration is likely to move forward on similar civil rights issues by reviewing Trump administration orders that discouraged D&I training and changed rules for what constitutes discrimination on the basis of sex will likely be reviewed.
Employers should pay special attention to coverage of same-sex spouses and gender dysphoria treatment as these may be areas of concern for the new administration. Biden may also focus on wellness issues, particularly if the Equal Employment Opportunity Commission (EEOC) issues its long-awaited wellness regulations.
Prepare for price transparency
Employers will need to undertake substantial efforts to work with their technology services, provider networks and pharmacy benefit managers to assure that they can provide appropriate data to participants making health care choices.
While many rules may be revised under the Biden administration, other parts might survive. The Trump administration issued several rules governing health care transparency, which require both hospitals, and health plans to publish prices for services. In addition, by 2023, non-grandfathered employer-sponsored health plans will be required to provide plan participants access to an internet self-service portal. This is in order to enable employees to obtain real-time cost-sharing information about future medical care. Employees must be able to search for procedures and determine their costs and select providers. Employers will also need to assure that they have a compliance plan to work through implementation of the transparency requirements.
Although the Biden administration could modify the transparency rule, or it could be challenged in litigation, the rule is consistent with the ACA and has been endorsed as a potential game-changer for the health care industry.
If this rule continues, employers will need to undertake substantial efforts to work with their technology services, provider networks and pharmacy benefit managers to assure that they can provide appropriate data to participants making health care choices. In addition, the transparency regulation may be a natural extension of the use of technology by employers in all aspects of the benefits delivery relationship. Employers may wish to pay attention to aggregation of technology platforms used by employees and may find that they are able to get better access to health payment data.
Finally, employers may face renewed demand for a variety of benefit options due to changing demographics in their workforce. Benefit design options, such as high deductible health plans, may be more popular among different groups. However, federal rules may not keep up with employers’ needs for flexibility in benefit design offerings.
All in all, when it comes to health policy, the most important lesson learned from the last ten years may be that employer-sponsored coverage is popular, flexible, and enduring, but that plan sponsors should be prepared for continuing challenges.
Kathryn Bakich is national health compliance practice leader and senior vice president at Segal, the employee benefits consulting firm. With over 20 years of experience in health care compliance, Bakich has been recognized as one of the country’s leading experts on employer-sponsored health coverage. Bakich specializes in providing research and analysis on federal laws and regulations affecting health coverage.
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