Tough Budgeting Choices Ahead — Human Infrastructure
The House and Senate Democrats are facing tough choices on the budget reconciliation measure. This is also called soft infrastructure or human capital. The Progressive Dems want to spend $3.5 trillion over the next 10 years; the moderate Dems want to spend $1.5 trillion. There is also a question as to how it should be paid for. Senate and House Republicans are unalterably opposed to the package.
We know only the headlights of what is in the package: refundable tax credits for children, child care subsidies, universal pre-K, free community colleges, climate change, health coverage expansion, among others. It is paid for in whole or in part by repealing the Trump tax cuts for the wealthy.
I know a little about the health care side of this equation.
· Medicaid coverage for the poor in the Republican led states, primarily in the South, who have refused the Medicaid expansion.
· Coverage for dental, vision and hearing through Medicare for the seniors and the disabled.
· Increased subsidies for gig workers and others purchasing coverage through the Exchanges.
· Medicare negotiated reimbursement for prescription drugs.
The ACA covered all low-income US citizens below a certain income level through state Medicaid programs. The federal government would pay 100% of the costs, and this would slowly be decreased to a 90% federal match. The Supreme Court held this expansion was optional with the states not mandatory as Congress had envisaged. National Federation of Independent Business v. Sebelius, 567 U.S. 519, (2012) There are now an estimated 2+ million uninsured low-income adults in 12 states who could be helped, mostly residing in Texas, Florida, Georgia, and North Carolina. https://www.kff.org/medicaid/issue-brief/the-coverage-gap-uninsured-poor-adults-in-states-that-do-not-expand-medicaid/ And there are another 1.8 million low-income adults (100-133% of FPL) who would shift from the federal Exchanges into Medicaid in these twelve states. Virtually all (97%) live in Southern states. Over half are low wage working whites; very high percentages as well are low wage African American and Hispanic workers. The Commonwealth Fund projects the annual cost of expanding Medicaid in the non-expansion states is $30 billion annually, as contrasted with $22-28 billion if the expansion is through the federal Exchanges. https://www.commonwealthfund.org/publications/issue-briefs/2021/jun/filling-gap-states-not-expanded-medicaid The lower cost using the Exchange model is due to fewer people dropping their employment-based coverage to use the Medicaid expansion. It can and will and should be argued that this is not a new cost since the expansion was part of the costs incurred and paid for in the original Affordable Care Act (ACA) of 2010.
One question is how should their coverage be structured: Medicare, the Exchanges or Medicaid? The federal government already operates Medicare in these states; it may be easiest to use Medicare reimbursement rates and the existing delivery system, but with no copays or deductibles. The federal Exchanges already offer private insurance and a delivery system; again it would be easy to use that system, but with no copays or deductibles. Medicaid is the existing system for the poor with Medicaid; it is operated pursuant to state rules on reimbursement and delivery systems. There is no assurance that the non-expansion state legislatures and Governors won’t change these rules; such changes could be for the better or for the worse, but would align the systems of coverage and reimbursement rates with the rest of the Medicaid population.
Another question is who should determine their eligibility -- the Social Security Administration (SSA) or the federal Exchanges or the state welfare system? Social Security Administration already determines eligibility for Medicare and Social Security; it should be easy to administer eligibility for the Medicaid expansion eligible population. The federal Exchanges administer eligibility for Exchange coverage and could readily add in determining eligibility for the Medicaid expansion eligibility group. Given the hostility to the ACA at the legislative and gubernatorial levels in the non-expansion states, it makes little sense to use their state welfare system to determine and administer their eligibility. This is unfortunate as it adds complexity to what is already a too complicated system of health coverage.
Medicare does not cover vision, dental or hearing. Yet treatment for each of these conditions becomes ever more necessary and prevalent because as we age, we have higher needs for each of these services. https://www.cbpp.org/research/health/medicaid-and-medicare-enrollees-need-dental-vision-and-hearing-benefits Most states cover these services in their Medicaid programs; yet a number of states like Alabama do not. https://www.cbpp.org/research/health/medicaid-and-medicare-enrollees-need-dental-vision-and-hearing-benefits While some higher income seniors can afford to pay for these services out of pocket or can buy private coverage for these services, most seniors face financial difficulties affording them and experience serious health consequences as a result of not getting timely or any care. Congress could extend Medicare Part B to cover these services; Part B is 3/4th funded by taxes and 1/4th by premiums from enrollees. CBO estimated the ten-year cost at $358 billion to expand coverage for these services to seniors and the disabled.
The Exchanges offer subsidized private individual coverage for low, moderate, and middle-income uninsured individuals. The subsidies take two forms – premium assistance and cost sharing assistance. The Biden plan is to increase these subsidies in several ways: 1) eliminate them for persons with incomes below 150% of FPL, 2) eliminate the premium assistance cap at 400% of FPL, and 3) increase premium assistance subsidies across the board. https://www.cnbc.com/2021/04/28/biden-wants-to-permanently-extend-enhanced-obamacare-premium-subsidies.html It would help gig workers, the unemployed, the uninsured and others without access to either employment-based coverage or state Medicaid – a potential population of up to 30 million Americans (half already in the program and half eligible but not enrolled) could get lower cost coverage through the Exchanges. This is already the law for the next two years as a part of the American Recovery Act passed by the Democrats and signed by President Biden earlier this year.
Americans pay extremely high prices for prescription drugs – about 250% higher than the average of other developed nations. https://www.rand.org/news/press/2021/01/28.html The Biden plan would allow Medicare to negotiate the prices of drugs with the pharmaceutical manufacturers. Savings could be up to $400 billion over a decade. https://www.biopharmadive.com/news/biden-medicare-drug-price-negotiation-proposal/604898/ and https://www.commonwealthfund.org/blog/2021/prospects-drug-pricing-reform-under-biden-harris-administration Needless to say the pharmaceutical industry and its congressional allies are strongly opposed and highly influential; they point for example to their critical role in developing Covid 19 vaccines. If Medicare negotiations with the drug makers is a part of the budget reconciliation package, it would offset some of the cost of the coverage expansions.
So as the old song from mine worker organizing in Harlan County goes “which side are you on boys, which side are you on” — the uninsured poor in the South, the seniors and disabled across the nation, the uninsured gig workforce and the unemployed in all 50 states, or the drug manufacturers and the wealthy who have benefited so greatly from the Trump tax cuts?
You might want to write your Congressperson with your views on the Budget Reconciliation package being debated in Congress.
Lucien Wulsin
10/3/21