November 20, 2020
The change of administration resulting from the November election will surely have big implications for the healthcare industry. Just how big remains to be seen, as Georgia’s two Senate seats and the fate of the Senate majority remain in question. With or without the Senate, the Biden administration will have a very different agenda than the previous administration with regard to the future of the ACA, pharmaceutical pricing, and many other issues at hand for the US healthcare system.
Probably the biggest change policy-watchers are looking for from the Biden administration will be plans to shore up the still strong but beleaguered ACA, including the potential addition of a public option to the state exchanges.
During the primary season, Biden‘s support for a public option was seen as a watered-down compromise for the center left in the face of the progressive push for “Medicare for all.” It will be interesting to see if a policy discussion around the public option ever occurs, and if anyone will articulate the potentially potent and radical implications of that seemingly small change. Depending on how it’s implemented, a public option could transform the entire healthcare system and achieve many of the goals of the Medicare for all crowd.
A “public option” can mean a lot of things, but let’s assume we are talking about putting one or more government-run plans on each state exchange. These new plans would be accessible to anyone that did not have insurance available through an employer or were unable to afford the plans their employer offers. Depending on the rules for how accessible these public plans would be – meaning just how many people would be eligible to purchase them – they could have a major effect on the rest of the healthcare exchange market.
The two big areas the public option plans would impact would be price and benefit structure. If the public option was widely accessible and cost significantly less than other plans, the rest of the market would have to meet that price or lose market share. Similarly, if the public option included a more generous benefit structure, private insurers would have a strong incentive to offer comparable benefits.
In this way the public option could set standards for both pricing and benefit structure.
If the public option is accessible enough to move states closer to offering basically the same plan for the same price to everyone, that starts to sound a lot like Medicare for all. In this case, though, these very similar plans would be available both directly from the government and from private payers. Less “Medicare for all” and more “Medicare Advantage for all.”
Medicare for all proponents generally advocate for the gradual elimination of the private insurance industry, claiming that Medicare Advantage-style approaches will be too expensive with the health plans adding costly overhead to the process. In my experience, industry experts are very skeptical that we could eliminate – even gradually over a decade – a $1 trillion industry that employs millions of people and constitutes the primary infrastructure for quality data analytics and fraud/waste/abuse detection and prevention for the healthcare system as a whole.
If a public option is introduced, it may well be much less impactful than the scenario described above – especially at first – and the kind of price/benefit normalization process described here could take years to play out. In the end, it could provide just the kind of “soft landing” the US healthcare system needs to finally make access to affordable care universal without destroying the insurance industry to do it.
In any case, the policy changes and debates ahead are sure to create a target-rich environment for healthcare thought leadership, and the Aria team is already engaging with our clients to identify the best topics and POVs to drive success in this new era. Be sure to follow us on Twitter, LinkedIn and Facebook to keep your finger on the pulse of the latest healthcare policies and their impact on the healthcare IT world specifically.
