Dems getting behind private insurance to bolster coverage
WASHINGTON » Democrats spent much of the 2020 presidential primary debating the best way to expand public health insurance. They sparred over whether to enroll everyone in public coverage — the preferred policy of Sen. Bernie Sanders — or to give everyone a choice to do so, the public option plan that President Joe Biden supports.
The candidates repeatedly proposed a future in which private insurers play a diminished role in the U.S. health system or no role at all.
But the first major legislation of the Biden administration, if it passes in the Senate, moves in the opposite direction: It proposes spending billions to expand private health insurance coverage to millions more. The American Rescue Plan, a $1.9 trillion stimulus package that the House passed last week, would increase government subsidies to health insurers for covering recently laid-off workers and those who purchase their own coverage.
The new subsidies do not preclude future legislation that could make public plans more available. Some congressional aides say they are already laying groundwork for the inclusion of a public option plan in a legislative package expected later this year. And the stimulus package does introduce an incentive for states to expand public coverage through Medicaid, though it is unclear whether any states will take it up.
The decision to start with subsidizing private insurance shows how it can often be the path of least resistance when legislators want to expand coverage. The changes can slot neatly into a preexisting system and tend to garner support from the health care sector (which benefits).
“The politics of expanding public coverage in a way that would shift people to public insurance gets tricky really fast,” said Karyn Schwartz, a senior fellow at the Kaiser Family Foundation. “There are very concrete losers: the providers who would see their payments go down.”
Private health plans cover 176 million Americans, outnumbering the combined enrollment of Medicare and Medicaid. The stimulus plan would probably increase private insurance sign-ups by a few million people with the new subsidies it provides to those buying their plans.
The American Rescue Plan spends $34 billion expanding the Affordable Care Act subsidies for two years. The changes would make upper-middle-income Americans newly eligible for financial help to buy plans on the Obamacare marketplaces and would increase the subsidies already going to lower-income enrollees.
The stimulus also subsidizes private health insurance premiums for newly unemployed workers. They typically have the opportunity to purchase their former employers’ health benefits through a federal program called COBRA, which can often be prohibitively expensive because the employer is no longer paying a share of the worker’s premium.