U.S. Healthcare Industry Projected Impact from a Biden Administration
Since Theodore Roosevelt, American presidents have endeavored to reform healthcare. President Trump ran in 2016 on “repealing and replacing Obamacare” or the Affordable Care Act (ACA) however, no new plan ever emerged. Even in the 2020 election, President Trump did not propose a new healthcare plan. On the other hand, Vice President and now President-elect Joseph R. Biden Jr. ran on a plan to strengthen the ACA, and expanding it, at one point calling it “Bidencare” during the U.S. presidential debate.
Having witnessed many U.S. presidents, and their battles with reforming healthcare dating back to the early 1990s, we are left with some undeniable facts.
- The healthcare growth rate has not changed materially in 20 years.
- Healthcare costs have accelerated due to material changes and expansions in the laws. The two biggest being the creation of Medicare Part D in 2003 by President George W. Bush, and Obamacare in 2010.
- The healthcare industry does well regardless of the party in the Oval Office. The biggest net beneficiaries are insurance companies, big Pharma and then, every other player respectfully.
- The largest negative impact over the growth, even of healthcare cost, has been on physicians, specifically, independent physicians.
A Biden Administration will seek to leave its own impact.
First, on November 10 the Supreme Court of The United States (SCOTUS) will hear a case on a technical issue relating to the severability of the individual mandate in the ACA requiring everyone to have ‘ACA approved’ healthcare or face a “tax penalty” on their personal income tax. This case (California vs. Texas) essentially addresses the elimination, or severing, of the “tax” or individual penalty from the rest of the ACA. Even though this has been “zeroed” out by law, it remains a part of the law and is being challenged based on its constitutionality.
During the race for presidency and the confirmation of now Associate Justice Amy Coney Barrett, this SCOTUS case was part of a narrative that could repeal the entire ACA; the possibility of that outcome could leave millions of uninsured Americans, and provisions to protect people with pre-existing conditions, from losing coverage or impose draconian higher insurance premiums could materialize.
With the election now over, we believe that the chances of the SCOTUS repealing the ACA are not-zero however, very near zero, as the repeal of the ACA is not before the high court. The ACA was always a slackly written law, unlike most major laws, that did not address the issue of whether it’s a part of the law; if found unconstitutional, could be severed without disrupting the rest of the law. In addition to being ineptly written, it has been even more negligently regulated. The better odds appear to be either a unanimous or a significant majority of the justices will agree not to “sever” or remove the individual mandate from the ACA, leaving in place the “tax” or penalty in the law that could possibly be revived by the Biden Administration. No way do we see that the SCOTUS would find that the “intent” of Congress was to have an all or nothing provision that initially had such an impact on Americans.
Second, everything else. President-Elect Biden is on record many times for his nearly religious defense and support of the ACA. The ACA has improved access to healthcare to millions of Americans, and for that he should be very proud. He has said that he would expand subsidies to cover more Americans and expand the nearly dead public exchanges. Biden has also stated that he is not a supporter of “Medicare for all” or a single payor system however, he does believe that a public option is good for Americans. This allows individuals to “effectively” buy into Medicare as part of the ACA.
Medicare/Medicaid provides full government paid healthcare to 115 million Americans, more than one-third, today.
Medicare today is automatic for people 65 and over. The Biden Administration has proposed changing the automatic enrollment at age 60, which would add about 20 million Americans to the Medicare program immediately which would add approximately US$200 billion to the current costs of US$640 billion per year.
On Medicaid, President-elect Biden has stated he will seek to build upon the state Medicaid expansions, allowing people in the states that have not expanded to still benefit by using the ACA public option, providing them access to Medicaid expansion.
Also, expanding Medicaid to DACA beneficiaries awaiting a permanent adjustment to their immigration status and remove the limits on “public charge” for renewal of their immigration condition.
The Biden Administration proposes full subsidies for those who have lost their jobs and strangulated paying COBRA premiums to maintain their health care insurance.
President-elect Biden supports a ban on surprise medical billing without details, plus would use new programs to negotiate prices with hospitals and providers, an agenda initiated by the Trump Administration when Congress was given a mandate to legislate an end to this practice by December 31, 2020.
The most interesting part is that the Biden Administration would likely propose to build on what President Trump has already started by seeking to allow the entire federal government (today only the Veteran’s Administration has this ability) to negotiate prescription drug prices, something that until now has been prohibited by law. This would be a dramatic opportunity to reduce costs particularly in the Medicare program.
The industry winners and losers
Managed care is likely to be a huge winner with the expansion of Medicare/Medicaid and the ACA. Additionally, the natural demographic migration of nearly 10,000 Americans reaching age 65 daily that will continue to chronicle Medicare enrollments for the next decade will continue to drive healthcare opportunities, in particular managed care companies and providers.
Pharmaceutical companies will have challenges, receiving both sound and adverse news with the expansion of coverage and the downward pressures on prices. Hospitals and providers will see positive news on patient encounters with the expansion and likely greater affordability of healthcare coverage; however, they may also see pricing pressure on many procedures performed. Those in managed care will be net beneficiaries of this.
In summary, we anticipate the gross healthcare industry revenues will likely increase materially under a Biden Administration perpetuating, and perhaps even increasing, the traditional healthcare spending rate.
About OXIO Health®, Inc.
OXIO Health, Inc. is a new, multifaceted healthcare innovations company that realized medical care and medical technology had to be merged in a new, 21st century site, to bring more value and improve quality; much of which still remains elusive in healthcare today. Healthcare in the U.S. today is a US$3.5 trillion industry with expectation to reach over US$6 trillion by 2030, as 10,000 new baby boomers reach retirement age daily through this period. We have assembled the best systems in our Portfolio of Companies driven to be a change agent in this industry that has resisted change for 50 years; however, due to the lessons-learned from the COVID-19 pandemic, are now accepting of these needed changes in the delivery of care.
For more information visit www.oxiohealth.io
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Healthcare 2030 Podcast: http://oxiohealth.io/podcasts/
Noel J. Guillama, President