Health Policy: What Progressive Democratic Control Means

Americans can expect the federal government to soon exert much greater direct control over their healthcare. The reason: Self-styled “progressive” Democrats won a 2020 electoral trifecta, and control not only the White House and the House of Representatives, but also the Senate.

Progressive Democrats have repeatedly outlined the key elements of their health policy agenda in campaign pronouncements, detailed policy papers, and meticulously drafted legislative proposals for years. Many of these proposals go back decades. So, no one should be surprised.

We can we anticipate, at the very least, an effort to create a new government health plan -- the so-called “public option” -- to compete directly against private and employer-sponsored health insurance. We can also expect more taxpayer subsidies for Obamacare plans, the expansion of existing federal entitlements (especially Medicare and Medicaid), and tighter restrictions on the authority of states to permit the sale of alternative insurance products that don’t conform to rigid federal mandates.

But that’s not all. Look for the restoration of the individual mandate tax penalty on those who don’t purchase federally approved plans, the imposition of government price controls on prescription drugs, and more taxpayer funding of abortion -- combined with tougher restrictions on the personal rights of conscience and the exercise of religious liberty.

Increasing healthcare costs will inevitably follow -- not only much higher federal taxes to pay for these new programs, but also bigger transactional costs for providers, thanks to even heavier federal regulation of the already highly regulated healthcare sector of the economy.

In the new and narrowly divided Congress, not all these policies may gain enactment, but the political winds are in their favor. In the last Congress most House Democrats, and 15 leading Senate Democrats, sponsored comprehensive legislation -- inaccurately dubbed “Medicare for All” -- to outlaw Americans’ private and employer-sponsored health insurance.

It would also have abolished existing Medicare and Medicaid and other federal programs and created a single program of government-controlled health insurance. Never mind that similar systems in Britain and Canada are characterized by horrendous delays and denials of medical care.

And while the Democratic House and Senate measures have no financing provisions, Heritage analysts estimate that such a program would require a payroll tax of 21.2 percent, leading almost three-quarters of Americans to pay more for healthcare than they do today.

The same policy, however, can be achieved on the installment plan. President-elect Joseph Biden and many Democrats in Congress will seek to create a “Public Option;” a new “Medicare-Like” health plan, armed with special advantages designed to tilt the playing field in its favor. These special advantages, denied to private health plans, would thus ensure, eventually, the progressive elimination of private health insurance -- including employer-sponsored coverage.

Following Biden’s pre-election policy collaboration with Sen. Bernie Sanders, Vermont’s independent socialist, Biden’s campaign advisors agreed that the “public option” proposal would “ pave the path” forward to a centralized, government- controlled system of national health insurance.

Biden also proposes to lower Medicare age of eligibility from 65 to 60, thus growing government coverage, control, and taxpayer funding, while shrinking private coverage and financing. According to a preliminary analysis from Avalere, a health policy research firm, Medicare’s enrollment would grow by an estimated 23 million, with 59 percent of the shift coming from job- based health insurance and 14 percent coming from individual insurance.

Biden’s Medicare expansion proposal collides with Medicare’s impending budgetary crisis, with the hospital trust fund facing insolvency as early as 2024. That means the program will not be able to pay for all the promised benefits to its current enrollees.

As a result, Biden’s Medicare expansion will have to financed differently from the rest of the Medicare program. At the very least, it will rely more heavily on general revenue spending and beneficiary premiums to avoid accelerating the program’s descent into financial crisis.

The new Congress likely will venture into government regulation of prescription drug prices. Their starting point will likely be H.R. 3, a bill the House enacted last year that gave the HHS Secretary authority to set economy-wide prices for prescription medicines. The bill would base drug prices on those imposed by foreign governments.

These price controls have curbed innovation and replicating such a policy that would reduce the availability of new medicines. This is especially inappropriate and odd since pharmaceutical innovation delivered a vaccine against COVID-19 in record time.

Beyond that, look for the Biden administration to aggressively use all the tools at their disposal to advance these goals. In the process, they will doubtless try to undo Trump’s healthcare accomplishments.

For example, expect them to start by canceling major Trump administration regulatory relief measures that allowed individuals and families to private health insurance alternatives, including short-term health plans to cover gaps in coverage, expanded opportunities for small businesses and their employees to enroll in association health plans, and let workers get money from their employer-sponsored health reimbursement accounts to buy their own private health plans. They could also eliminate Trump’s healthcare price transparency rules, requiring hospitals and insurers to disclose their prices to consumers.

Washington policymakers should chart a different path. Real healthcare reform empowers doctors and patients to take control of medical decision-making. The Biden administration and the new Congress are moving in the opposite direction, putting government bureaucrats in charge of medical care. 

Robert Moffit is a Senior Fellow in Domestic Policy at The Heritage Foundation. Doug Badger is Visiting Fellow in Domestic Policy Studies, of the Institute for Family, Community, and Opportunity, at The Heritage Foundation.