This is the final part in the series. Part 1 was direct quotes from Joe Biden’s official campaign website about his healthcare plan. Part 2 explained the main parts and rationale of that plan. And in this final part I share my assessment of that plan.
First, as a brief summary, let me remind you of the main parts of Joe Biden’s plan.
He is going to get rid of the limit (400% of the federal poverty level) on who qualifies for health insurance premium subsidies when they are buying insurance on the private market, and he will replace it with a flat percentage of income (8.5%). Anyone whose health insurance will cost more than 8.5% of their annual income will qualify for a subsidy. And he’s going to make those subsidies more generous, so whether someone qualifies for a subsidy will be calculated based on their income compared to the price of a gold-level insurance plan rather than a silver-level plan. And, to top it all off, he’s going to create a new government-run health insurance company that will offer an insurance plan on the private market. This “public option” will be available to other groups as well. For example, employers could, instead of administering their own employer-sponsored insurance plans, have their employees get on the public option. And in states where Medicaid eligibility is more restrictive, many of the uninsured will qualify to be on the public option plan for free.
Ok, now for my thoughts on all of that.
First, I like to start by thinking in terms of the big picture. There are three problems healthcare reformers are usually trying to solve. They want to (1) increase access to care, (2) decrease the cost of care (prices), and (3) improve the quality of care. But I merge the last two goals into one by saying that they want to improve the value of care (which takes into account prices and quality).
So how will Joe Biden’s plan do at increasing access and improving the value of care?
Let’s take the increasing access one first. Remember from last week that there are about 30 million uninsured people in the U.S. Joe Biden’s website quotes that this plan will get 97% of Americans insured, which means there will only be about 10 million uninsured people when all this is implemented. Whether that is too many or not is purely a judgment call based on your own personal moral and political beliefs, so I won’t give any comment on that.
What I will comment on, however, is the other aspect of access-increasing policies that needs to be taken into account. You see, there are two questions that need to be considered whenever you are evaluating a policy designed to increase access. The first is what I already mentioned: How many people it will get insured? The second question, which is almost universally forgotten, is this: How will this policy impact our efforts to improve the value of care? If we increase access and, at the same time, impair our efforts to improve the value of care, we have taken one step forward and one step backward all at the same time.
If you’ve read any of my other writings, you will already know that I believe the key to improving value in healthcare is to get more patients to choose higher-value insurers and providers, which comes from giving them price and quality information about their options and then making sure nothing interferes with their incentives to choose the highest-value one for them. When that is happening properly, market share flows to the higher-value providers and, therefore, it stimulates competition over who can offer the highest value to patients.
Single-payer systems, such as Medicare for All (where a single insurance company run by the government insures everyone in the country), typically are implemented in a way that creates many barriers to that value-improving competition. (By the way, to be clear–I am not saying those barriers are intrinsic to single-payer system designs, just that that’s how they always seem to be implemented; if you want to know more on this topic, see my description of an optimal single-payer system and my evaluation of Elizabeth Warren’s healthcare platform.)
In contrast to Medicare for All proposals, improving the Affordable Care Act is pretty much the most value-improvement friendly way to increase access; it doesn’t create any major new barriers to the changes that need to be made to improve value.
Summarizing this analysis of how Joe Biden’s plan does with the first issue (increasing access), fixing the ACA rates poorly on getting everyone covered (although he is going about it in the most reasonable way possible) but it rates highly on not creating new barriers to fixing the second issue.
And now, speaking of that second issue, improving the value of care, let’s see how Joe Biden’s plan does at that.
. . . Crickets. In spite of choosing an access-increasing plan that will not create too many barriers to our efforts to improve value, I don’t see much in his plan that will take advantage of that. I don’t think this is necessarily an oversight. I just think he and his team don’t know what needs to happen to make transformative changes in healthcare value (although that’s what this blog is all about–apparently they haven’t found it yet). But he has at least proposed what he can to try to lower drug costs, which makes political sense because that’s been a hot topic these days.
I haven’t yet mentioned the public option, so let me say something about that before I close this series.
Creating a public option is a workaround. It’s trying to solve a problem without getting at the root of the problem, which severely hampers its effectiveness at solving that problem and also risks causing collateral damage.
The primary problem that a public option is trying to solve is the issue of non-competitive insurance markets. But no other market in society needs a government-produced option to keep the market’s pricing honest, so why does healthcare insurance? The answer is that it doesn’t. What the healthcare insurance market needs is what other markets already have, and it’s the same thing I mentioned above: It needs shoppers to be able to readily identify the highest-value insurance plan and then choose it. Eliminating barriers to this will do more to stimulate competition over value than a public option will, and it risks no collateral damage.
A public option is also a gradual way to shift more of the population onto public insurance and slowly phase out private insurance, which essentially results in a single-payer system. You could call it Medicare-and-Medicaid-and-Public-Option for All. Whether that’s his goal or not, it doesn’t matter, because it opens up an avenue for that to eventually take place. And I’ve already mentioned my concerns about single-payer systems above.
Overall, I am impressed with Joe Biden’s approach to fixing the ACA. It’s a very rational approach, which is why it’s exactly what I described in my KevinMD post in 2019 about a possible optimal future U.S. healthcare system. But I am very concerned about his addition of a public option, which I think will distract from the real changes that need to be made in the health insurance market and will also create serious risk of new barriers to improving the healthcare system’s value. And as for his plan to improve healthcare value, he doesn’t really have one. So it’s only half a plan, really, with some positive aspects and some negative aspects. Drop the public option and propose some things to improve the value of care (here are some suggestions), and we’ve got ourselves a solid option for the future of our healthcare system.