Senate Dems Post Memo On Reforms To Make Health Insurance More Affordable

Senate Finance Committee Ranking Member Ron Wyden (D-OR) and fellow Senate Democrats released a Request for Information last week outlining proposed reforms to the United States health insurance system that they say would make it more affordable, provide greater access and establish regulations intended to protect patients. The memorandum seeks stakeholder input and is intended to shape a future Democratic healthcare reform agenda.

The outline seeks to reverse recent Republican-led changes that terminated enhanced Affordable Care Act premium subsidies and imposed tighter restrictions related to enrollment eligibility in Medicaid.

But notably the document doesn’t include a Medicare for All proposal. In this regard, it doesn’t cater to the more progressive wing of the Democratic Party or the insurgent Democratic Socialists of America movement.

Since passage of the ACA, some progressive Democrats along with Sen. Bernie Sanders (I-VT) have introduced legislation called Medicare for All that would essentially eliminate private insurance and usher in a single payer system in which healthcare is provided for all and financed by the government through tax payments. Medicare for All is sometimes talked about as if it’s the only way forward.

On the other hand, Senate Democrats are proposing expansion of coverage by offering a public, Medicare-like option. Likewise, earlier this year Democratic policymakers promoted the concept of Medicare by Choice. Designed as an alternative to Medicare for All, it builds upon the existing health insurance framework. Medicare by Choice would imply expanding the number of people who qualify for Medicare and offering Medicare-like plans for individuals and employers along with expanded subsidies to cover health insurance costs. These alternatives would then compete against commercial plans. Plus, the proposal would institute caps on patient out-of-pocket spending and offer supplemental benefits to all, such as dental, vision and hearing.

The ideas being submitted for discussion resemble in spirit a bill introduced last year called the Choose Medicare Act. According to this piece of legislation, public option plans would be offered on all state and federal exchanges, giving people the ability to use existing ACA subsidies to help cover their premiums. Here, the proposed law aims to be “self-sustaining” and “fully paid for by premiums” so as to avoid dipping into the Medicare trust. New enrollees would pay premiums calculated to ensure a new segment dubbed Medicare “Part E” remains “financially solvent.” But just how high the premiums would need to be is unclear.

Thus far this century, several fundamental changes in the healthcare system have succeeded in getting passed in Congress, perhaps in part due to their working more or less within the confines of an extant system. For example, the Medicare Modernization Act in 2003, the 2010 Affordable Care Act and 2022 Inflation Reduction Act expanded or strengthened coverage.

Besides renewed efforts to push for Medicare-like public options, the Senate Democrats’ recently posted memorandum wants to reform the existing mixed public-private insurance system. It emphasizes making private insurance more affordable as well as easier to navigate for patients by way of policies such as automatic or simplified enrollment and curbs on the use of prior authorization by insurers. Also included among the proposed regulations is reinforcement of already-existing ACA requirements pertaining to medical-loss ratios. These are percentages of health insurance premiums that an insurer spends on medical claims and quality improvement activities, rather than administrative costs or profits.

Furthermore, the document calls for getting rid of “junk” insurance plans with very high deductibles and skimpy coverage, while tackling “corporate greed.”

Wyden’s request for information also proposes addressing the perceived problem of vertical integration of healthcare behemoths. The three biggest pharmacy benefit managers — CVS Health’s Caremark, Cigna’s Express Scripts and UnitedHealth’s Optum Rx — together control 80% of prescriptions in the U.S. PBMs are now part of conglomerates that own and control specialty pharmacies, certain healthcare provider clinics and even manufacturers of pharmaceutical products in some instances. They’re also owned by health insurance companies. This has drawn the ire of a growing number of legislators who want to eliminate certain practices which they assert are anticompetitive.

An unlikely duo of political opposites, Senators Josh Hawley (R-MO) and Elizabeth Warren (D-MA), introduced legislation earlier this year that would break up vertically integrated healthcare conglomerates.

Warren, Hawley and like-minded critics of industry mergers complain that healthcare conglomerates use their size and leverage to steer patients toward their own pharmacies, increasing prescription drug costs for patients, employers and government programs, while driving independent pharmacies out of business.

However constructive the initiatives put forward by establishment Senate Democrats may seem, there’s the risk they could be viewed as too tepid for a sizable portion of the electorate who is not keen to preserve any part of the status quo. The debate between Medicare for All and Medicare by Choice advocates is shaping up to be an interesting one in the coming years.