Blog Post

Democrats take the Senate. What does it mean for health care?

By Christopher Kerns

January 6, 2021

    Editor's note: This story has been updated to reflect the Associated Press calling both Senate runoff races in Georgia for Democratic candidates

    The Democrats pulled it off. Even though no Democrat since 1986 has been able to unseat a Republican senator from Georgia, the wins of Jon Ossoff and Raphael Warnock have secured the U.S. Senate for the Democrats (with Vice President-elect Kamala Harris as the tie-breaking vote), auguring a new period of unified Democratic control of the political branches of the federal government.

    These wins give the party significantly more freedom to enact President-elect Biden's agenda—but that freedom will be tempered by the precarious nature of their control. In both houses of Congress, Democrats will hold razor-thin majorities, and will require virtual lockstep of all members of their party to push any legislation through both chambers. And in the Senate, any legislation that cannot be resolved through budget reconciliation will be subject to filibuster from the GOP, unless the Democrats deliver on their mission to abolish it with a unanimous vote from their caucus.

    After Biden's win had been declared back in November, I outlined five predictions for how the Biden administration could approach key health care issues. By and large, I stand by those predictions: expect a greater focus on participation over performance on value-based care; industry consolidation is likely to have many unexpected twists and turns; states are likely to again become laboratories of experimentation on coverage expansion; health care spending will have to be addressed to shore up the Medicare trust fund; and some areas of compromise—on drug pricing, telehealth, price transparency, and maternal health—are genuinely possible.

    But back then, I added many caveats that depended on which party would ultimately control the Senate. With that chamber's turnover, today I want to focus specifically on what a unified Congress and presidency mean for health care—and with that, six more predictions for 2021.

    1. A lot more federal money is likely to be channeled into health care, with more federal control over the Covid-19 vaccine rollout

    In the short term, the most obvious implications are increased funding from the federal government to combat Covid-19 and its economic impacts. Democrats ran on increasing money for testing and contact tracing, centralizing decision-making around vaccine distribution, and providing increased relief for consumers impacted by job losses or increased medical costs.

    In this sense, the recent relief bill signed by President Trump can be thought of as a down payment on future spending, as Democrats in the Senate will now have enough votes to pass any additional House-passed funding with support from Harris. Increased payments to taxpayers, support for state and local governments, and more funding for centralizing the distribution effort are all on the table. But given logistical challenges cited over the slower-than-hoped-for vaccine rollout, a Biden administration may wish to exert more control over distribution within the states.

    2. The GOP will have limited power to prevent confirmation of any of Biden's nominees

    We can also expect Biden's appointees to face an easier time with confirmation. With control over committees, Democrats will be able to push through appointees to HHS, CMS and other entities with less opposition from Republicans. HHS nominee Xavier Becerra, an outspoken defender of the ACA, would likely use his platform to roll back some of the Trump era changes to the law by restoring cost-sharing subsidies, cementing protections for abortion access, and potentially adding in mandated benefits included in insurance coverage.

    3. Democrats will have a much freer hand to stabilize Medicare's finances as they see fit

    Senate rules currently allow for votes on budget reconciliation to require a simple majority, evading the 60-vote filibuster threshold. In practice, this means that bills that allocate money or raise revenue for existing government functions can pass Congress far more easily. As mentioned above, in the short term, this is likely to speed efforts to spend more revenue combating the pandemic. But over the longer term, this gives Democrats more flexibility (with fewer concessions to Republicans) when addressing the Medicare trust fund shortfall—which could manifest in some combination of price cuts, tax increases, and value-based reimbursement changes. And Democrats will have far more power to determine what that mix looks like.

    4. All eyes are on the filibuster—and that could put the public option and Medicare eligibility expansion very much back on the table

    This is the most interesting development to watch. Enacting two of Biden's stated health care priorities—a public option for residents of states that didn't fully expand Medicaid under the Affordable Care Act, and a lowering of the Medicare eligibility age—will likely be beyond the power of reconciliation. Abolishing the filibuster for all legislative purposes (a change that is often floated when a new party takes control of the Senate) could resurrect both efforts—though it's worth noting that actually abolishing the filibuster would require zero defections from Democrats, and to date at least one senator has said he opposes its abolition.

    But if Democrats do deliver on their stated goal and pull the trigger, that opens the door for creating a public option and lowering the Medicare eligibility age—both of which would have far-reaching implications too detailed to go into here (though expect our analyses on each of them in the coming weeks and months if and when those policy proposals take shape). And it's important to remember that such efforts could cascade quickly, as politicians on both sides of the aisle look to midterm elections in 2022. Which brings me to my next point.

    5. If Democrats can keep their majority unified, big changes aren't only possible, they could be quite rapid

    Democrats' majorities are clearly thin, and the need to keep members voting in lockstep may prove to be too steep a hurdle. But the delicate balance in Congress could also spur a great deal of legislative and regulatory action in advance of the next general election in two years, when even small GOP gains could flip both chambers. If any of the bolder (or aggressive or ambitious, if you will) elements of the Democrats' agenda begin to gain traction—and especially if the filibuster gets the axe—expect a flurry of activity in a short amount of time.

    6. If the ACA gets overturned, Democrats will get the ultimate "do over" to implement health care reform with 10 years of lessons learned

    We've written before about the likelihood of a Supreme Court invalidation of the Affordable Care Act. I’m not a betting man (although that hasn’t stopped people from asking me for the over/under on just about every political issue that involves health care), but given the tenor of oral arguments, a full invalidation appears unlikely. That said, if the Court overturns the ACA, Democrats could potentially re-pass the ACA with its unconstitutional provisions stripped out.

    But Congress also will have more flexibility to pass "ACA 2.0." Debates around the individual mandate, a public option, Medicare eligibility, and Medicaid expansion will once again grab headlines. Whether Congress will want to revisit those debates is another matter, but one worth watching. Much will depend on the future of the filibuster. In the coming weeks as we examine Biden and his party's priorities in the new Congress, we'll be releasing new analyses of the various proposals. But if there's one prediction I'm willing to take the bank, it's this: don't expect a slow news cycle in 2021.

    Next steps

    First, sign up for our Stay Up To Date webinar series, where each week we take a look at the latest issues facing the health care industry and provide answers to your most pressing questions.

    Register now

    Second, subscribe to our Radio Advisory podcast, where host Rachel Woods recently sat down with Yulan Egan and myself to discuss what the health care industry might look like in 2021 and what we can expect from different stakeholders.

    Subscribe now

    And finally, keep an eye on the Daily Briefing and on Advisory Board's Twitter account for further analysis.

    Complimentary  Briefing
    We broke down the key things you need to know to prepare for 2021 in the wake of Covid-19.
    Webinar recording
    Hear our experts discuss what the results of the Georgia runoff election—and control of the Senate—will mean for the health care industry.

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