Blog Post

The 4 biggest health policies in the House reconciliation bill

By Heather Bell

September 24, 2021

    If you've been following the news, you know that Democrats' grand plan of expanding Medicare benefits, increasing access to health insurance coverage for low-income residents, and reducing prescription drug prices may now be in jeopardy. These policies, as well as a slew of others, are on the negotiating table as the House and Senate craft a reconciliation bill—and they hit a major speed bump last week.

    Before we dive in, I want to offer a bit of background. Congressional Democrats have adopted a two-pronged approach to passing key parts of President Biden's American Jobs Plan and American Families Plan. The first part was to craft a bipartisan $550 billion physical infrastructure bill, which the Senate passed in August. That bill is currently pending in the House, where Democrats are working on part two: a separate $3.5 trillion human infrastructure bill that they plan to pass along party lines using the budget reconciliation process.

    The Senate just passed a bipartisan infrastructure bill—and health care is footing the bill

    The House version of the reconciliation bill began to take shape last week, offering the first glimpse at policy priorities and legislative language that could be used in the bill—while also revealing factions within the Democratic party that are putting both bills at risk.

    Below, I'll walk you through the most controversial health policies that are currently in play—and what we're watching as the reconciliation debate unfolds in Congress.

    Expanding Medicare Advantage benefits

    The House bill would create a new dental and oral health benefit under Medicare Part B beginning January 1, 2028. The new benefit would cover preventive and screening services, such as oral exams and dental cleanings, up to two times per year, as well as dental X-rays and fluoride treatments. Those services, as well as other basic treatments, such as tooth restorations/extractions and oral disease management services, would require 20% cost sharing by beneficiaries. More significant services, such as bridges, crowns, and root canals, would have cost sharing starting at 90% and declining by 10% each year until beneficiaries hit 50% in 2032.

    The House bill also would create new benefits under Medicare Part B for hearing services beginning Oct. 1, 2023, and vision services beginning Oct. 1, 2022.

    Expanding Medicare benefits has become a top health policy priority among Democrats—in fact, Democrats in the Senate are considering proposals that would launch the new dental benefits earlier. Currently, Medicare beneficiaries must purchase supplemental Medicare Advantage or private employer-sponsored retiree plans to gain dental, vision, or hearing coverage—and Kaiser Family Foundation data found 47% of Medicare beneficiaries lacked dental coverage as of 2019.

    However, Republicans have argued that the MA plans make the benefit expansion unnecessary, particularly given the looming Medicare Trust Fund insolvency projections. The American Dental Association and America's Health Insurance Plans also oppose the policy change. The American Dental Association is concerned members will be paid less by traditional Medicare than by Medicare Advantage plans, while insurers are worried about the impact on other benefits typically offered in Medicare Advantage plans, such as meals and transportation to medical appointments.

    Closing the Medicaid expansion gap

    The House bill would create a new federal Medicaid program for non-expansion states beginning in 2025. Prior to 2025, low-income individuals would qualify for subsidized coverage on the Affordable Care Act's exchanges. People with annual incomes below 100% of the federal poverty level (FPL) would qualify for the new program, while those above that level would continue to receive premium assistance to purchase coverage on the exchanges.

    The program would be fully paid for by the federal government, meaning states would not have to contribute—a financial benefit that critics of the plan said could prompt expansion states to roll back their plans, as they are currently on the hook for 10% of their programs' costs. However, the House bill includes a disincentive for this: Any state that opts out of its expansion program would be required to pay a penalty to HHS equal to the product of (1) 10% of the average monthly per capita costs expended under the state's expansion plan during the most recent quarter, and (2) the sum of the number of individuals enrolled under the state's expansion for each month during the quarter.

    Closing the Medicaid expansion gap has been a key priority for the Biden administration—and a new federal Medicaid program would be a boon for private insurers and managed care organizations, as it opens up an additional 2 million uninsured, low-income residents who live in the 12 non-expansion states.

    Making permanent the American Rescue Plan's enhanced ACA subsidies

    The House bill also would permanently eliminate the so-called "subsidy cliff" that prevented individuals with annual incomes over 400% FPL from qualifying for subsidies to offset the cost of purchasing coverage on the ACA's exchanges. The American Rescue Plan, which Congress passed in March, temporarily enabled people above 400% FPL to qualify for subsidies and capped their premium costs at 8.5% of their incomes. The law also fully subsidized coverage for people with annual incomes up to 150% FPL. Both of those policies were set to expire after two years, but the House reconciliation bill would fund those changes indefinitely.

    Drug price negotiation

    This is where things get dicey. The House bill would create the "Fair Price Negotiation" program, which gives the HHS Secretary the authority to negotiate maximum fair prices for selected drugs for at least one coverage year beginning in 2025. The bill would allow the Secretary to negotiate prices for at least 25 drugs (this number goes up to 50 in 2026) selected from a list of 125 single-source Part D drugs, other drugs, and insulin drugs with net prices that exceed the average international market price. CBO has estimated a similar policy could generate up to $500 billion in savings over 10 years.

    The pharmaceutical industry strongly opposes the policy change, and the Pharmaceutical Research and Manufacturers of America has launched a seven-figure advertising campaign to combat the proposal. And last week, several Democrats came out against the proposal, including Sen. Kyrsten Sinema (D-Ariz.), whose objection could jeopardize passage in the Senate, where Democrats cannot lose a single vote.

    It's important to note that this is just one of many drug pricing-related proposals in the House bill. But it is one that Democrats have been counting on to help offset the costs of the health care proposals discussed above—and without it, Democrats will either need to find additional savings or scale back their health care ambitions.

    What happens next?

    The House Budget Committee as soon as this week could send a final reconciliation package to the full House. In the meantime, Democratic leaders, including President Biden, are meeting with key lawmakers in the House and Senate to hear concerns and discuss changes that could ensure the bill's passage.

    The other complication is Democrats' original two-pronged plan. House Speaker Nancy Pelosi had struck a deal with her members to vote on the bipartisan infrastructure bill and the reconciliation bill simultaneously by Sept. 27th. But House Democrats are not yet ready to vote on the reconciliation package, presenting a potential obstacle for the House to pass the bipartisan infrastructure bill. We'll be following the debate closely to see how negotiations evolve—and what ultimately makes it to the House floor for a vote next week.

    Stay Up to Date: Inside the budget reconciliation debate 

    Thursday, October 14 | 3 p.m. ET

    calendarJoin Christopher Kerns and a panel of experts featuring Mara McDermott, a VP with McDermott+Consulting, and Advisory Board's Heather Bell to get the insider’s perspective on the biggest health care policies being debated for the reconciliation bill, how those policies could shape the industry, and which policies could make it into the final bill.

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