Democrats’ dilemma: How to keep health care expansion in their big spending bill

By Tami Luhby, Jessica Dean and Ali Zaslav, CNN

For President Joe Biden and congressional Democrats, the $3.5 trillion budget reconciliation bill was a chance to fulfill their longstanding dreams of expanding health care coverage.

The proposed package includes broadening Medicare to provide dental, vision and hearing benefits, expanding Medicaid in the 12 states that refused to adopt the Affordable Care Act provision and making permanent generous premium subsidies for Obamacare policies. To help pay for it, the Democrats would enable Medicare to negotiate drug prices — another longtime goal.

But policy priorities have run into the harsh buzz saw of politics, which is threatening the ability of the party to get more Americans covered and improve equity in health care. The Democrats have fractured over the size of the legislation, with moderate members saying they won’t accept such massive measures. The party needs the votes of all of its 50 senators to pass the bill.

West Virginia Sen. Joe Manchin has said he’ll support a $1.5 trillion package, though the Democrat acknowledged earlier this month that he wouldn’t rule out going as high as $1.9 trillion to $2.2 trillion.

The party is now wrestling with shrinking the package, which will likely mean jettisoning some members’ most coveted provisions or reducing their generosity to fit in as much as possible. One or more of the health care measures are also at risk.

“It’s very difficult to weigh the tradeoffs in these different expansions,” said Tricia Neuman, executive director of the Kaiser Family Foundation’s Program on Medicare Policy. “There are competing needs. There’s a strong constituency for each of these proposals.”

In a letter to colleagues last week, House Speaker Nancy Pelosi suggested that Democrats should do “fewer things well,” but later indicated that she hopes lawmakers won’t have to drop anything and would instead reduce time frames of the provisions.

Progressives are leaning towards retaining as many measures as possible and constraining their cost in other ways.

“We’re continuing to have these conversations inside of the caucus, you know. Part of the challenge is we still don’t know what the final number is going to be,” Democratic Sen. Raphael Warnock of Georgia told CNN.

A federal Medicaid expansion program

Warnock, who is up for re-election next year, is one of the biggest advocates in the Senate for expanding Medicaid. Some 14.5% of Georgia residents were uninsured in 2020 — third highest in the nation, according to a Kaiser analysis of Census data.

“We have a chance, unlike any chance we have had before, to close the coverage gap and save lives,” Warnock wrote in a USA Today op-ed in early October. “Now is the time to take it.”

The reconciliation package would extend coverage to a total of more than 2 million low-income adults in Georgia and in the 11 other states that have not broadened Medicaid. It would initially provide them with premium subsidies to buy Affordable Care Act coverage and then shift them to a new federal Medicaid expansion program in 2025, paid for entirely by the federal government. How much this would cost has not been made public yet.

This measure, however, isn’t sitting so well with lawmakers from states that have already opted to expand Medicaid — and pick up 10% of the cost.

“The way it was described to me is the feds are going to pay for the Medicaid. Well, what about Montana? We’ve already expanded it,” said Democratic Sen. Jon Tester of Montana, a GOP-controlled state. “Does that mean the state’s share still gets paid for by the state because if it does, that’s going to be hard to sell.”

Expanding Medicaid to low-income adults would allow the Democrats to deliver for this key demographic ahead of the 2022 midterm election in hopes of maintaining control of Congress. And it would help fulfill the party’s promise to improve racial equity.

“This is the last population and probably the most vulnerable of all the populations that’s left on its own for health care,” said Leslie Dach, founder of Protect Our Care, which seeks to increase coverage. “We’ve seen the effects of that in this pandemic.”

Giving seniors more benefits under Medicare

Broadening Medicare benefits would serve a similar purpose for attracting the votes of senior citizens, another key constituency. The reconciliation bill would provide vision benefits starting next October and hearing services the following October. Dental coverage, which would cost far more, would only begin in 2028.

Though the Congressional Budget Office has yet to weigh in on this latest proposal, it found that a 2019 House bill to add these benefits would raise spending by about $358 billion over a 10-year period.

Nearly half of Medicare beneficiaries, or 24 million Americans, did not have dental coverage in 2019, according to Kaiser. Many also lack vision and hearing benefits.

Those enrolled in Medicare Advantage plans are more likely to have coverage for all three services, but the extent of those benefits varies.

Sen. Bernie Sanders of Vermont, an independent who caucuses with the Democrats, is the most vocal proponent in the Senate for adding these benefits to Medicare. He has contended that it’s a red line for him and other progressives.

“Should we tell elderly people who have no teeth in their mouth, they can’t hear, they can’t afford to buy a pair of eyeglasses that we should not expand Medicare?” Sanders said when asked what could be trimmed in the bill. “We can afford to do this.”

Manchin, however, has raised concerns about expanding a federal program that’s already on shaky financial footing. He’s floated limiting these additional benefits based on income in an effort to reduce the cost. It would be the first time Medicare coverage would be restricted by earnings.

Enhanced Affordable Care Act subsidies

As part of their $1.9 trillion coronavirus relief package earlier this year, Democrats were finally able to address a major shortcoming of the Affordable Care Act — its lack of affordability for many Americans, particularly in the middle class.

The American Rescue Plan temporarily beefed up the law’s premium subsidies. Making these permanent in the reconciliation package is a high priority for many in the party’s leadership.

For this year and next, enrollees pay no more than 8.5% of their income toward coverage, down from nearly 10%, while lower-income policyholders receive subsidies that eliminate their premiums completely.

Also, those earning more than 400% of the federal poverty level — about $51,000 for an individual and $104,800 for a family of four in 2021 — are now eligible for help for the first time.

These changes helped convince an additional 2.8 million Americans to sign up for policies during the special enrollment period Biden enacted earlier this year.

Making the enhanced subsidies permanent and filling in the Medicaid coverage gap by expanding eligibility for assistance would reduce the number of uninsured Americans by nearly one-quarter, or 7 million people, in 2022, according to a recent Urban Institute report. The increased cost would add up to $442 billion over 10 years.

But letting the beefed up subsidies expire could have the opposite effect.

Democrats “have to deal with the reality that they’ve in the short term expanded access and affordability through the ARPA. That would be something that gets rolled back if it’s not extended,” Cynthia Cox, director of Kaiser’s Program on the ACA, said of the American Rescue Plan provision.

Allowing Medicare to negotiate drug prices

One way Democrats were hoping to help pay for their massive spending bill was to allow Medicare to negotiate prices with prescription drug manufacturers, which could be used to offset $700 billion of the cost.

The House version would require the Health & Human Services secretary to negotiate maximum fair prices for at least 50 and as many as 250 high-cost medications that lack competition, including insulin. The price would be available to Medicare beneficiaries and to individuals enrolled in group health plans.

Large majorities of Americans across the political spectrum favor permitting Medicare to negotiate, even after they hear the argument that drug companies need to charge high prices to fund research, a recent Kaiser tracking poll found.

Though allowing Medicare to negotiate has been a longtime priority of the party, moderate House and Senate Democrats have resisted supporting it. The powerful pharmaceutical industry has also lobbied hard against the effort.

Pelosi indicated Thursday that progressives may have to scrap the proposal in order to get a deal on the massive social safety net package.

But she told KQED in San Francisco: “We’re still making that fight. I’m not even sure we’ll get it in this bill. We’ll get something of that, but it won’t be the complete package that many of us have been fighting for a long time.”

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CNN’s Manu Raju contributed to this report.