The health-related provisions of the revised BBB plan – State of Reform – State of Reform

After weeks of intense negotiations over his administration’s sweeping domestic agenda, President Biden released a revised Build Back Better (BBB) plan which substantially scales back many key provisions, including those related to health care. Even so, the absolute size of the initiative — $1.85 trillion in new federal spending over ten years, covering everything from climate change to housing to child care — ensures it will be consequential legislation. Further, it is possible that some of its provisions will be modified further, and that new health-related changes will be added to the mix before the plan is taken up for consideration in Congress.


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In the revision from the administration, and the draft bill being assembled in the House, the key health-related changes are as follows:


  • ACA Premium Credits. The American Rescue Plan (ARP), enacted in March, increased the generosity of premium and cost-sharing assistance for individuals enrolling in coverage offered through the Affordable Care Act (ACA) exchanges. The higher level of subsidization is scheduled to expire after 2022. BBB would keep the revised and more generous schedule of premium assistance in place through 2025.


  • The Medicaid Coverage Gap. Leading Democrats have been discussing for several months how to close the gap in coverage for low-income individuals residing in the twelve remaining states that have not adopted the Medicaid expansion under the terms of the ACA. The affected individuals are those with incomes too low to qualify for assistance in the exchanges (which begins at 100 percent of the federal poverty line), and yet not low enough to qualify for pre-expansion Medicaid. The Kaiser Family Foundation estimates about 2.2 million adults fall into this category. The revised BBB would make them eligible for fully-subsidized coverage in the ACA exchanges for the years 2022 through 2025, with premium and cost-sharing assistance at the levels provided in the ARP.

An earlier version of BBB coupled this temporary ACA expansion with a new, fully-federalized Medicaid coverage option that would be offered to persons in the coverage gap beginning in 2025. That idea has been dropped from the latest BBB plan because it was viewed by some as being unfair to the states that adopted the Medicaid expansion and thereby cover 10 percent of the cost of the expanded coverage.

Providing ACA exchange subsidies may avoid creating that particular type of funding inequity even as it opens the door to a different version of the same problem. In particular, it seems likely that states that have expanded Medicaid may believe it is unfair to lock them out of substituting ACA coverage for the Medicaid expansion, as enrollment in ACA exchange plans requires no state contribution

The Congressional Budget Office (CBO) has estimated that the combined cost of continuing the ARP subsidy provisions through 2025, and closing the coverage gap with those same subsidies, also through 2025, would have a combined federal cost of about $126 billion and would reduce the number of uninsured persons in the country by 2.3 million. If the provision were to be made permanent (which is a distinct possibility in future legislation), the ten-year cost would be $471 billion.


  • Medicaid Home and Community-Based Services (HCBS). The revised plan includes a permanent increase in the federal matching rate of 6 percentage points for states offering home and community-based services in accordance with new national standards. The aim is to encourage all states to offer these services as an alternative to institutional care, and to improve the quality of the services by paying caregivers a higher hourly rate. The White House estimates this provision will cost $150 billion over ten years (CBO has yet to publicly release an estimate of it).


  • Other Medicaid and CHIP Provisions. Although not mentioned in the White House documents, it is likely that the legislation considered by Congress will include several other less costly but still consequential changes to Medicaid and the Children’s Health Insurance Program (CHIP). Among the changes likely to remain in the bill are permanent funding for CHIP and Medicaid coverage in U.S. territories, 12-month Medicaid coverage for postpartum women, and mandatory coverage of dental, vision, and hearing services as a benefit within Medicaid, which will effectively ensure coverage of these services for the poor elderly and thus make Medicare coverage less pressing.


  • Covered Benefits in Medicare. Many Democrats wanted to use BBB to expand Medicare coverage to dental, vision, and hearing services. The revised plan includes an extension only for hearing, at an estimated ten-year cost of $35 billion. The coverage, which would not begin until 2024, would pay for examinations by qualified audiologists and for hearing aids (once every five years) for patients who need them.


  • Prescription Drugs. Early versions of BBB included aggressive plans for regulating the prices for prescription drugs, both within Medicare and in the commercial insurance market. Those reforms were dropped from the latest White House revision. The only provision mentioned in the White House revision is a full repeal of a Trump-era rule that would ban the use of rebates as a tool for lowering the net prices of drugs. The Biden administration had already signaled it opposed this change, but deferring to Congress to block allows the expected savings, estimated at $145 billion, to be used to pay for the costs of other BBB provisions. Many Democrats in the House and Senate are not ready to concede that BBB will not include other prescription drug pricing changes, and thus are continuing their search for a compromise that can pass both chambers.


  • Other Provisions. The latest House-written version of BBB continues to include many other health-related provisions that were not mentioned in the White House release. It is likely they will stay in the bill, as they are less controversial. These provisions include $3 billion for pandemic preparedness activities, $7 billion for a strengthened public health workforce, $30 billion for state-sponsored reinsurance programs (to lower premiums in the ACA exchanges), and additional funding for a large number of existing public health initiatives.


Although the Biden administration and congressional leaders are eager to pass BBB (along with a separate measure addressing the nation’s physical infrastructure) as soon as possible, the complex process of assembling this sprawling legislative initiative, and securing sufficient support for its passage, may take several more weeks. Among other things, the legislative text appears to be far from final, and CBO has yet to release its estimates of the full plan. Further, many Democrats are still working to include provisions that are not in the latest White House release and to alter the terms of the provisions that did make the cut.

In other words, there may yet be further significant and unexpected developments in a story already filled with them.

James C. Capretta is a columnist for State of Reform and a senior fellow at the American Enterprise Institute.

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