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After months of wrangling with congressional Democrats, the White House believes it has a deal for a $1.5 trillion domestic policy package that can win enough support to reach President Joe Biden’s desk.
The consequence of the infighting between Democratic leaders, progressives and conservative Democratic lawmakers such as Sens. Joe Manchin (W.Va.) and Krysten Sinema (Ariz.) is a significantly smaller legislation than Biden envisioned. Nevertheless, the framework the White House unveiled Thursday includes numerous key priorities, including the biggest effort to expand health coverage since the Affordable Care Act became law in 2010.
Even this relatively smaller plan could be a boon to rural hospitals because it includes the first major effort to respond to a Supreme Court ruling that limited the ACA’s Medicaid expansion. Rural hospitals in states that haven’t expanded Medicaid are more vulnerable to closures because they carry heavier burdens from uncompensated care.
The provisional deal includes an extension of enhanced subsidies for people who buy health insurance from the ACA’s exchange marketplaces and a path to coverage for people who would qualify for that law’s Medicaid expansion had their home states adopted it.
The White House sought to make larger ACA subsidies available to more people on a permanent basis, but legislators including Manchin and Sinema objected to the package’s overall cost, forcing Biden and Democratic congressional leaders to scale back their ambitions.
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The American Rescue Plan Act created these enhanced subsidies, but they’re due to expire after next year, which would lead to higher net premiums for millions on the eve of the midterm congressional elections. The current proposal would extend them through 2025.
Keeping the subsidies temporary would run the risk they won’t be extended by a future Congress, especially if it is controlled by Republicans but it would solve a short-term political and policy dilemma for the president’s party.
But many Democrats view the temporary subsidies as better than nothing given the White House plan includes other costly priorities, including, universal free preschool, efforts to address climate change and a small expansion of Medicare benefits. The White House plan also includes $150 billion in new funding for home and community-based services in Medicaid, which is $250 billion less than Biden wanted.
Biden and congressional leaders were forced to make cuts and bring down the overall cost of the proposal after Manchin said he wouldn’t vote for legislation that costs more than $1.5 trillion.
The president’s original plan called for spending $3.5 billion on a slew of domestic policies, but objections from conservative Democrats to the price tag and to specific provisions forced the White House and the Democratic congressional leadership to accept a package that costs $2 trillion less. In addition to making the health coverage provisions temporary, the plan jettisons a number of policies important to progressives, such as parental leave and stronger climate change provisions.
Despite the White House’s assurances, this smaller package may discourage progressive lawmakers and disappoint the Democratic base, depriving Biden of enough votes to enact his agenda. Sen. Bernie Sanders (I-Vt.) who chairs the Budget Committee, has been a leading advocate for adding dental and vision to Medicare, which isn’t included in the White House framework. Neither is allowing Medicare to negotiate drug prices with manufactures, which has been a Democratic goal since Medicare Part D came to be in 2003. The White House plan, however, would add hearing ad coverage to Medicare.
The White House framework includes a variety of tax increases and spending cuts the White House says would fully offset the cost of new and enlarged programs. The White House proposes a 15% minimum tax on large corporations and a 1% surcharge on corporate stock buybacks, for example. Biden also wants to withdraw President Donald Trump’s Part D rebate rule, which hasn’t taken effect yet but would cost about $145 billion.
The White House plan would extend ACA subsidies to people making more than 400% of the federal poverty level—about $51,500 for an individual—and make subsidies more generous for lower-income exchange customers. The legislation also proposes to make exchange subsidies available to an estimated 2.2 million low-income people who are uninsured because they in the so-called Medicaid gap.
The ACA as written expanded Medicaid to anyone earning less than 138% of poverty, or about $17,780 a year for a single person. The law also made private insurance subsidies available only to those with incomes at or above the poverty line. The Supreme Court disrupted this plan when it ruled in 2012 that states could refuse to participate in the expansion. A dozen states continue to reject the policy, leaving millions in those places ineligible for Medicaid or for exchange subsidies.
The White House and Democratic leaders proposed a federal Medicaid-like program for people in the coverage gap but were forced to scrap that plan to gain Manchin’s support.
Senate leaders have not yet released legislative text, but the House could vote on its version of the legislation as soon as this week.
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