Written by Senior Vice President, Health Policy and Public Affairs Kristen Smith.
EGA Five Facts to Know: Healthcare Issues in the President's Budget That Will Continue to Dominate Political Debates
President Biden recently released his annual budget blueprint. And while presidential budgets are in no way guaranteed to become law, the issues outlined provide a good sense for what we will be hearing most about leading up to the 2024 presidential election.
Here are five facts to know about the issues in Biden's healthcare budget that are likely to dominate political debates over the next 18 months:
1. Medicare Solvency is the Big Issue Facing the Next President
The Medicare Hospital Insurance Trust Fund is expected to pay out more than it brings in by 2028, the last year of the next president’s term, according to Medicare trustees. To make up for the expected shortfall, lawmakers have to find $247 billion, either through spending cuts or additional revenues. In his budget plan, President Biden proposes a Medicare tax increase on the highest earners, which Republican leaders say is a non-starter. Biden has successfully boxed GOP leaders into a “no cuts to Medicare benefits” stance, though Medicaid cuts are still on the table. Given the size of the expected shortfall — and the importance of entitlement programs to likely voters — this issue is expected to continue to get substantial airtime in the coming months.
2. The Drug Pricing Debate Did Not End with the IRA
Biden’s budget also proposes to shore up the Medicare Hospital Insurance Trust Fund through an expansion of the drug price negotiating power given to Medicare in the Inflation Reduction Act (IRA). The President wants to allow Medicare to negotiate prices for more drugs, securing greater cost savings. But the healthcare provisions in the IRA are already controversial, with critics arguing lower drug prices will hinder innovation and ultimately harm patients. Expansion or acceleration of Medicare’s negotiating power is therefore unlikely to secure significant bipartisan support.
3. Deficit and Ideological Pressures Pose a Threat to Expanded Health Insurance Subsidies
The President’s budget calls for permanently expanding Affordable Care Act (ACA) subsidies currently set to expire in 2025. These subsidies make insurance premiums for those in health plans on the exchanges more affordable, or even free, depending on their income level. Biden’s plan also proposes coverage similar to Medicaid for eligible people in states that have not yet expanded Medicaid coverage. Though Republican efforts to repeal ACA and prevent Medicaid expansion have lost some of their original political momentum, GOP leaders are unlikely to support expansion, especially if it means increased deficit spending.
4. Continued Debate Over COVID Spending Complicates Funding for Future Pandemic Preparedness
New COVID funding is not included in Biden’s budget, but $20 billion for pandemic preparedness is included. Biden’s plan calls for funding on a range of measures from vaccine development and disease surveillance to bolstering laboratory safety and strengthening the public health workforce. But Republican leaders still want accountability for how they believe the Biden administration fell short in handling the COVID pandemic, including how billions of dollars in relief funds were deployed. As the emergency pandemic response winds down, and given the significant funds already allocated, new COVID funding would have been a non-starter. But even Biden’s call for funding for future pandemic preparedness is likely to be a hard sell.
5. Action to Address the Mental Health Crisis is Necessary, but the Barriers to Care are Numerous
The mental health crisis in this country — especially among adolescents — is cause for great concern. As part of the President’s budget and aligned to his previously outlined national mental health strategy, Biden has proposed $20 billion in additional funding for the Substance Abuse and Mental Health Services Administration (SAMHSA)’s 9-8-8 and Behavioral Health Services program, additional funding to prioritize innovative mental health research and treatment, and legislative proposals to improve Medicare’s mental health benefits and behavioral health for the private insurance market and Medicaid beneficiaries. Action to address this crisis is clearly necessary, but the barriers to mental health care are many, and Republicans are likely to offer less costly solutions.
Republican leaders have not yet released their budget, but it will almost certainly include more modest healthcare proposals. EGA health will continue to monitor these and other major health policy issues that are certain to be the subject of much debate heading into election season.