Biden’s 2024 re-election campaign has said the key accomplishments of his first term will be more generous Affordable Care Act (ACA) subsidies and establishing federal caps on prescription drug prices. What it has yet to do is signal an aggressive plan for change in a second term, such as a federally mandated public option (This was part of the 2020 Biden campaign.) or hospital price caps for commercial insurance. When it comes to medical care, it seems like the basic principle is to take safety precautions.
Major federal policy changes are unlikely to occur in the coming years (The Trump campaign has also not offered any broad-based policies., or even something really tangible), one would expect enterprising nations to fill the void. And indeed, there are signs that even more significant state-run health care reform may be coming in the coming years.
But this new period of national experimentation is not shaping up as a contest of competing visions, with regulation on one side and market incentives on the other. Rather, most important reforms are in the same direction: strengthening the role of government in setting prices and controlling overall costs.
The Biden administration is moving in this direction by using federal authorities to support its efforts and by launching a new demonstration program that will allow some states to push the limits of public control. We support states that are willing to move forward.
The ideas with the most political influence in each state fall into three basic groups.
The Biden administration is seeking to complement this series of efforts with new strategic concepts. All-Payer Health Equity Approach and Development (AHEAD) Model. The Centers for Medicare and Medicaid Services (CMS) will work with eight states over the period 2024 to 2034 to test global hospital budgets and investments in primary care, while controlling overall costs. It is planned to achieve the goal of improving the health of the nation. Approved applicants will receive a small amount of start-up funding ($12 million per state).
CMS citation Maryland’s long-standing hospital pricing program As an initial and partial model of what we have in mind for AHEAD participants.
A major impediment to the effectiveness of state-led reforms is state regulatory preemption of self-insured plans offered by large employers. AHEAD does not provide a solution to this problem. However, the emergence of a number of state-focused reforms may increase political pressure within Congress to reconsider the issue of granting targeted exemptions to today’s blanket preemption requirements.
The only state-focused changes currently being considered that could support market discipline are: Tighter price transparency. But states that have taken up the cause are mostly enforcing federal rules rather than breaking new ground.
Overall, the policy direction of the major reform-oriented states is quite clear. The aim is to extend as much public control over health care pricing as possible, possibly extending to a universal pricing system. While it would be difficult to pass such a plan through Congress, it may be possible to build the necessary infrastructure one state at a time and thereby build an empirical record to inform voters. It might work.
