SummaryThe outcome of Georgia’s runoff election—resulting in a Democratic majority in the Senate—combined with the existing Democratic majority in the House and incoming Biden administration, significantly changes the policy outlook for 2021.
On January 5, Senate candidates Reverend Raphael Warnock (D) and Jon Ossoff (D) each received a majority of votes in GA’s Senate runoff elections, defeating incumbents Senators Kelly Loeffler (R) and David Perdue (R). The Senate will be divided 50–50; however, Vice President-Elect Kamala Harris will be able to cast tie-breaking votes, giving Democrats control of the Senate majority.
With Democrats controlling both chambers of Congress and the White House, Avalere experts have identified 10 key implications on the healthcare policy landscape.
1. Possible healthcare policy vehicles will broaden to include legislative avenues.
With Democrats taking control of both chambers of Congress, there is greater opportunity to advance legislative healthcare policy priorities that may have otherwise been unable to garner sufficient Republican support. At the same time, the Biden administration is likely to pursue a range of reforms leveraging regulatory vehicles, such as near-term rollbacks of Trump administration policies (e.g., state Medicaid flexibilities).
2. Narrow Senate margin will require substantial intra-party alignment.
A 50–50 split with Vice-President-elect Kamala Harris able to cast tie-breaking votes means Democrats will need to reach unanimous agreement within the party or recruit Republicans for policies to advance. Achieving this level of agreement could be challenging on certain issues, such as major coverage expansion. Conversely, policies with substantial alignment are most likely to move forward, including COVID-19 relief, Affordable Care Act (ACA) enhancements (e.g., expanding access to Advance Premium Tax Credits, providing additional funds for reinsurance programs, rolling-back short-term limited duration insurance flexibilities), and certain drug pricing reforms with significant Democratic support (e.g., inflation-based rebates).
3. Budget reconciliation will serve as an important vehicle for policy change.
Without the 60 votes needed to avoid a filibuster, Senate Democrats are likely to turn to reconciliation—which allows budgetary bills to pass with only 50 votes—as a key vehicle for priority policies. Importantly, the Byrd rule (Section 313 of the Congressional Budget Act) dictates the types of proposals that are eligible for reconciliation, thus limiting the scope of policies that may be advanced with only a simple majority in the Senate. Stakeholders should assess the feasibility of key healthcare reforms advancing through a budget reconciliation vehicle and specifically what adjustments to existing proposals would need to be made in order to comply with the Byrd rule.
4. Immediate focus on more robust COVID relief is likely.
An additional COVID-19 relief package is certain to be an early focus of the new Congress. While gridlock has defined previous relief package negotiations in 2020, Democrats are likely to move to advance a relief package with more significant measures. These measures could include more generous direct payments to Americans (e.g., $2,000 stimulus checks), enhanced unemployment benefits, and financial and logistical supports to states.
5. Greater possibility of insurance coverage reform.
Coverage protections and ACA enhancements will likely be a focus of both legislative and regulatory agendas in 2021, though there are a range of potential policy approaches. For example, Democrats have expressed support for reductions in patient cost-sharing (e.g., lowering deductibles by tying plan generosity to gold tier plans rather than silver), bolstering ACA subsidies, and lowering Medicare eligibility to age 60.
6. Debate on public option will shift from state-by-state approach to federal.
To date, states have been the primary drivers of public option proposals, with WA becoming the first state to offer a public plan on its state exchange in 2021. However, with Democrats controlling Congress and the White House, the debate could return to the federal level. If a federal public option is brought to the table, it may take time for Congress to work toward alignment on key details, including eligibility, covered benefits, benefit generosity, and prescription drug coverage.
7. Enhanced opportunities for state support for Medicaid and ACA exchanges.
Given COVID-19-related disruption in health insurance and previous Democratic coverage expansion priorities, federal incentives for Medicaid expansion and bolstered enrollment assistance may be on the table. Democrats may also consider funding to support the establishment of state-based exchanges and reinsurance programs. These measures were the focus of the previous House-passed legislation The Patient Protection and Affordable Care Enhancement Act (HR.1425).
8. Need for pay-fors may drive debate on drug pricing policy.
With ambitious coverage expansion priorities and budget reconciliation as a likely vehicle, Democrats may need to seek out pay-fors and could look to drug pricing policies. Specifically, drug pricing policies that would result in public program savings (e.g., inflation-based rebates, Part D benefit redesign, changes to the Medicaid AMP cap) could be considered.
9. A more aggressive set of drug pricing reforms may be contemplated.
Prior to the COVID-19 pandemic, drug pricing policies such as Part D benefit redesign and others included in the Senate Finance Committee’s Prescription Drug Pricing Reduction Act of 2019 (S.2543) were a high priority for both parties. Now in the majority, Democrats have the opportunity to consider more significant reforms, including Medicare negotiation and Part D inflation-based rebates. The Lower Drug Costs Now Act (HR.3), passed by the House of Representatives in 2019, may serve as a loose framework for Democratic advancement.
10. Nominees are more likely to be confirmed.
The incoming Biden administration has already announced a number of appointments, including CA Attorney General Xavier Beccera as the nominee for Secretary of the Department of Health and Human Services (HHS). With a Democratic Senate and the tie-breaking vote of Vice President-Elect Kamala Harris, President-Elect Biden’s nominations are likely to be swiftly confirmed via a required simple majority vote. Quick confirmations could facilitate more immediate regulatory action from agencies under HHS.
To learn more about Avalere’s work in health policy, including drug pricing policy and coverage reform, connect with us.
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