Health Reforms Favor Rate-Setting: Insights from American Enterprise Institute
TL/DR –
The Biden 2024 re-election campaign plans to highlight increased subsidies for the Affordable Care Act and federally set limits on drug prices as its major first-term achievements, but has not signaled plans for aggressive changes in a second term. A lack of significant federal policy changes is leading to expectations of more significant state-run health reforms, which are leaning towards stronger government control over pricing and costs. The Biden administration is also launching the All-Payer Health Equity Approaches and Development (AHEAD) Model, which will work with eight states to test global hospital budgets and primary care investments to control costs and improve population health.
Biden 2024 Agenda: Increased ACA Subsidies and Prescription Price Caps
Highlighting the Affordable Care Act (ACA) subsidies increase and federally set limits on drug prices as first-term achievements, the Biden 2024 re-election campaign hasn’t yet hinted at aggressive changes for a second term. There’s no indication of plans for a federally-mandated public option or hospital price caps in commercial insurance, suggesting a cautious stance on health care.
Despite the lack of far-reaching proposals from the Trump campaign, states are poised to fill the policy void with innovative health reforms. These reforms aren’t competing visions of regulation versus market incentives, but rather, they signify increased government control over pricing and costs.
States Experimenting with Health Reforms
The Biden administration encourages states to expand government control over health care costs. It’s facilitating their efforts and initiating a demonstration program enabling few states to broaden public control boundaries.
Most politically viable state ideas fall into three categories. The All-Payer Health Equity Approaches and Development (AHEAD) Model is a new strategic concept the Biden administration is introducing. The Centers for Medicare and Medicaid Services (CMS) will collaborate with eight states from 2024 to 2034 to experiment with global hospital budgets and primary care investments to control costs while improving population health. Each approved applicant can avail of $12 million in start-up funding.
CMS cites Maryland’s hospital rate-setting program as a precursor of what the AHEAD model entails.
The Challenges of State-Led Reforms
A significant roadblock for state-led reforms is the pre-emption of state regulatory authority over self-insured plans. While the AHEAD model doesn’t tackle this issue, the surge of state-focused reforms could escalate political pressure to reconsider granting targeted exemptions to the current pre-emption requirement.
The only state-centered change under consideration supporting market discipline is increased enforcement of price transparency. However, most states enforcing this are following federal rules rather than pioneering new ones.
The Future of Health Care Reforms
The policy direction of leading reform-focused states is apparent. Their objective is to extend public control over health care pricing as far as possible. While implementing an all-payer rate-setting system may be challenging, building the necessary infrastructure one state at a time and crafting an empirical record for voters could make it feasible.
—
Read More Health & Wellness News ; US News