Health Insurance and Consumer-Directed Health in a Biden Administration

It’s been a long time since election day, but the Senate races in Georgia are now decided. So, what might be in store, from a healthcare perspective, when Joe Biden’s presidency begins January 20?

Let’s start with a recap of Biden’s agenda that may affect employer health insurance and consumer-directed health (CDH) plans in particular:

• Larger Affordable Care Act (ACA) exchange subsidies available to more people.
• Unrestricted opt-out from an employer health plan.
• A public option, administered by Medicare, intended to be relatively low cost.

Will there be change as a result of this agenda?

Whether and to what extent this agenda can be enacted is unclear. Last week’s run-off election in Georgia did flip the Senate to Democratic control, but just barely. The majority party’s lead in the House was also sharply reduced. The narrow majorities in both chambers will most likely moderate any changes if they occur. The smart bet would be to expect a public option to be passed by the House, with some chance of passage in the Senate.

Would there be a rush to the exits by employees toward a (presumably cheaper) public plan?  

Fiscal realities and competing priorities for increasingly scarce funds will have a lot to say about that cost advantage. And given that the plan’s reimbursement rates will likely be much lower than commercial plans, many providers may opt not to participate, materially diminishing the quality of the offering.

The public plan would not mean the end of the out-of-pocket cost challenge with which Americans continue to struggle; Medicare enrollees face substantial costs today. Consequently, there will be a need to preserve access to CDH accounts to help people deal with those costs. WEX and the industry have been communicating that message on Capitol Hill for two years now to build awareness in an effort to ensure that these accounts are part of the framework going forward.

Additional takeaways

In other matters: 

• CDH accounts now enjoy support on both sides of the aisle, but meaningful health savings account (HSA) expansion is likely off the table in the new session. Legislation to decouple HSAs was introduced by two Republican senators in late 2019. 
• A follow-on stimulus/COVID relief bill will be an early priority in the new Congress, providing an opportunity to re-open the conversation on COBRA subsidies. 
• On the regulatory front, we can expect some rollback of Trump administration actions, such as short-term, limited duration plans. The Trump regulatory agenda was to provide employers and insurers more flexibility to implement market-based solutions. Going forward, we can expect a pivot to less flexibility and greater adherence to the ACA.

In summary, the narrow margins in Congress will be a moderating influence in the new term.  Employers can be expected to remain the primary provider of health insurance to working Americans, and CDH accounts will remain highly relevant no matter who provides the insurance. 

While we don’t anticipate meaningful expansion opportunities in either the legislative or regulatory arenas, our solutions enjoy bipartisan support. And there’s still an opportunity for COBRA as a critical lifeline for people who have lost their employer coverage. Stay tuned.

Want to learn more about what to expect in healthcare in 2021? Robert Deshaies, president of WEX’s health division, provides his five benefits and healthcare trends for 2021 that may surprise you. Check them out!

The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own counsel.