President Biden wants to change seemingly everything: the government’s role in the economy, the way we generate power and move around, the way parents take care of kids, the “caring economy.” Is there anything he’s leaving out?
Actually, yes. Conspicuously absent from Biden’s triad of huge reforms—the American Rescue Plan, the American Jobs Plan and the American Families Plan—is the health care reform Biden touted as a candidate. Every Democratic presidential candidate in 2020 had an aggressive health care plan, starting with “Medicare for all,” the Bernie Sanders-Elizabeth Warren effort to replace private health insurance with a government program. Biden pointedly rejected that, calling instead for a “public option” that would leave private insurance in place but offer a new government plan for those who couldn’t get decent coverage through an employer.
There’s a glancing reference to Biden’s public option in the American Families Plan, but there’s no outline of how it would work—as there are for other top priorities—and Biden didn’t mention it in his April 28 address to Congress. Biden is detailing smaller measures: the American Rescue Plan, which Congress passed in March, contains new health insurance subsidies for people who didn’t qualify under the Affordable Care Act because they made too much money. Those subsidies were temporary, and Biden wants to make them permanent as part of the family’s plan. That may help a couple of million Americans get more affordable coverage.
That would still fall far short of the “public option” Biden campaigned on, which would be a government program similar to Medicare for anybody looking for a better deal on insurance, with no age requirement. Anybody could buy into the government plan, which, in theory, would be able to offer competitive rates because of its sheer size. That would put the government plan in direct competition with private insurers, which could be good or bad, depending on your perspective. If the government offered lower rates, then private insurers would have to match them, a boon for consumers. But if people flooded into the government plan, it could destabilize the employer-based insurance system, which generally works, at least for big companies with buying power.
Establishing a new government health care plan would be a combative undertaking Biden seems willing to put off for another time. It could disrupt a large segment of the economy more than anything else in Biden’s plans. Bernie Sanders is pushing “Medicare for more” legislation that would lower the Medicare eligibility age from 65 to 55, similar to Biden’s public option. But that’s unlikely to pass, given the lack of enthusiasm among some Democrats, especially in the Senate. Biden might pursue a public option if Democrats maintain or expand their narrow majorities in both houses of Congress in the 2022 midterm elections (which will be tough).
A second thing missing from Biden’s reform trifecta: any plan to remove the $10,000 cap on state and local tax deductions that went into effect with the Trump tax cut law in 2017. Unlike the public option, Biden never campaigned on restoring the full SALT deduction, as it’s known. But several Democrats from states hurt most by this new limit on tax deductions, such as New York and California, are demanding a repeal of the limit as a condition of voting for Biden’s favored legislation.
In late April, a senior White House official told reporters Biden wasn’t pushing for a SALT cap repeal because it would lower federal tax revenue at a time Biden was looking for new sources of revenue to spend on families and children. There’s also the political problem that repealing the SALT cap would mostly benefit high-income taxpayers. It’s possible Congress could include a repeal or partial repeal of the SALT cap in legislation that Biden would sign, as long as it contained other Biden priorities. One way to do it would be to restore the tax deductions but only for people with incomes below a threshold of, say, $400,000.
A third priority Biden seems lukewarm on: Giving the government the legal power to negotiate prescription drug prices with manufacturers. Biden does mention this in his family’s plan, and in his speech to Congress he did call for letting Medicare negotiate directly with drugmakers, which it has never been allowed to do. But as with the public option, the White House has provided no detail of how Biden wants to lower drug prices, which is a likely tell: Biden supports the idea in principle but doesn’t want to get bogged down in that fight right now.
In 2019, the Democratic House passed a bill to let Medicare force down drug prices, which is a likely template for legislation this year. House Speaker Nancy Pelosi has promoted the legislation. Like the public option, however, this too would be a bloody legislative battle, against the politically powerful and lavishly funded pharmaceutical industry. Biden would probably sign legislation if Congress could pass it. But Biden may also prefer to put off this battle until the second half of his presidential term—if Democrats can hold onto power in Congress.
Biden still has a full agenda. His proposals for shifting the economy from carbon energy to renewables are complex and extremely ambitious. At the same time, he’s pushing for the biggest expansion of social welfare programs since Lyndon Johnson’s Great Society agenda of the 1960s. If Biden accomplishes half of what he’s after, it will be a transformational presidency. That should be enough for one year.