Democrats Promised to Transform Health Care. But Their Relief Bill Hands the Health Care Industry a Big Win

Democrats spent months in 2020 debating huge, transformative solutions to America’s broken health care system. They promised to take on the health insurance industry, lower costs, and ensure that no family would go broke paying for the care they needed—and that was even before a once-in-a-century pandemic highlighted the health care system’s existing flaws. But now, with Democrats holding unified control of Washington, the first piece of major legislation likely to land on President Joe Biden’s desk is set to hand the industry billions while doing little to control prices or address other stumbling blocks that prevent people from accessing health care.

The new COVID-19 relief package, which Senate Democrats are widely expected to pass within the week, would expand Affordable Care Act (ACA) subsidies for two years and provide funding to underwrite coverage through COBRA, the program that offers temporary extensions of employer health insurance for workers who lose their jobs. While Biden has endorsed both of these ideas, the package notably omits his more ambitious proposals, including lowering the age of Medicare eligibility and creating a federally-run public health insurance option to compete with private insurers.

The relatively moderate reforms come as an alliance between big health care companies and business interests joins forces with Democratic leadership, which has largely focused on shoring up private health insurance by bailing out employer health plans and expanding the ACA. (The package also includes incentives for the remaining 12 states that have not expanded Medicaid to do so, although it’s up to largely Republican-led state governments to take Congress up on its offer.)

The outcome is a relief to the health care industry. At a moment when some lobbyists were worried that the effects of the pandemic—combined with Democratic control in Congress—would give progressives traction to push for Medicare for All or a public health insurance option, the current relief bill does neither. “The framework that we have in place is a solid one. And we can close the coverage gaps that continue to exist using that framework without some sort of more fundamental change to how people in this country get their health care coverage,” says Molly Smith, group vice president for public policy at the American Hospital Association.

Progressives, meanwhile, are disappointed. They see the incremental health care reforms as a missed opportunity: Health care analysts argue that the government could cover more people for far less money by enrolling them in Medicaid or Medicare rather than offering subsidies on the private market. And some activists worry the current focus on private insurance further entrenches the problematic, employer-based system and allows the powerful health care industry to kick calls for broader reform down the road.

“These are all temporary fixes,” says Rep. Ro Khanna of California, an outspoken advocate for single-payer health care who supported the package despite “vehemently” disagreeing with the COBRA provision. “The reality is that most Americans are going to see that their costs are continuing to go up, their premiums are going up, their co-pays are going up, their deductibles are going up. And their care is being restricted.”

Bolstering employer-based insurance

The U.S. health care system has been built on employer-based health insurance for decades. Some 160 million Americans got their health insurance through their job in 2019. But the COVID-19 pandemic called into question the wisdom of that system. With businesses shuttering and tens of millions of people out of work, many Americans suddenly found themselves without access to health care as a viral pandemic swamped the nation. Researchers estimate as many as 15 million Americans and their dependents lost insurance through their jobs last year. Progressives seized the moment to push their long-standing message that the employer-based model is broken, and the Democratic primary was dominated by a debate over two potentially enormous health care transformations, Medicare for All or a public option.

The $3.8 trillion health care industry, for its part, was also in upheaval. While coronavirus patients overwhelmed the health system, many hospitals and providers saw profits collapse as people avoided routine medical care for months and elective procedures were cancelled. Health insurers, meanwhile, raked in record profits. The disparity helped underscore a politically tricky reality: while some providers and patients benefit from the private health care system, others do not. Hospitals, doctors, insurers and employer groups were poised to defend private insurance, while health care advocates and providers who treat the uninsured argued for expanding government-run health care, which offers lower reimbursement rates but could cover those without other options.

The tension played out in the Democratic political field. After Biden emerged as the Democratic nominee, he joined with Sen. Bernie Sanders to create a “unity task force,” which ultimately recommended a plan for a public option. The Democrats’ apparent unity around a robust, federally-managed alternative to private health insurance galvanized the health care industry players. After Biden’s election, health care lobbyists, employer-benefits groups and some unions stepped up efforts to push moderate, but meaningful improvements to the existing, private insurance market, like increasing ACA and COBRA subsidies, in part as a strategy to prevent the expansion of government health care.

On Dec. 3, America’s Health Insurance Plans (AHIP) and the Blue Cross Blue Shield Association, two health insurance lobby groups, wrote to Congressional leaders recommending a plan that included expanding ACA subsidies and asking the government to fully cover the cost of COBRA premiums. And in February, the Affordable Coverage Coalition, representing competing interests across the U.S. health system, came together to champion the idea of building on the ACA and other existing programs to reach universal health coverage. The group, which includes major insurers, hospitals, doctors and business lobbies, also endorsed boosting subsidies for the ACA and covering COBRA costs, as well other moves favored by Democrats that would help more people enroll in coverage and incentivize states to expand Medicaid.

“From our view, the ACA went a long way, but it needs, like any program, some mid course corrections to reach its aspirations,” says Chip Kahn, president and CEO of the Federation of American Hospitals, which represents for-profit hospitals and is a member of the Affordable Coverage Coalition, along with the American Hospital Association, AHIP and Blue Cross Blue Shield Association. Over the last four years, Kahn said, Republicans’ focus on repealing and replacing the ACA meant the government chipped away at the law rather than improving it. With Biden now in office and Democrats in control of Congress, the time was ripe to bolster the law. “That’s why we thought it was timely to get together with others in the industry, who we share this view with, that this framework can work for everyone,” he says.

While hospitals, doctors and insurers have defended the ACA in the past since they benefit when more people have health insurance, the new coalition also added the U.S. Chamber of Commerce, which did not previously support the law. The Chamber joined the coalition because it is “an effort and opportunity to strengthen the private insurance market,” says Katie Mahoney, vice president of health policy at the Chamber. The ACA has been in place for years at this point, she added, so it’s important to ensure the existing system works and to advocate for the continued success of private insurance. “Business wants to have predictability, business wants to be able to innovate and provide the valued benefit of coverage to their employees,” Mahoney says. Many of the coalition’s ideas, including the expanded ACA tax credits and COBRA funding, have made it into Democrats’ COVID-19 relief bill.

Boosting ACA and COBRA subsides: the safest political option

In non-pandemic times, most workers who have left their jobs try to avoid signing up for COBRA. The premiums can be very expensive without an employer’s assistance, and people who have been laid-off can typically find cheaper coverage through subsidized ACA marketplace plans or Medicaid. But corporations, hospitals, many health care providers and some unions benefit directly from the employer-sponsored health plans and want to make sure they remain after the economy recovers from the pandemic. The system allows corporations to get tax breaks for offering the benefits to their employees; it offers hospitals and doctors higher reimbursement rates than Medicare or Medicaid; and it preserves the often-generous plans unions have negotiated with their companies.

In some ways, subsidizing COBRA benefits is a politically safe idea. Many of the 160 million Americans who had workplace health insurance before the pandemic said they generally liked their plans, Biden supports temporarily paying for workplace insurance and Republicans are less likely to fight a plan that props up employer-based private insurance than alternatives that expand government coverage. The House tried including COBRA subsidies in its third stimulus bill last spring, but that package never made it through the Republican controlled Senate at the time. This time around, the Senate parliamentarian has ruled the COBRA provisions can be included in bills passed under the budget reconciliation process, the mechanism that Congress is using to pass COVID-19 relief and that requires a simple majority vote, so the idea seems destined to stay the final package.

It’s not just the COBRA provision that is aimed at avoiding more public health coverage, though. Many of the groups in the new coalition are also part of a different advocacy group, Partnership for America’s Health Care Future, which started in 2018 with the goal of pushing back on Medicare for All. It now opposes all forms of a public option. The Partnership ran a seven-figure ad campaign attacking Medicare for All in 2020 and launched ads opposing Biden’s public option during the Democratic National Convention. “The work we did, in terms of raising the issues we did in the Partnership about these other types of coverage was prescient,” says Kahn, of the Federation of American Hospitals, who helped start the Partnership. “It was the right time to start working on those issues, and to try to get people to focus on the Obamacare framework, rather than all these add ons, changes in policy.”

The Partnership is solely focused on lobbying against any expansion of government coverage. But its members say its work and the work of the Affordable Coverage Coalition are in sync: both believe the country should have a combination of public programs and private coverage, and they see promoting—and buttressing—an employer-backed insurance model as the best way forward.

“We’ve got a path to covering everyone in a way that wouldn’t disrupt coverage and care,” says Justine Handelman, senior vice president of policy and representation at Blue Cross Blue Shield Association, which is a member of both the Affordable Coverage Coalition and the Partnership. “We believe that this is an important step and a down payment on the ACA during the pandemic to ensure that people can afford coverage, and we will be working with Congress to extend that beyond the two years and ideally make it permanent.”

Progressives lament a missed opportunity

Some progressives see Democrats’ willingness to buttress the existing, employer-insurance based system as a missed chance. Medicare for All advocates argue that Democrats should use their new power to aggressively expand the safety net and start making structural changes to the system that exacerbated access to health care during the pandemic rather than allowing it to continue.

“Democrats have won control of the federal government, so now there are no more excuses. And the question is are we actually going to fix the health care crisis that got us here?” activist Ady Brarkan asked in a recent video from progressive media outlet More Perfect Union criticizing the COBRA subsidies. “Here’s the frustrating reality. President Biden and congressional Democrats are proposing a solution that doesn’t come close to solving this crisis.”

Before the new Congress had even begun, left-wing activists called on Rep. Alexandria Ocasio-Cortez to force a House vote on Medicare for All. Ocasio-Cortez explained that this wouldn’t achieve the left’s desired outcome, but that didn’t satisfy everyone. And while many progressives say they need to build more grassroots support for single-payer health care in order to get more lawmakers onboard, health care activists and outside groups have been clear about demanding more from Congress.

In a recent email to supporters, National Nurses United, the nation’s largest nurses union and a powerful champion of Medicare for All, echoed the sentiment, arguing that “the ACA isn’t enough” and that “the only way to truly make health care a human right is through Medicare for All.” Connie Huynh, director of the Health Care for All campaign at progressive advocacy group People’s Action, which also supports Medicare for All, describes the COBRA subsidies as “another corporate bailout” but says she believes the COVID-19 package is “a critical start” that will provide some immediate relief. “It’s something that we need to win now, so that we can open up space for our next opportunities,” she says.

She and other progressives are especially frustrated by what they see as the limited scope of the current relief plan. The Congressional Budget Office recently estimated that the House bill would result in 1.3 million people getting insurance coverage next year while the changes to the ACA and COBRA benefits would cost $52.8 billion. The expanded ACA subsidies would make many more people eligible for reduced or free coverage. But part of the problem is reaching those people and helping them navigate hurdles to sign up. And once they’re enrolled, some people will still face high deductibles, out-of-pocket costs, and instances where their insurer flat out denies in-network claims. When it comes to COBRA, the House bill proposed covering 85% of the cost of laid off workers keeping their employer plans, but after unions like Unite Here said that wasn’t enough, the Senate plan would have the government cover 100% of COBRA costs. All of these changes are temporary: The COBRA subsidies last just through September and the ACA expansion would be in place for two years.

“We should be clear it’s not a long-term solution,“ says Huynh. “We’re putting a spare tire on the car right now. It’s gonna help us get by, but if we think that we can try to drive with a spare tire for too long, the car is going to break down somewhere else.”

Single-payer advocates look for new paths forward

In the Biden-Sanders unity task force recommendations, Democrats proposed a kind of immediate public health insurance option that could open during the pandemic. Both Sanders and Rep. Pramila Jayapal, chair of the Congressional Progressive Caucus, introduced bills last spring that would allow for emergency expansions of Medicare during the public health crisis. But those ideas lacked the political support to move quickly and by the end of the year, the debate among Democrats was again centered on improving, rather than overhauling, the existing system.

This paradigm part of what sociologist Paul Starr calls the “policy trap.” In his 2011 book Remedy and Reaction: The Peculiar American Struggle Over Health Care Reform, Starr writes that when the U.S. created its health financing policies half a century ago, it set up an “increasingly costly and complicated system that has satisfied enough of the public and so enriched the health care industry as to make change extraordinary difficult.”

Jayapal, who pushed to include provisions in the relief package that would automatically enroll laid-off workers in public health insurance and tie ACA subsidies to more generous plans, has criticized the industry-based health care reforms in the current bill. “They’ve been naked about their greed to keep the profits for the private insurance industry,” she tells TIME. “I wish we could move quickly and do the long-term structural change that we need, so that everybody in America has health care.” But she still voted for the bill, calling it “urgent” to provide some immediate help. “We have to just use whatever we have right now,” she says.

Jayapal says she is continuing to push for more sweeping reforms with both House Speaker Nancy Pelosi and Biden’s Domestic Policy Council Director Susan Rice. But it’s an uphill battle. Xavier Becerra, Biden’s pick for Health and Human Services Secretary, was a vocal Medicare for All advocate when he served in Congress, but during his confirmation hearing last week, reassured Republicans that he planned to stick with Biden’s goals to “build on the Affordable Care Act.”

Democratic Senators Tim Kaine and Michael Bennet recently reintroduced an updated version of their Medicare-X public option plan—something that progressives say is too moderate, but the Partnership for America’s Health Care Future opposes. FCC filings show the Partnership is already buying ads in Montana and Maine, where Senators who may need to be convinced to nix a Medicare-X plan are from. It also recently tried to run Facebook ads criticizing a public option in those places as well as in West Virginia, Arizona, Pennsylvania and the Washington, D.C. area.

Jayapal says she’s ready for a long fight. “I’ve never believed that it’s going to be easy to make any substantial changes to the system. We in Congress are going to have to get a backbone and a spine to stand up for health care for every single person in this country,” she says. “If anything, the fact that they’ve continued to make billions of dollars, both insurance companies and drug companies during this pandemic, is just even more fodder for the mill of why we have to have at least a public option that is administered by Medicare—but in an ideal world, also, a Medicare for All single-payer health care system.”