The Washington PostDemocracy Dies in Darkness

Democrats race to prevent spike in health premiums amid record inflation

Failure to finalize a spending deal with Sen. Joe Manchin III could leave millions facing high prices — and others lacking affordable coverage altogether

From left, Rep. Patrick Kennedy (D-R.I.) talks to Sen. Joe Manchin (D-W. Va) during an event to celebrate the Bipartisan Safer Communities Act on the South Lawn of the White House on July 11. President Joe Biden delivered remarks at the event calling the new law "the most significant gun violence reduction legislation in the last 30 years." (Chip Somodevilla/Getty Images)

Roughly 13 million Americans could see their health insurance costs rise next year — and millions more may not have care at all — unless congressional Democrats can reach agreement over a critical portion of their long-stalled economic spending legislation.

The uncertainty loomed over lawmakers as they huddled again this week in pursuit of a wide-ranging deal that can balance the promises they made during the last election with their need to win support from Sen. Joe Manchin III (D-W.Va.), the crucial swing vote in the narrowly divided chamber.

But the problem took on new urgency on Wednesday, as Democrats grappled with the latest round of inflation data. Prices rose by more than 9 percent last month compared to a year earlier — a dour report that prompted the fiscally conscious Manchin to emphasize he would be “very, very cautious” as negotiations with party leaders continue.

Democrats see hope for spending deal with Manchin as Congress returns

The most urgent concern involves the fate of tax credits that help low- and middle-income Americans purchase health insurance annually. Unless Congress extends these subsidies, roughly 13 million people are set to see their monthly premiums spike in January, according to an estimate from Kaiser Family Foundation — in some cases by hundreds of dollars per person.

Some Democrats also hope to offer new help to the roughly 2.2 million people, mostly women and people of color, who find themselves in an even tougher financial bind: They’re too poor to qualify for federal aid yet unable to enroll in Medicaid because they live in 12 states where Republican leaders have refused to expand program eligibility.

Democrats initially sought to address both matters as part of the roughly $2 trillion Build Back Better Act that President Biden endorsed, and House lawmakers adopted, at the end of last year. In the Senate, however, Manchin opposed that broader package largely out of fiscal concerns. Some of his trepidation extended to some of his party’s proposed health care spending, raising questions as to how far Democrats might have to scale back their ambitions to win his must-have support.

On Wednesday, Manchin signaled some openness to extending subsidies that help cover premium costs. But he said his support “depends” on whether lawmakers can find “a pathway forward that’s not inflammatory,” referring to inflation, at a time when prices of gas, groceries and rents are spiking at their highest clip in roughly 40 years.

In response, some Democrats tried to cast their ambitions differently. Even as they bristled at the inflation report for June, party lawmakers said it affirmed the need for swift action to advance their economic agenda — arguing that spending on health care and other policies could ease families’ financial burdens.

“We’re cutting costs for consumers. We’re cutting prescription drug costs. We’re holding down premiums … we’re cutting energy costs for the long time,” said Sen. Ron Wyden (D-Ore.), the leader of the tax-focused Senate Finance Committee, adding that additional proposals to raise revenue would contribute to “reducing the deficit.”

“This is an effort to reduce consumer costs,” Wyden added, “this is the central focus of what we are working on.”

For Democrats, the wrangling over health care strikes at the heart of their political legacy, more than a decade after the passage of the Affordable Care Act (ACA). Lawmakers maintain their work is unfinished in lowering the costs of coverage, reducing the price of drugs and expanding access to care in a nation where one malady can lead to financial ruin — and roughly 30 million people still do not have insurance.

On the road to winning the White House and capturing both chambers of Congress, the party’s leaders had offered a sweeping vision for further reforms. Some lawmakers, including Sen. Bernie Sanders (I-Vt.), called for plans like Medicare-for-all that might have guaranteed universal coverage. But their attempts to turn their policy vision into law quickly hit serious roadblocks. Republicans immediately mobilized to block the efforts — and even some Democrats, including Manchin, grew skeptical of their colleagues’ more ambitious, costly health proposals.

For now, Democrats believe they have clinched an agreement around lowering prescription drug costs for seniors, a plan that would empower the government to negotiate the price of some medicines offered under Medicare. Schumer finalized the legislative text with Manchin last week, allowing Democrats to take the next step to prepare it for the process known as budget reconciliation. The parliamentary procedure enables them to advance any final spending deal with a simple majority, averting unanimous Republican objections, provided Democrats keep Manchin satisfied and stay united.

Still unresolved, however, is the fate of the insurance subsidies. In a coronavirus relief package adopted last year, lawmakers provided more financial help to low-income Americans who purchase insurance through national or state exchanges — and they granted those benefits to middle-income Americans for the first time.

But the expanded subsidies are set to expire at the end of this year. While many Democrats hoped to make the existing aid permanent, Manchin has sought to scale that spending back. The West Virginia moderate has focused on eligibility, aiming to further limit the subsidies by income level, according to two people familiar with the matter who spoke on the condition of anonymity to describe the deliberations. Manchin’s objection stems from a broader belief that federal benefits should be means-tested to focus only on the poorest, a more conservative approach than what is supported by others in his party, who want to ensure families in higher-cost areas receive help, too.

Any attempt to scale back the existing subsidies to meet Manchin’s concerns ultimately would raise insurance costs for some of the 13 million people currently benefiting from the program. Talks to rejigger the proposal are underway, the two people familiar with the matter said, expressing optimism they could find some solution soon.

“I’m fully expecting to be voting on a reconciliation bill before we leave here in August,” said Sen. Tim Kaine (D-Va.) on Tuesday, adding that “continuing the subsidies” that help millions afford insurance is “very much key to it.”

A day later, even as Manchin expressed renewed cost concerns, Kaine maintained his optimism: “Yes, it will be a part of what we’re going to do.”

Absent action, the financial hardship could prove immense. Roughly 3 million people who currently access insurance through the insurance exchanges could be priced out of the market, leaving them uninsured, according to a March report from the Department of Health and Human Services. Nearly 9 million people could lose hundreds of dollars in financial help each year, and roughly 1.5 million may lose their subsidies entirely.

The stark potential consequences prompted eight major health groups — such as the American Cancer Society Cancer Action Network and the American Medical Association — to warn about “premium shock” if Congress fails to extend enhanced financial help for ACA consumers. Officials from state insurance marketplaces, meanwhile, have begged Congress in recent weeks to act swiftly, since July is when they typically try to set their rates for the next year.

Democratic lawmakers have joined them in expressing panic, fearing the political blowback they might face in what is already a tough election year. This May, more than two dozen Democrats from swing districts called on Schumer and House Speaker Nancy Pelosi (D-Calif.) to extend the subsidies and “deliver on the promises we made to our constituents to lower their health care costs and protect their care.” More than a dozen Senate Democrats delivered their own plea a month later.

The uninsured are eager for Congress to fill a coverage gap — even for a few years

Closing the Medicaid coverage gap in the 12 Republican states that long have refused to extend benefits poses an even greater challenge.

Democrats first tried last year to provide premium-free health coverage for more than 2 million affected adults through the insurance exchanges through 2025. But Manchin said at the time that the federal government should not be on the hook for subsidizing some states’ benefits while others covered their own costs.

Since then, the proposal largely has faded from the renewed negotiations, according to two people familiar with the matter, as Schumer and Manchin focus on other health policy issues and look for ways to keep down the total costs of the legislation. Some congressional aides confide the odds are low that it is included in a final spending deal, though they caution nothing has been decided.

Yet Democrats have continued to press their case anyway: On Tuesday, for example, Sen. Raphael G. Warnock (D-Ga.) pointed to the fact that there are hundreds of thousands of residents in his state alone affected by the Medicaid gap. The senator, running a close reelection race that may determine control of the Senate next year, said he had made Medicaid expansion a top priority as a result.

“Imagine having Social Security or Medicare in 38 states,” Warnock said. “It’s unimaginable because it’s the law of the land.”

Some staunch proponents of closing the Medicaid gap have ramped up their advocacy efforts particularly in response to Dobbs v. Jackson Women’s Health Organization, the Supreme Court decision that overturned Roe v. Wade. Protect Our Care, a Democratic-aligned advocacy group, has circulated memos on Capitol Hill this week, arguing that abortion bans coupled with the lack of Medicaid expansion “impacts women of color and their families, leaving them without coverage and at risk for severe birth outcomes.”

Rep. Robin L. Kelly (D-Ill.), the leader of the Congressional Black Caucus Health Braintrust, added in an interview that many of those affected by the Medicaid gap are women — meaning inaction could worsen maternal mortality at a moment of great uncertainty. She said Tuesday she had directly brought up the matter with Schumer, pointing out the “importance of Medicaid postpartum coverage and closing the gap.”

“There are still too many people in the richest country in the history of the world without health care or adequate health care,” Kelly said.

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