With a new Commander-in-Chief poised to take office in January, one of the most volatile and polarizing election seasons comes to a close here in Georgia (Senate race still withstanding). Amidst the pandemic, the issue of healthcare has been one of the most important topics on the minds of Georgians and all Americans. As we shift into a new era of leadership, what changes can Americans expect to see when it comes to healthcare?
As far as healthcare and the impact Biden may have on coverage for Americans, we’re primarily seeing two topics of conversation - the future of the Affordable Care Act and the handling of COVID-19.
The Affordable Care Act (Obamacare)
Since becoming the front-runner of the Democratic party, Biden has made it clear that he intends to offer a public plan option for Americans. This option would operate similar to Medicare, and continue building on the foundation Obama set in place through Obamacare.
Currently, the Affordable Care Act protects people with pre-existing conditions - such as cancer, heart disease, diabetes, etc. Additionally, it limits out-of-pocket expenses users pay for doctor visits and medical expenses, as well as require employers with 50+ employees to offer insurance coverage.
Currently, around 27.9 million (or 8.5 percent) Americans are uninsured.1 Biden has pledged on the campaign trail to lower this number to three percent.
Affordability of a Public Plan Option
Currently, Obamacare plan options have a limit of charging 9.86 percent of household earnings for a health insurance plan. Biden’s new plan proposes a decrease in cost limits to 8.5 percent.2
Biden’s plan also proposes an elimination of the tax credit income cap, currently set at 400 percent of the federal poverty line.2 This would allow more Americans to be eligible to receive tax credits that assist in offsetting the cost of plan premiums.
Biden has included a plan to regulate and oversee new drug prices, as well as lower Medicare prescription prices and eliminate advertising tax breaks for pharmaceutical companies. Speaking of Medicare, the Biden administration has also proposed a drop in age eligibility for Medicare from 65 to 60.
More on Medicare. Will retirees bare more the cost burden? My instincts tell me, yes. Having worked with Aetna's Medicare Advantage plan for years and heading up the program here in Georgia, the cost savings from advantage plans can only go so far.
As people are living longer and baby boomers continue to retire, the amount paid into the system by us in the form of Medicare taxes doesn't remotely cover the massive cost of healthcare in America today3. Perhaps the difference will be made up from taxes to still working, higher income individuals. I'm not so sure those additional tax dollars will be enough to subsidize a growing senior population's healthcare needs.
While an Advantage plan may be a way to save you dollars in any environment, it will be important to weigh the pros and cons of choosing Medicare Advantage plans versus traditional Medicap options. Of course, you can have a say in your out of pocket by doing whatever is in your power to become a healthier Georgian! As a pre-retiree, I would also strongly recommend making additional savings for healthcare through HSA's and overall, a part of your long term preparedness program.
Obviously, we can’t talk healthcare in 2020 without diving into the topic of COVID-19 and Biden’s plan for it.
On his campaign website, Biden has outlined some clear direction for how he proposes to handle COVID-19 as president. His plan includes:3
In terms of restoring the economy to pre-pandemic levels of growth, the Biden administration emphasizes the importance of establishing a “rigorous public health response” in order to navigate a “stronger, more effective reopening.”3
Healthcare has remained top of mind for many Americans throughout 2020, and it will likely continue to be an important issue as we step into 2021. If you’re wondering how the Biden administration’s proposed healthcare changes may affect your current coverage, you can always reach out to your company’s HR department, insurance provider or financial professional for guidance.
Roy Larsen is a Certified Financial Planner™ practitioner and Fee Only Wealth Manager who resides outside of Atlanta, Georgia.