On U.S. health care policy, President Biden’s administration concluded this past year as predicted. The administration aggressively consolidated greater federal control over health care, undercutting state authority and making Americans more dependent on the federal government. At the state level, health care was the proverbial “mixed bag,” reflecting the intensely contentious competing visions for health care reform. 2022 will likely bring more of the same at both the federal and state level.

Biden’s Campaign for Federal Control. The Administration took aggressive administrative and legislative actions to implement its health policy agenda. It rolled back many of the Trump administration’s reforms aimed at bringing down the cost of health care and pushed more people into government-run coverage by re-opening the Obamacare exchanges and quadrupling the number of organizations charged with enrolling individuals in government coverage.

The Centers for Medicare and Medicaid Services (CMS) also began taking steps to strip away state flexibility. In fact, CMS took the unprecedented step of revoking previously approved state Medicaid agreements targeted at those states promoting work as a means to assist able-bodied, low-income adults transition out of government dependence and toward self-sufficiency.

Working closely with its allies in Congress, the Administration used the ongoing COVID crisis as a pretext to pursue its long-term goal of a government-run, single-payer health care system. The initial legislative vehicle, the American Rescue Plan, further consolidated federal control by making existing Obamacare subsidies more generous and extending Obamacare subsidies to all, regardless of income. Touted as “temporary” relief, these provisions laid the groundwork for the next legislative phase.

The multi-trillion-dollar, tax-and-spend “Build Back Better” plan, passed by the House, made temporary provisions permanent and added a new set of sweeping and costly changes that would permanently consolidate federal control over health care. In addition to making the temporary federal subsidies permanent, the plan set up a new government-run health program, made changes to undermine employer-based coverage and other non-government coverage options and imposed more federal mandates on the states, further restricting the states’ authority to manage their health care programs. Thus far, this massive bill has been stalled in the United States Senate.

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States Fight over Policy Direction.  As with the national debate over the best response to COVID, 2021 state battles on health care reform revolved around two very different and competing approaches. Progressive or liberal-leaning states pursued heavy-handed government interventions to expand government control, while more conservative or mainstream states pursued policies designed to make health care coverage more accessible and affordable.

Among the progressive victories, Nevada and Colorado joined Washington state in enacting a so-called “public option.” Each with its own version, these states established government-run plans to compete against existing private health plans in the state.

There were also a number of proposals advanced in the states aimed at imposing government controls on pharmaceuticals, ranging from importing government price controls from other countries to creating government affordability boards to “oversee” pharmaceutical prices in the states.

In sharp contrast to these campaigns, the more mainstream or conservative states took up patient-centered reforms aimed at expanding access and improving choice and competition.

For example, Montana removed key regulatory barriers to patients and competition by expanding the availability of direct primary care, eliminating some restrictions on telehealth services, easing rules for medical professionals to dispense prescription medications and repealing anti-competitive certificate of need laws that restrict entry of new providers and health care innovation.

In Texas, the state enacted “Healthy Families, Healthy Texas.” As an alternative to Medicaid expansion, this bipartisan package of reforms focused on improving access, outcomes and affordability. Montana and Texas were not alone, other states also took important actions to advance patient-centered health reform in their own states.

Looking ahead

This year, you can expect to see many of these same policy issues resurface—in one form or another—at the federal or state level. Specifically:

Build Back Better. President Biden and his congressional allies are not likely to give up trying to pass the multi-trillion Build Back Better plan. They may try to resuscitate the House-passed bill, craft another version of it, or advance elements of the proposal on a piecemeal basis. The latter approach might include making those temporary ACA subsidies and expansions permanent and re-introducing a “public option” plan aimed at squeezing out private and employer-based health coverage. In addition, with the enticement of generous federal funds, states may be lured into advancing this piecemeal approach by adopting federal benefit and eligibility expansions, including those relating to home-and community-based health services.

Public Health Emergency Declaration. The Secretary of Health and Human Services recently extended the Public Health Emergency (PHE), which is now set to expire in April. Various regulatory and funding implications are tied to the declaration and its extensions. One such policy is the 6.2 percent increase in Medicaid funding provided to the states under the Families First Coronavirus Act. This funding is available through duration of the PHE. However, states receiving these funds must consent to federal rules limiting their authority to enforce certain Medicaid eligibility rules. Looking ahead, some states, especially those now running surpluses, may decide to pre-emptively forgo the extended emergency funding to regain their ability to manage their own Medicaid eligibility rules.

Waivers. While the Administration took swift and unprecedent action to revoke certain Medicaid waivers, there are still other previously approved waivers related to Medicaid and the Affordable Care Act (ACA) that remain in flux. Georgia, which had its 1115 Medicaid waiver revoked by the Biden administration last year, was also put on notice that its Section 1332 ACA waiver was under further review. This waiver allows the state to use a private, online site, rather than a government-run site, to assist consumers in shopping and selecting a health plan. The future of Tennessee’s 1115 Medicaid waiver is also uncertain. It gave the state additional flexibility to reorganize the financing of it Medicaid program based on budget targets. Beyond these two waivers, the Biden administration may initiate yet another round of waiver reviews in 2022.

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Other Administrative Policy Changes. Expect the Biden administration to further ramp up its regulatory power in 2022. For example, the recently released Obamacare payment rule further rolls back Trump’s regulatory reform efforts by imposing new federal rules and mandates on health plans, restricting Americans’ options. Additionally, CMS recently outlined its priorities for Medicaid. These include making enrollment in Medicaid easier and ensuring that enrollees can maintain coverage more easily. CMS also indicated that it would consider initiating policies aimed at establishing a “federal floor” for health care services. More broadly, the Administration has also indicated that it would reframe its health policies to focus on addressing “diversity” and “equity” as well as addressing “social determinants” of health.

Action in The States. Health care is already re-surfacing at the state level. The California legislature is considering a radical proposal to adopt a single payer model, while Gov. Gavin Newsom has unveiled plans to expand government-funded health care to illegal immigrants. Analysts and policymakers will also follow how three “public option” plans fare in Washington, Nevada and Colorado. Of related interest is how the Biden administration might respond to these liberal-leaning state initiatives, including whether it might use its federal power to bolster these state efforts. Expect also to see continued efforts in several states to impose government price controls on pharmaceuticals, as well as new initiatives to extend price controls to other sectors of the health care economy.

In contrast to these efforts to secure greater government control over health care, one can expect more mainstream and conservative state officials to focus on measures to open up their health care markets to greater competition. They are also likely to continue to make permanent some of the key deregulatory actions taken during COVID pandemic. These changes include opening access to care through telehealth services, broadening access providers with licensure changes, and removing costly and anti-competitive certificate of need rules on access to health care facilities.

Federal and state lawmaker will continue to be quite active on the health policy front this year. The question is, “Which approach will gain more ground: one that depends on more government-based interventions—whether federal or state—or one that removes government regulatory barriers to expanded patient choice and market competition.”