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Power Point Slides: President Biden’s Budget and the Impact to Medicare

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Here is a breakdown of President Joe Biden’s Budget and how it will reshape the U.S. Healthcare System and Medicare:

President Joe Biden’s Budget has 3 main initiatives when it comes to healthcare and Medicare:

  1. Lower Prescription Drugs Costs
  2. Improve Medicare
  3. Recharacterize how Healthcare is defined
Lowering Prescription Drug Costs

Pres. Joe Biden’s Budget calls for allowing Medicare to “negotiate payment for certain high-cost drugs and requiring manufacturers to pay rebates when drug prices rise faster than inflation”.

The issue:

1. Unfortunately, Pres. Biden’s Budget does not address all drugs that Americans be using. This, however, may lead to lower costing drugs to inflate at even higher prices. Drug makers may in turn simply increase the cost of drugs that Medicare is not negotiating.

2. The other issue is with the passing of this Budget it will nullify the Favored Nation Model (FNM).

The FNM simply makes drug makers sell medications in the U.S. at the same price they give to other nations. 

For example:

According to an article from, Insulin, which most Type 1 Diabetics use, can cost as high as $450.00 a month in the United States. That same drug in Canada currently sells for about $21.00 a month.

Under the Favored Nation Model that medication would cost $21.00 a month or even lower if it were sold cheaper in another nation.

Improve Medicare

Pres. Joe Biden’s Budget will also allow Medicare to expand coverage in terms of providing access to Dental, Vision and Hearing. All of these services are essential in maintaining good health and have been found to lower overall health costs. Under the system of Medicare, though, the only way to access coverage for these would be through purchasing a Medicare Advantage Plan (MA Plan).

MA Plans are available through private insurers who must provide the exact same coverage as Medicare Parts A and B, but can also provide for other services like the 3 above and even things like gym memberships and transportation to and from care.

MA Plans do have what some deem to drawbacks as they tend to have networks, expensive costs if care is utilized and do not cross states lines. 

With Pres. Biden’s Budget Medicare can not only compete with MA Plans, but may become a better form of coverage as Medicare does not have networks, can cross state lines (you access care anywhere in the country) and may be cheaper for those who do wind up in a hospital.

The issue:

1. The biggest issue will be the costs of coverage within Medicare. As more people turn to these new plans the costs to private insurers who provide them may increase. The end result could be higher premiums as corporations tend to pass on increased liabilities onto consumers.

2. The other drawback may be the result that many people who are already in MA Plans and would like to switch back to Medicare may not be able to. If they can, depending on their residency, they may find that doing so will lead to higher costs or even possibly denial of coverage. Under current guidelines once a person selects an MA Plan often times they are not able to switch back to Medicare due to regulations surrounding health status. 

In order to switch back to Medicare, after a person’s Initial Enrollment Period, they may be subject to a medical underwriting evaluation. If they are found to be unhealthy they may have to pay higher premiums or could even be denied all together.

Recharacterize Healthcare

The absolute biggest initiative with Pres. Biden’s Budget when it comes to healthcare is that it redefines healthcare to be “a right. not a privilege.”

The great news about this initiative is that for every American receiving health services will never be an issue, but there are also consequences that could lead to a complete transformation of the country.

A right, defined by the worst possible source, Wikipedia, is: “the fundamental normative rule about what is allowed of people or owed to people according to some legal system, social convention, or ethical theory”.

By this definition not only are people owed healthcare, but the federal government is now responsible for guaranteeing that another will provide it…no matter what, which brings us to last the part of Pres. Biden’s Budget: paying for this.

Affording these changes

Unlike typical Presidential Budgets, when it comes to healthcare and potential promises, Pres. Biden’s Budget does address how the government will be able to afford these changes.

Under the Budget moving forward Medicare will reform how it pays for services that the healthcare industry provides, which means that Medicare will lower the reimbursement rates it pays for services.

Medicare is a reimbursement system. When a person receives care under Medicare there is no bill they have to pay other than any Deductibles that may apply.

The healthcare providers then must submit a bill for payment to the Centers for Medicare Services (CMS). Typically, CMS pays these healthcare providers at a rate that is 80% less than what private insurers pay.

For example:

A healthcare provider submits a bill for $1,000.00 to CMS. Since insurers, typically, only pay 80% of that bill or $800.00 CMS will reimburse that provider $640.00.

The obvious ramification is that since the healthcare provider does not receive the necessary revenue to maintain their practice they in turn increase their rates the next year to offset this loss.

Under Pres. Biden’s Budget Medicare may even lower this amount further, thus the costs for healthcare may go even higher.


President Biden’s Budget is proposing to:

  1. Lower drug cost for some medications, but in turn may increase the costs of many others.
  2. Expand coverage of Medicare, which is great, but at the cost of destroying Medicare Advantage Plans, which may lead to higher costs for seniors who are already in Medicare.
  3. Make healthcare a right, which could place the federal government in the position of ensuring health services are provided not matter what.
  4. Revamp how healthcare providers receive payment which may lead to not only higher health costs, but worse, the eventuality of many healthcare providers leaving the field all together.
    • This why healthcare being a right may lead to bigger problems. If no one wants to enter the healthcare industry due to entry being so expensive and the ability to pay off those debts almost impossible to achieve due to a lack in pay, how will the government guarantee this new right?

Here is a downloadable version of the PowerPoint; Political Update

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