The United States currently faces a deficit of over $700 billion. Not including other health programs, in 2021, over $734 billion was spent on Medicaid alone. Despite these facts, President Biden’s 2024 budget proposal aims to increase funding for healthcare by 11.5%. The proposal claims proposed tax increases will not only pay for the increased healthcare spending, but also reduce the overall current deficit.
Below, I summarize key takeaways from the healthcare budget.
- Expanding Medicaid
The budget proposal intends to “make permanent the expanded premium tax credits” from the Inflation Reduction Act. But as PRI President and CEO Sally Pipes wrote back in 2022, those same provisions will “distort the market in ways that lead to higher prices for everyone.” Healthcare expenditures account for most of the current spending growth and are already projected to balloon to $1.4 trillion by 2033, according to the most recent figures from the Congressional Budget Office. Making the Inflation Reduction Act provisions permanent will only make that worse.
Currently, 11 states have not adopted Medicaid expansion under the Affordable Care Act. As healthcare costs soar in other states, the states fear expansion could disadvantage current Medicaid enrollees and that the costs would burden their state budgets. In response to the reluctant states, the 2024 budget proposes to provide “Medicaid-like” coverage. It is unclear how such coverage would be implemented and whether it would violate the state’s right to decline expansion.
The proposal seeks to force private health insurance to expand coverage for mental health. It also proposes lowering the patient cost for Medicare patients receiving mental health services. Additionally, the budget seeks to increase post-partum Medicaid coverage to the full 12 months after birth.
- Drug Innovation
Biden’s budget proposal increases the number of prescription drugs under price controls. Theoretically, price controls would reduce prices for patients. But, in the long-term price controls reduce competition and increase costs across the board.
PRI senior fellow Wayne Winegarden, who has written on the dangers of prescription drug price controls, gave his take, “The budget proposal proves that the ten drugs they put price controls on through the Inflation Reduction Act were just a downpayment. Now, the budget is calling for more drug price controls than even the Inflation Reduction Act. Broad-based price controls are anti-patient and anti-health. Patients are going to suffer, and treatments are going to be lost.”
In addition to drug costs, the budget reiterated President Biden’s commitment to the Cancer Moonshot initiative. Through the budget, he seeks to fund cancer research for treatments. But, as Sally Pipes has pointed out, “levying price controls on prescription drugs [guts] the ecosystem that underwrites drug discovery.”
- Healthcare Workforce
With over 100,000 employees having left the healthcare sector, there is a significant shortage of labor in hospitals. As a result of the competitive labor market, hospitals have had to increase the pay for contracted nurses. Many hospitals struggled to stay open throughout 2022. A report by Health Affairs pointed out that the issue impacts rural hospitals the most, as they have extremely limited budgets.
To address the crisis, the budget seeks to double the size of the health center program, expand the nurse workforce, and invest in rural hospitals.
But throwing more money at hospitals to subsidize salaries does not solve the underlying issue: the lack of nurses. Instead, encouraging states to loosen nurse licensing laws would help more nurses enter the workforce.
As it currently stands, the Biden administration’s 2024 proposed budget would significantly increase healthcare costs with little benefit to taxpayers.
McKenzie Richards is a policy associate at the Pacific Research Institute.