Policy Lab

Run on 4 March 2026

Healthcare Reform in the US

A full record of the simulated debate process, from constituency grievances and reform iterations to viability scoring and the final bill.

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The final result

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This debate took roughly 75 minutes to run. We created AI agents for each major political constituency, surfaced their grievances, designed reform proposals, scored each other's reactions, and eventually produced a full legislative bill proposal.

If you just want the final result, the article explains what the bill would change and how it affects the different groups involved. Otherwise, keep reading below to follow the full deliberation.

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or keep reading to discover the process behind it

Constituencies

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We began by identifying the main political constituencies involved in this debate.

Progressive DemocratsModerate DemocratsModerate RepublicansConservative Republicans

Grievances

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We then mapped what each group wants, in their own voice.

Progressive Democrats

1People die because they can't afford care they're legally entitled to receive
2The employer-based insurance system traps people and distorts the labor market
3Private insurers add cost without adding care

Moderate Democrats

1Insurance coverage is still too fragile for working families
2Drug prices are indefensible and we've been too slow to act
3The uninsured and underinsured still show up in emergency rooms, and everyone else pays for it

Moderate Republicans

1The cost of coverage is crushing middle-class families
2Deductibles are so high that insurance isn't really insurance
3Drug pricing is opaque and not tied to value

Conservative Republicans

1The Affordable Care Act destroyed the individual market we actually wanted
2Government price controls and regulation have killed hospital and provider competition
3Medicaid expansion has become an open-ended entitlement with no accountability

Policy Areas

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Finally, we grouped these grievances into 6 negotiable policy areas.

01Prescription Drug Pricing and Pharmacy Benefit Reform
02Coverage Access, Insurance Market Structure, and Medicaid
03Healthcare Market Transparency, Competition, and Administrative Simplification
04Mental Health and Substance Use Parity and Access
05Long-Term Care Financing
06What This Debate Does Not Address

Alignment

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We then analyzed where the constituencies converge, where they clash, and what trade-offs might hold a coalition together.

For each of the 5 policy areas, we ran a reform loop: one agent proposed changes, another scored how each group would react, and the cycle repeated until the scores cleared the bar or no more gains were possible.

Employer-sponsored insurance covers roughly half of Americans through a World War II-era tax exclusion that costs the federal government an estimated $5.9 trillion in foregone revenue over the next decade, with its largest benefit flowing to high-income workers [KFF, 2024; Tax Policy Center, 2025]. The ACA added marketplace subsidies, Medicaid expansion to 138% FPL, and pre-existing-condition protections, but 10 states declined expansion, leaving roughly 1.4 million low-income adults with no coverage pathway [KFF, 2024]; the enhanced subsidy provisions were set to expire at the end of 2025, reinstating a sharp cliff at 400% FPL. Roughly 27 million Americans remain uninsured [U.S. Census Bureau, 2023], 27% of covered workers are enrolled in high-deductible health plans [KFF, 2024], and Black women die in childbirth at more than three times the rate of White women [CDC, 2024].

These were the proposed changes:

·Medicaid Gap Fallback for 10-12 million uninsured adults in non-expansion states
·Public plan option for rural areas with no real insurance market
·Tax treatment for self-employed and gig workers who buy their own insurance
·Limits on insurance company delays in prior authorization decisions
·Deductible and out-of-pocket cost caps for individual and small-group plans
·National Medicaid quality floor to reduce state-by-state variation
·Enforcement of behavioral health prior authorization parity
·Demographic data reporting and risk adjustment to address racial health disparities
·Hospital cost-shift transparency
→For the full details, see the full debate.

By group

Progressive Democrats: The Medicaid Gap Fallback finally reaches the 10 to 12 million low-income adults that ten states left stranded when they rejected ACA expansion. These adults have had no legal path to coverage for over a decade. The fallback opens automatically without requiring the non-expansion states to act or cooperate, and the data-sharing authority gives CMS legal power to compel access to state eligibility records without state consent.

Moderate Democrats: The prior authorization response time standard reaches commercial individual and small-group plans immediately, and the employer plan conditionality mechanism attempts to extend it to large-employer plans for the first time. Moderate Democrats view prior authorization delays as a documented patient harm that falls on insured working families, not just the uninsured. The FFS Medicaid prior authorization rulemaking mandate closes a gap affecting roughly 40 percent of Medicaid enrollees whose plans were not reached by the managed care standards.

Moderate Republicans: The portable premium deduction treats self-employed workers, independent contractors, and small business owners the same as large-employer employees for the purpose of the tax benefit on health insurance premiums. This is a structural equity correction that Moderate Republicans have wanted for years. The AHP portability specification makes the deduction more useful in states that had blocked cross-state association plan participation, giving their core self-employed constituents a real improvement.

Conservative Republicans: The GAO rulemaking notification provision means CMS must give the House Ways and Means Committee and Senate Finance Committee 60 days notice before publishing any rule adjusting the portable deduction's refundability threshold, with a 30-day public comment period and a prohibition on finalizing the rule before the notification period expires. This is a concrete legislative check on executive rulemaking authority that Conservative Republicans specifically requested.

No federal law caps what manufacturers charge for drugs in the commercial market. Manufacturers set list prices unilaterally and extend effective exclusivity through secondary patent filings on trivial modifications, a practice known as evergreening; the 12 top-selling drugs average approximately 125 patent applications filed per drug, with the majority submitted after FDA approval [I-MAK, 2022]. Medicare was explicitly prohibited from negotiating prices under the 2003 Medicare Modernization Act; the Inflation Reduction Act of 2022 created negotiation authority, but the statutory caps limit it to 10 drugs in 2026 and 20 per year from 2029 onward, out of more than 20,000 drugs on the market [CMS, 2022]. Pharmacy benefit managers (PBMs), three firms of which control roughly 80% of the market [FTC, 2024], negotiate manufacturer rebates in exchange for formulary placement, but federal law does not require those rebates to flow to patients at the counter; patients pay cost-sharing based on list prices, not net prices, so the rebate that reduced the insurer's cost does nothing for the person at the pharmacy window.

These were the proposed changes:

·PBMs must show their math:
·Rebates flow to patients at the pharmacy counter, not to PBMs and insurers:
·Pharmacists must tell patients when paying cash costs less:
·Medicare can negotiate prices for drugs with no competition:
·Generic drugs can reach the market faster:
·Insurers cannot remove a drug from coverage at annual renewal to force patients onto something else:
→For the full details, see the full debate.

By group

Progressive Democrats: The single biggest near-term win is the pharmacist workflow requirement. Right now, the legal right to know about a cheaper cash price exists on paper, but pharmacists exercised it only about 25 percent of the time. Requiring the dispensing system to generate a mandatory prompt means every commercially insured Progressive Democrat who walks up to a pharmacy counter will benefit from this disclosure without relying on whether that particular pharmacist remembers the rule.

Moderate Democrats: Every specific ask Moderate Democrats raised in round 1 was addressed: the statutory rebate definition closes the reclassification loophole, the civil penalty on formulary disclosure non-compliance ($100,000 per annual filing, plus $10,000 per day of delay) follows the hospital price transparency enforcement model they pointed to, and the formulary stability protection closes the non-medical switching gap that the step-therapy exception process left open. This is the reform they described wanting.

Moderate Republicans: The small-manufacturer carve-out was their specific request and was delivered exactly: manufacturers with under $200 million in annual U.S. net revenues are exempt from the quarterly PBM contract disclosure filing requirement. The PBM administering their products still has to file, so the reform's target (the three dominant PBMs) remains fully covered. This protects the emerging biotech developers that Moderate Republicans frame as legitimate engines of drug innovation.

Conservative Republicans: The IP protection clause and the 50-drug simultaneous negotiation cap were both delivered as specifically requested. Conservative Republicans view the IP clause as legally declaratory of existing law, but it removes a litigation talking point and gives them a visible firewall in the text of the statute. The negotiation cap and public annual queue prevent CMS from quietly expanding into simultaneous negotiations across the entire drug market.

The current system for healthcare market competition and administrative operation is characterized by three compounding failures: Certificate of Need laws in roughly 35 states [NCSL, 2024] allow incumbent hospital systems to formally oppose new competitors in regulatory proceedings, contributing to hospital markets where roughly 90% are classified as highly concentrated [Health Affairs, 2017]; antitrust enforcement has been episodic and reactive, with vertical consolidation absorbing nearly half of all physicians into hospital employment since 2012; and the multi-payer billing apparatus consumes approximately 34% of total healthcare expenditures in administrative overhead [JAMA, 2021], concentrated in prior authorization requirements that physician practices now average 39 per physician per week [AMA, 2024]. The Hospital Price Transparency rule has been in effect since 2021 but nearly half of hospitals remain non-compliant [HHS OIG, 2024], and even compliant data is difficult for patients to use. Scope-of-practice restrictions in roughly 11 states require nurse practitioners to operate under physician supervision regardless of local supply [AANP, 2024], directly limiting primary care access in rural and underserved areas.

Medicare explicitly excludes custodial long-term care, covering only limited skilled nursing following a qualifying hospital stay of at least three consecutive days, up to 100 days per benefit period. Medicaid covers custodial care in nursing homes and at home, but only after individuals have spent down assets to roughly $2,000, enforced through a five-year look-back on prior asset transfers. The private long-term care insurance market, which once had more than 100 carriers, has contracted to fewer than a dozen as insurers underestimated claim rates and exited; fewer than 50,000 new policies were sold in 2020 [AALTCI, 2021], and many existing policyholders have received premium increase notices of 50% or more. A private nursing home room cost a national median of $127,750 per year in 2024 [Genworth/CareScout, 2024], a figure that exceeds median household income and that most American families have no adequate mechanism to finance.

These were the proposed changes:

·Private long-term care insurance becomes viable again
·Families no longer have to spend down to near-nothing before Medicaid helps
·Older workers can save more for long-term care through HSAs
·Home care workers get a real wage increase, not one that providers can game away
·States where the LTC insurance market has already collapsed get a fix
→For the full details, see the full debate.

By group

Progressive Democrats: The 80% minimum loss ratio requirement is the most concrete concession to the concern that private insurers caused the LTC market failure and should not be rewarded with a federal backstop while continuing to prioritize margins over claims. Eighty cents of every premium dollar must be paid in claims, and HHS publishes annual loss ratio reports in machine-readable format. An insurer that falls below the threshold loses reinsurance access. Progressive Democrats see this as inadequate (they wanted 85%) but it is a binding, enforceable floor where there was none before.

Moderate Democrats: The reinsurance fund is now honestly capitalized. The original design tied the fund's solvency to Medicaid savings projections that independent analysis suggests arrive four to six years after enrollment and at roughly $74 per participant on average. That feedback loop, where premium increases reduce enrollment, reducing savings, worsening solvency, is eliminated. The $5 billion direct appropriation is the primary vehicle; Medicaid savings flow in as a supplementary top-up if and when they materialize.

Moderate Republicans: The $2 billion contingency reserve, appropriated as mandatory spending, eliminates the scenario that most worried Moderate Republicans in round one: a fund that looks solvent at launch but triggers premium increases on certified products in years four to six when Medicaid savings do not materialize on schedule. The reserve activates automatically if savings fall below 40% of projection. Moderate Republicans can now defend the fund's solvency without relying on optimistic projection assumptions.

Conservative Republicans: The statutory cap on the Medicaid asset protection floor is the single most significant Conservative Republican win in this proposal. The floor cannot be raised above $85,000 per individual by regulation or administrative action; any increase requires an Act of Congress. This converts what could otherwise be described as a stealth entitlement expansion into a legislative question: a future Democratic administration cannot quietly adjust the floor upward. Conservative Republicans can point to the cap as a binding constraint, not a promise.

The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) requires that insurers apply the same coverage rules to behavioral health as to medical and surgical care, but enforcement has been procedural rather than outcomes-based: plans self-certify compliance and regulators rarely audit the result. In practice, mental health providers are reimbursed at substantially lower rates than equivalent medical specialists [Milliman, 2023], which has pushed the majority of therapists and a substantial share of psychiatrists out of insurance networks entirely. State psychiatric bed capacity has fallen to 10.8 beds per 100,000 population [NASMHPD, 2023], a historic low, and drug overdose deaths totaled approximately 79,000 in 2024 [CDC, 2024].

These were the proposed changes:

·Mandatory insurance audits with real penalties
·Third-party administrator accountability closed
·Published compliance data for every plan
·A reimbursement floor that makes behavioral health networks actually work
·Inpatient psychiatric and crisis care capacity rebuilt from scratch
·More behavioral health providers, retained longer in the places that need them
·Federal grants tied to program outcomes, not just activity
·Federal support for states that want to improve court-supervised outpatient treatment programs
→For the full details, see the full debate.

By group

Progressive Democrats: The two structural holes in the reimbursement floor are closed. Under round 1, plans could have pre-emptively reduced their behavioral health provider networks in the 30 months between enactment and the floor's effective date, then used that smaller network as the protected baseline. The reform now measures the baseline at the date of enactment, eliminating that window. Progressive Democrats care about this because the floor was the reform they most needed, and a floor built on a pre-emptively shrunk network would have been a legal placeholder, not a functional guarantee.

Moderate Democrats: Every item Moderate Democrats pushed for in the iteration process is in the final proposal. The maintenance-of-effort condition for crisis care grants uses exactly the standard applied to Medicaid: states must maintain their own behavioral health spending at 90 percent of the three-year pre-grant average, with a narrow hardship waiver requiring documented general revenue shortfalls exceeding 5 percent. Moderate Democrats care about this because they have watched federal infrastructure dollars substitute for state spending in program after program, producing net-zero new capacity rather than the additional investment the dollar figure implies.

Moderate Republicans: The reimbursement floor is defined in the statute's congressional findings as parity, not price regulation. The floor requires plans to pay behavioral health providers the same proportion of their own medical fee schedule that they apply to medical services. The government is not setting a price list; it is requiring that the plan's own pricing standard apply consistently across physical and behavioral health. The MHPAEA Oversight Board reports annually to Congress on the crosswalk methodology's observed effect on premiums, giving Moderate Republicans ongoing published data to use in floor debates when the "government rate-setting" attack is made. They know the attack will be made regardless.

Conservative Republicans: The Assisted Outpatient Treatment Technical Assistance Program is the single most important concrete concession to Conservative Republicans in this proposal. States that operate or want to develop court-supervised outpatient treatment programs for severely mentally ill individuals have had no dedicated federal resource for program design, court integration, or due process framework development. Conservative Republicans believe that the absence of a meaningful AOT option in most states is why dangerously ill people cycle through emergency rooms, jails, and streets rather than receiving structured treatment. This program addresses that concern with a federal commitment, even if it does not fund coercive infrastructure. The program is funded separately from, and cannot be reduced by cutting, the Crisis Care Infrastructure Grant Program.

Executive Summary

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Across all 5 policy areas, average constituency approval rose from 18% to 52% and satisfaction from 13% to 42%.

The full debate page has the per-policy-area executive summaries and the complete round-by-round record.

Bill

Full bill →

An independent legislator agent implemented the outcomes of the debate in a 5-title, 28-section bill proposal, with some highlights:

·Drug pricing: Forces pharmacy benefit managers to pass 100% of manufacturer rebates to patients at point of sale for Medicare and Medicaid, with a phase-in schedule for commercial plans. Expands Medicare's drug negotiation authority beyond the IRA's annual caps to every drug with no therapeutic competition and no generic or biosimilar alternative.
·Coverage and cost limits: Closes the Medicaid gap by extending coverage to low-income adults in the 10 states that declined expansion, caps annual out-of-pocket exposure for insured families, and standardizes prior authorization response times across commercial and employer plans.
·Mental health and long-term care: Enforces behavioral health parity with automatic financial penalties of up to $10,000 per affected enrollee per year, for the first time. Creates a federal reinsurance fund to rebuild the collapsed private long-term care insurance market and protect middle-class families from catastrophic spend-down.
·and more in the full bill

Constituency Reviews

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Each constituency reviewed the final bill and assessed how it compares to the status quo.

Progressive Democrats: got the Medicaid gap closed, the out-of-pocket cap they pushed for, and mental health enforcement with penalties large enough to change insurer behavior. Drug negotiation is uncapped and backed by a 95 percent excise tax.

Moderate Democrats: got the Medicaid gap closed at full federal cost, a rural public plan where markets have failed, prior authorization deadlines with real penalties, and drug rebates flowing to patients instead of middlemen. The mental health reimbursement floor attacks why most therapists refuse insurance: insurers pay about half the rate for comparable medical care.

Moderate Republicans: got certificate of need reform tied to federal funds, antitrust notification for large hospital acquisitions, and expanded health savings accounts. Drug negotiation comes with an intellectual property clause and a 50-drug cap, guardrails they demanded.

Conservative Republicans: accepted PBM transparency, rebate pass-through, expanded health savings accounts, a portable premium deduction, and a statutory cap on the Medicaid asset protection floor that blocks administrative expansion without a congressional vote.

Process Audit

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Finally, an independent auditor agent reviewed the full deliberation process, flagged structural risks, and assessed whether the outcomes hold up to scrutiny.

Article

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A plain-language explanation of the final bill, written for a general audience with no knowledge of the policy area or deliberation process.

Healthcare Reform in the US

Phase 1: Preparation

Phase 2: Iteration

Coverage Access

Drug Pricing

Healthcare Market Transparency

Long Term Care

Mental Health Parity

Phase 3: Final

Phase 4: Publication