Senate Democrats announced a compromise budget framework to fund President Biden’s social spending plans to the tune of $3.5T, including substantial money for some of the administration’s key healthcare priorities. The framework sends instructions to several Senate committees, including the Budget and Finance panels, to craft legislative language around the central components of the deal, with the goal of passing a spending package before next month’s recess.
Many specifics remain to be ironed out in negotiations among the party’s progressive and moderate camps, but some of the main elements of the deal became clear this week. The plan includes extending theenhanced subsidies for purchasing individual coverage on the healthcare marketplaces, which were implemented earlier this year as part of the American Rescue Plan Act. It would also seek to close the so-called “Medicaid coverage gap”, by providing new coverage options for low-income adults in states that did not expand Medicaid under the Affordable Care Act (ACA).
New investments would be made in home- and community-based services for long-term care, along the lines of the $400B proposed in President Biden’s American Families Plan. And the budget deal envisions expanding benefits in the Medicare program to include dental, vision, and hearing services. Given the budgetary concerns of moderate Democratic lawmakers like Sen. Joe Manchin (WV), one critical question will be how the $3.5T deal will be paid for. One likely source of funding for the deal will be reforming the way Medicare purchases prescription drugs, making that long-time Democratic policy objective a probable part of any final package.
Notably absent from the healthcare spending proposals: lowering the eligibility age for Medicare from 65 to 60. No final decision has been reached on whether to incorporate such a move; rather, the question will be sent to the Senate Finance Committee for consideration. Given the urgency of passing as much of the Biden administration’s legislative agenda as possible before the midterm campaign season begins in earnest, we think it’s unlikely that Democrats will be willing to cross the Rubicon of Medicare expansion at this point.
The prospect of having to gain support from all 50 Democratic senators—as zero Republicans are expected to support the package—will likely temper any appetite for picking a fight with the influential hospital and physician industries, which have strongly opposed Medicare expansion.
One longer-term implication of the apparent decision to favor expansion of Medicare benefits over lowering the Medicare eligibility age now:a richer package of services in traditional Medicare might make Medicare Advantage (MA) a less attractive alternative for potential enrollees and could undermine any future efforts to create an “MA buy-in” for coverage expansion.
Expect lobbying and negotiations to reach a furious pace over the next several weeks, as lawmakers work out the final details of the $3.5T spending plan.
The owner of two pharmacies and a management company in Florida pleaded guilty Jan. 25 to his role in a $931 million healthcare fraud scheme. He is the seventh defendant to plead guilty in the scheme, according to the U.S. Justice Department.
Larry Smith pleaded guilty to conspiracy to commit healthcare fraud, and his sentencing is set for Oct. 25. In his written plea agreement, Mr. Smith admitted to conspiring with others to defraud pharmacy benefit managers into paying for fraudulent prescriptions. As part of the plea agreement, Mr. Smith agreed to pay restitution of $24.9 million and forfeit approximately $3.1 million.
An indictment charged Mr. Smith and others with a nationwide conspiracy to defraud pharmacy benefit managers by submitting $931.4 million in bills for fraudulent prescriptions purchased from a telemarketing company. After improperly soliciting patient information, the marketing companies received approvals through telemedicine prescribers then sold the prescriptions to pharmacies in exchange for kickbacks, said Derrick Jackson, special agent in charge at HHS’ Office of Inspector General in Atlanta.
In September 2018, HealthRight, a telemedicine company, and its CEO Scott Roix pleaded guilty to conspiracy to commit healthcare fraud for their roles in the scheme. They agreed to pay $5 million in restitution. Mr. Roix’s sentencing is scheduled for Oct. 25.
Mihir Taneja, Arun Kapoor, Maikel Bolos and Sterling-Knight Pharmaceuticals also pleaded guilty in December 2020, according to the Justice Department.
Their Senate majority will be slim as can be, and their margin for error in the House is also quite small. So it’s not going to be easy to get anything done. But it seems likely that the Biden White House and a Democratic Congress will try to pass legislation to expand health coverage.
Regarding what Democrats’ health care agenda would look like if the party enjoyed full control of Congress and the White House, a senior party official told reporters this fall: “If we don’t take full advantage of this moment, we’ll be making a huge mistake.”
The question is how big they will go. A lengthy health care section will likely be part of any new Covid-19 relief and recovery bill. But will that be the end of it, or do Democrats want to try to pass another health care plan through budget reconciliation? Given Senate rules, that process is probably their best chance of passing a major bill.
Taking a cue from my Future Perfect colleagues and their 21 predictions for 2021, I thought I would lay out some of my expectations for the coming two years of health policy. These projections are based on my own reporting, but they are not meant to be definitive — and nothing is 100 percent guaranteed. It’s more like a list of issues I’ll be watching.
Democrats will expand eligibility for Obamacare subsidies: 85 percent chance
Democrats could attempt to take two bites at the health care apple: first as part of a Covid-19 relief bill, and second in a budget reconciliation package that can pass with a bare majority. I think there is a very strong chance both attempts would end up with provisions expanding eligibility for insurance tax subsidies.
The $2.4 trillion HEROES Act passed by the House, a likely starting point for Covid-19 negotiations between the House and the Senate, would have made anybody currently on unemployment insurance eligible for premium tax credits. That would help people who have lost their employer-sponsored coverage afford a new health care plan. A provision like that is likely to become part of whatever Covid-19 bill Congress comes up with.
A reconciliation bill could make that change permanent and universal. Back in spring 2020, Senate Democrats released a list of their health care priorities in response in response to Covid-19. At the top was a plan to raise the current cutoff for Obamacare subsidies, which stands at 400 percent of the federal poverty level.
Under current law, anybody with an annual income above that threshold, which is about $51,000 for an individual or $87,000 for a family of three, is ineligible for any assistance. Democrats have introduced plans to expand eligibility, either by doubling the income cap to 800 percent of the federal poverty level (like in this bill from Sen. Jeanne Shaheen) or by eliminating it entirely so that nobody pays more than a fixed percentage of their income on health insurance (as President-elect Joe Biden proposed). Democrats could also try to make low-income people in states that have not expanded Medicaid eligible for tax credits to buy private coverage.
The people squeezed under Obamacare have been the ones ineligible for the law’s financial aid. Expanding eligibility could insure up to 4 million people, and it seems like the bare minimum Democrats would want to do on health care with their new power.
The public option won’t be part of a Democratic health care bill: 75 percent chance
Much like the 2009 debate over Obamacare, a new government insurance plan would probably be the most hotly debated proposal if Democrats try to approve a major health care bill. Biden embraced the public option in his campaign, but passing it won’t be easy — in fact, I think it’s more likely than not that it doesn’t happen.
One problem for a public option is budget reconciliation. Unless Democrats are willing to eliminate the 60-vote legislative filibuster, they’ll have to use this special procedural tool in order to pass a bill with just 51 votes.
But budget reconciliation comes with limits on what provisions can be included, narrowly targeted to federal spending, and creating this new program may not qualify. Capital Alpha, a health care policy analysis group, thinks there is “virtually zero chance” a public option like that proposed by Biden during his campaign would be enacted because it likely doesn’t satisfy the reconciliation rules.
Progressives will push Democratic leadership to be as aggressive in pursuing a public option as possible, including in how they handle those procedural limits. But the moderate Senate Democrats who will ultimately dictate what the final package will look like have sounded ambivalent about the public option, and Democrats are wary of the party getting dragged into a messy health care fight.
Support for a public option would be substantial — about 70 percent of Americans say they’re for it, polls show — but so would the opposition. The health care industry will surely mobilize against the plan if Democrats look serious about pursuing it.
I suspect that, either because the moderates rule it out from the start or Democratic leaders balk at a drawn-out health care debate, politics will take the policy off the table.
Democrats will approve Medicare negotiations for prescription drugs: 55 percent chance
Democrats have campaigned for several election cycles now on a promise to give Medicare more power to negotiate drug prices with pharma companies. This promise was a part of the drug pricing bill that House Democrats passed in the last Congress, a plan that was estimated to cut federal spending by $456 billion over 10 years.
Savings are the reason the policy could be handy for Democrats in crafting a budget reconciliation plan. Democrats will need to include provisions that save the government money to help pay for the new provisions that cost money, like expanding eligibility for tax subsidies.
“We have long believed that pharma faces the greatest risk of drug pricing reforms in conjunction with Democrats’ efforts to expand coverage,” Capital Alpha wrote in a recent analysis.
Those twin incentives — delivering on a campaign promise and finding offsets — could help overcome what would surely be fierce industry opposition.
But the politics of drug pricing have shifted during the Covid-19 pandemic, which is why I think there’s only a slightly better than even chance that Congress will approve Medicare negotiations. Pharma has delivered the Covid-19 vaccines in record time, improving the industry’s relationship with the public in the process. This, in turn, has lowered expectations among the experts for how aggressive Democrats will be on drug prices.
“I think now you don’t have all those stories about insulin and EpiPen, plus you have positive stories about vaccines and other drugs,” Walid Gellad, director of the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh, told me in December. “You don’t have as fertile an environment for more extreme drug measures.”
Thus, my feeling that the odds for Medicare negotiations are closer to 50/50.
If Democratic candidates Raphael Warnock and Jon Ossoff both win Senate seats in Tuesday’s runoff election, and give the Democrats majority power in that chamber, it will change not only what type of healthcare policies are passed by the Senate but which healthcare bills get brought up in the first place.
“The big thing that it means is that [Senate Majority Leader] Mitch McConnell (R-Ky.) no longer controls what bills even get a vote” in the full chamber, said one policy advocate who asked to speak on background. “Last year, a bill on prescription drug pricing passed on a somewhat bipartisan basis out of the Senate Finance Committee,” with the blessing of committee chairman Chuck Grassley (R-Iowa), “and it never even got a vote. It certainly would have passed the House. So it’s not so much that you’re going to see a lot of partisan bills passed with [Vice President Kamala] Harris casting the tie-breaking vote … it’s that things will actually get voted on.”
Leadership of Senate committees also will change, noted Dan Mendelson, founder of Avalere Health, a consulting firm here. And because of that, “you’d see the Senate Finance Committee focused on coverage, and you’d see kind of an aggressive push to figure out how do we expand exchanges, expand Medicaid, and get more people covered in the U.S.”
One of the top priorities will be shoring up the Affordable Care Act (ACA), he continued. “There is no consensus on how to replace the law if it’s struck down by the Supreme Court. Legislation is necessary on an urgent basis.” Some other issues, such as drug costs, “are more likely to be addressed through regulatory approaches rather than legislative ones initially,” Mendelson said.
Marie Fishpaw, director of domestic policy studies at the Heritage Foundation, a right-leaning think tank here, suggested that expanded federal control of healthcare would be under consideration. “Last Congress, a majority of Democrats in the House of Representatives and 15 Democratic senators have already signaled their support for Medicare for All, so we can expect the left will push for more government control of healthcare should they get more power in Congress,” she said in an email. “Whether that happens by expanding Obamacare with a public option or setting up Medicare for All, it all leads to the same outcome in which government officials in Washington have more decision-making power over the kind of healthcare that Americans receive.”
Joe Antos, PhD, scholar in healthcare and retirement policy at the American Enterprise Institute, another right-leaning think tank, said in an email that “with Harris as the tie breaker, Biden will need to avoid issues where Democrats are not solidly behind him (at least Democratic senators). Drug pricing limits and another COVID spending bill are the most likely to be enacted, perhaps fairly quickly.”
The COVID bill will include “another trillion or two,” Antos said, because “despite all the moaning on TV about lack of state funding, the problem isn’t money — it’s organization and the skilled people to wield the needle. I think there would be more money for states and public health.”
As for the ACA, Biden “might try to reinstate the individual mandate with a penalty/tax, but that would only be a political show since the mandate really hasn’t mattered much in increasing number with insurance (after the first 2 years of ACA enrollment),” said Antos. “Increasing access to the premium subsidy is a possibility, but the true left won’t like it.” On the regulatory side, Antos predicted that Biden will “rewrite Medicaid guidance and reject waiver projects that tighten Medicaid rules,” such as waivers seeking to add work requirements for Medicaid.
Like Mendelson, Antos expects to see Biden push for action to lower prescription drug prices — possibly legislatively. “He would even get some Republican votes for limiting what Medicare will pay for Part B drugs and maybe even Part D drugs,” he said. “This isn’t Medicare ‘negotiating’ drug prices — it’s just old-fashioned price setting, which Medicare has done for decades.” Such a thing would be easier to implement in Part B “since we are already in a price-setting regime.” And, because the price controls would only be in effect for Medicare, “prices paid by everyone else will likely rise,” Antos added.
Less likely to succeed is Biden’s proposal for an advisory board that would consider drugs’ therapeutic value in its recommendations on prices. That is “a complex version of the Independent Payment Advisory Board, which never got off the ground,” Antos said.
Biden also may try to ease rules related to funding of reproductive healthcare organizations like Planned Parenthood that provide abortions, but legislative action in that regard would be a tough slog, Antos said, even with a nominally Democrat-controlled Senate. But Biden “could do something administratively” as the Trump administration has done in the other direction.
Senate confirmations of Cabinet members, such as California Attorney General Xavier Becerra as Secretary of Health and Human Services, would also be smoother under a majority-Democratic Senate, said Mendelson.
And what if the Republicans retain the Georgia Senate seats — and their majority? “The primary strategy the Republican leadership has pushed is to slow things down and to kill major legislation, and that goal gets facilitated if there’s a Republican majority,” he added. With McConnell keeping control of the Senate’s agenda, “things will run much more slowly and there will be a mentality of not doing things.”
But it could go the other way as well, Mendelson noted. “The optimistic scenario is that Senate Republicans feel like they have something lose in the midterms in 2022, and they need to build some sort of record of legislative accomplishments.” In that case, premium support for ACA marketplace enrollees and bringing down costs in the small-group insurance market might be in play, he said.