During President Joe Biden’s speech to Congress on Wednesday, he called for an ambitious health agenda that would allow the federal government to negotiate prescription drug prices, expand Medicare coverage, build on the Affordable Care Act and lower deductibles. All of these ideas would transform the way Americans pay for health care—but most of them are not actually in the legislative plan the President has put forward.
“Let’s give Medicare the power to save hundreds of billions of dollars by negotiating lower drug prescription prices. And, by the way, that won’t just help people on Medicare. It will lower prescription drug costs for everyone,” Biden said. “We’ve talked about it long enough. Democrats and Republicans, let’s get it done this year.”
Despite his strong rhetoric, Biden’s American Families Plan, also unveiled on Wednesday, does not include the proposals to cut prescription drug costs or lower the Medicare eligibility age, which congressional Democrats had pressured him to include in recent weeks. His $4 trillion package comprised of the American Families Plan and the American Jobs Plan has been praised by progressives as a huge investment in the country’s economy and social safety net. But the omission of these larger health care policies has raised questions for progressives about the President’s commitment to the ideas in the face of opposition from Republicans, moderate Democrats and pharmaceutical companies.
“While [lowering drug prices and expanding Medicare] is a focused priority of Congress, it’s clear it’s not as much so for the White House,” says Alex Lawson, executive director of Social Security Works, which supports the drug pricing and Medicare reforms.
Biden’s plan does include $200 billion to make permanent the increased premium subsidies for people who buy health coverage on the Affordable Care Act (ACA) marketplace, which were passed in the American Rescue Plan earlier this year. The expanded subsidies mean that millions of Americans are eligible for cheaper or free health coverage. But the Congressional Budget Office has estimated that the subsidies will get just 1.3 million uninsured people to buy coverage over two years, a small portion of the total uninsured. “In terms of federal dollars, subsidizing private insurance is the most expensive way you can go about getting people covered. Whereas doing it through a public option or Medicaid or Medicare is much lower cost on a per person basis,” says Cynthia Cox, a vice president at the nonpartisan Kaiser Family Foundation.
That is a main reason why many congressional Democrats have been pushing Biden to do more than shore up the ACA. Vermont Sen. Bernie Sanders and 16 other Senators sent a letter to Biden on April 25 calling for the President to address drug pricing, lower the Medicare eligibility age, cap out-of-pocket expenses for Medicare and expand Medicare benefits to cover hearing, dental and vision care. Another group of more than 80 House members, including progressives like Washington Rep. Pramila Jayapal and moderates like Rep. Conor Lamb of Pennsylvania and Rep. Jared Golden of Maine, wrote a similar letter advocating for the government to negotiate drug prices and expand Medicare.
A new set of analyses from the Kaiser Family Foundation this week indicate that lowering the Medicare eligibility age from 65 to 60 or even lower could bring down U.S. health spending overall. The foundation’s first analysis showed that when people turn 65, their health care spending drops significantly from the period between age 60 to 64 despite the fact that most people use more health care as they age. The reason? Medicare pays lower prices for health care services than private insurers. Employers also benefit. The foundation’s second analysis showed that if people ages 60-64 were no longer enrolled in employer-sponsored insurance, the cost for employer plans could drop by 15%. Even if Medicare expanded to include dental, vision and hearing coverage as Sanders and some Democrats want, Kaiser Family Foundation’s Cox says health spending could still drop.
Polling has shown that both of these policies are popular, even among Republican voters. And congressional Democrats say that is especially true after the COVID-19 pandemic disproportionately affected older Americans. But by far the most popular item that Democrats are pushing is the proposal to allow the U.S. government to negotiate with manufacturers over drug prices—something that most other developed countries already do. A new government study commissioned by Sanders and released this week shows that the U.S. pays two to four times more for prescription drugs than other wealthy countries, adding to the evidence supporting the Democrats’ position.
Even though these policies are popular among voters, the political reality for Biden is more difficult. Republicans oppose most of Biden’s spending on the social safety net, so the legislation will likely need to pass through the budget reconciliation process, which would allow Democrats to push it through along party lines. But with an evenly-divided Senate, they can’t afford to lose any votes. The ACA subsidies that Biden has included in his plan face no opposition from Democrats or the health insurance industry, but both the drug pricing reform and Medicare changes will face intense pushback from pharmaceutical companies, hospitals and medical providers, as well as more moderate Democrats.
Health care has been a winning topic for Democrats in recent election cycles and bringing down drug prices could be particularly helpful ahead of the next midterms, says Robert Blendon, a Harvard professor of health policy and political analysis who studies public opinion about health care. If Biden isn’t prioritizing that, “it must be because there’s one or two votes in the Senate who have an interest that’s more worried about the pharmaceutical industry than what it’s going to look like in the 2022 election,” he says.
Democrats can still fight to add the drug pricing proposal and Medicare changes into the spending package once it gets to Congress. Sanders told reporters on Tuesday that the provisions would be in the legislation “if I have anything to say about it,” while Senate Finance Committee Chair Ron Wyden of Oregon said he would “look at every possible vehicle” to get drug pricing done. House Energy and Commerce Committee Chair Frank Pallone of New Jersey said drug pricing would be one of his top priorities as the plan makes its way through the House.
House Democrats passed their signature drug pricing legislation, known as H.R. 3, back in 2019, and the bill was recently reintroduced and has a hearing scheduled in Pallone’s committee. Advocates believe that lawmakers can negotiate to put measures like this into the American Families Plan. “We have a container that can fit what we want in there,” said Lawson of Social Security Works.
Still, Biden’s speech Wednesday hinted at how difficult these big health care changes can be. “We know how to do this. The last president had that as an objective,” he said, referencing former President Donald Trump’s failed push to lower prescription drug prices.
Now Biden has left it up to Democratic lawmakers to get their own colleagues on board and make the changes happen.
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