Timed to show that they are not just about impeaching President Trump, House Democrats released a far-reaching plan to redesign the Medicare drug benefit. But the measure, which the House plans to vote on next week, goes well beyond an attempt lower drug prices. It would redesign Medicare Part D cost-sharing and add key core benefits to fee-for-service Medicare Part B, including dental, vision, and hearing care (including hearing aids).
The Congressional Budget Office estimates that the proposal would reduce Medicare drug costs by $500 billion over 10 years in three major ways:
- It would allow Medicare to directly negotiate prices for up to 250 of the mostly costly drugs that have no competition from generics or biosimilar drugs. Companies that don’t negotiate would be subject to an excise tax of up to 95 percent on gross sales.
- The US prices of those drugs would be tied to a benchmark index of prices in other developed countries.
- And, for all drugs, manufacturers would have to rebate back to Medicare any price increases that exceed the rate of inflation.
The bill would use that savings to sweeten Medicare benefits in several ways: It would put a $2,000 limit beneficiaries’ annual out-of-pocket drug costs. It would create new Medicare benefits for dental coverage, including screening and preventive services as well as dentures; for vision care, including routine exams as well as new glasses or contact lenses every two years; and hearing care, including the cost of hearing aids for those with severe hearing loss.
Among its other new Medicare benefits, the bill would make it easier for beneficiaries to enroll in Supplement (Medigap) insurance or to switch from Medicare Advantage to traditional fee-for service Medicare, and it would increase the number of low-income seniors eligible for Medicare subsidies.
The measure is, not surprisingly, hugely controversial. Some of the House’s most liberal members argue it does not do enough to lower prices, while the pharmaceutical industry insists it would reduce the number of new cutting edge drugs it will develop.
Blocked in the Senate
President Trump, who supported the idea of negotiating drug prices during his presidential campaign, now strongly opposes the House Democrats’ bill.
The measure will die in the Senate, where Majority Leader Mitch McConnell (R-KY) likely will block it from ever coming to a vote.
In a less partisan time, it might have been possible to reach agreement on some elements of drug pricing reform that both sides agree on. For example, the House Democrats, a bipartisan bill from the Senate Finance Committee, and Trump all favor the concept of capping Medicare out-of-pocket drug costs. They also agree on the idea of limiting drug price hikes to inflation, though the White House would do this for Part B drugs only (such as chemotherapy), not the much more commonly used Part D medications.
In 2018, the White House released its own comprehensive plan for lowering drug prices, but it has said little about it since.
Broad public support
There is widespread public support for the idea of Medicare negotiating drug prices. In an October public opinion survey, the Kaiser Family Foundation found that 88 percent of the public—including 85 percent of Republicans– backs the idea.
House Speaker Nancy Pelosi (D-CA), who has been pushing hard for a drug pricing bill since she resumed the speakership a year ago, has argued that Democrats should be focusing more on costs and less on universal insurance coverage. Hence, her opposition to Medicare for All.
The new bill, however, cleverly takes the drug cost effort another step. By using potential cost savings to sweeten Medicare benefits (rather than, say, reduce overall government spending for the program), Pelosi is likely to build public support for her bill.
House passage of the measure won’t bring Medicare drug price control very much closer to reality—at least not until after the next election. But it will likely help Pelosi and the Democrats argue that they are about more than just impeaching the president. And it will make it tougher for Trump to complain about the “do-nothing Democrats.”
It is too bad, though, that the industry, Congress, and the president can’t find a way to get together and find a way to actually make prescription drugs more affordable.