There is good news this week for seniors regarding Medicare and Social Security. You may have already seen the alert TSCL Chairman Rick Delaney sent out about the new legislation. Yesterday the House passed H.R. 3, The Lower Drug Costs Now Act, the health care bill that we've been reporting about for several weeks.
The legislation would allow Medicare to directly negotiate the price of insulin products and up to 250 additional drugs per year. It would also prohibit drug price hikes beyond the rate of inflation, allow private insurers to buy drugs at Medicare’s negotiated price, and cap seniors’ out-of-pocket spending on prescription drugs at $2,000 annually. Pharmaceutical manufacturers, under threat of a 95% excise tax, would be effectively forced to lower prices below the new thresholds.
The bill passed on almost a party line vote, with only two Republicans joining with Democrats in support of it. Many Republicans have said the bill is a threat to private-sector innovation and the development of new drugs.
The CBO (Congressional Budget Office) this week estimated that if Democrats’ bill does become law new drug approvals would fall by roughly 30 percent in the decade beginning in 2030, due to lower pharmaceutical company revenues and, subsequently, decreased investment in new research. However, there are some experts who dispute that.
In addition to the threat of the development of new drugs the bill's opponents, that include the big drug companies, claim that the bill does not actually have a true negotiation process. But the excise tax enabled the Congressional Budget Office to estimate that the price negotiation method would save the federal government $456 billion over the next 10 years, and the net effect would be to reduce federal deficits by about $5 billion over that 10-year period.
Other provisions would cap seniors' out-of-pocket costs in Medicare Part D at $2,000 per year and would make drug makers pay back Medicare, and potentially private payers, for hiking prices at a rate higher than inflation. The CBO estimated that the inflationary rebates would save the federal government $36 billion over 10 years. The Part D redesign, however, would cost more than $9 billion.
The bill would use the savings to expand Medicare benefits, including important new benefits regarding hearing, vision and dental care. Beginning in 2023, Medicare would cover hearing aids once every five years for individuals diagnosed with profound or severe hearing loss in one or both ears. It would cover examinations and hearing aids prescribed by a doctor or audiologist that aren’t available over the counter.
There would also be vision coverage, which would begin in 2023, which would include one routine eye examination and one contact lens fitting per two-year period, as well as one pair of glasses or a two-year supply of contacts.
And, dental and oral health coverage under Medicare would begin in 2025 and would include preventive and screening services, including two exams and cleanings per year, as well as X-rays and fluoride treatments. It would also include basic treatments — such as basic tooth restorations and extractions — and major treatments — such as bridges, crowns, and root canals — as determined by HHS. Additionally, it would cover one set of physician-prescribed dentures per five-year period.
Republicans introduced a competitor bill they called the “Lower Costs, More Cures Act” — a collection of largely bipartisan and comparatively more modest measures to lower drug prices by spurring generic competition. However, it was defeated on a 201-223 vote.
The House bill now goes to the Senate for action but Senate Majority Leader, Mitch McConnell, said he will not take up the legislation and the White House has threatened to veto it.
A major drug-pricing bill already passed by the Senate Finance Committee does not include government drug-price negotiation, but its inclusion of the inflationary rebates in Medicare Parts B and D has alienated Republican senators. The bill has so far stalled, but some provisions could be used as offsets in a must-pass government funding deal.
Senate Finance Chair, Chuck Grassley, said he thinks the House took the wrong approach to addressing high drug prices, but commended House Democrats and Republicans for engaging on the issue and called for the Senate to pass the legislation he co-authored with Finance Ranking Democrat Ron Wyden of Oregon. However, Senate Majority Leader McConnell does not support the Grassley-Wyden bill. Instead, less-sweeping measures such as Alexander’s bills to address surprise billings and to create more transparency may advance.
Legislation on reducing the costs of drugs will not pass the Senate this year and instead will be pushed into next year for possible action.
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Last week we told you about the new legislation that TSCL has endorse, called the “Know Your Social Security” bill. The bill would clarify the requirement for the Social Security Administration (SSA) to mail an annual Social Security Statement to all workers ages 25 and older with covered earnings but who are not receiving Social Security benefits.
Earlier this week the House Ways and Means Committee, which is the committee that has jurisdiction over Social Security issues, met to discuss the bill and on a bi-partisan basis voted the bill out of committee and sent it to the full House of Representatives to be voted on in the near future.
This is the way Congress is supposed to work and it was refreshing to see the members of the committee – both Republicans and Democrats – talk about how nice it was to work together on an issue of the common good and pass something that is so important to the welfare of so many Americans. As one of the Republican members of the committee said, while this bill may not seem like a big deal, for many Americans receiving their Social Security annual statement and seeing what their benefit will be when they retire may be the only financial planning they'll ever do.
The bill passed the committee unanimously so TSCL hopes that it will receive quick action by the full House and then sent over to the Senate for action. While there is no companion bill in the Senate, the bi-partisan nature of the House bill could be enough of an incentive to the Senators that they will want to pass it quickly. TSCL will be working on that in the coming weeks. However, because of the lateness of this year, it is likely the Senate will not deal with the bill until sometime next year.
The statement of support for the bill by TSCL Chairman Rick Delaney was entered into the official record of the debate on the bill by Social Security Subcommittee Chairman John Larson.
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Finally, lost in all the other news this week is the fact that it appears Congress will be able to avoid another government shutdown next week. Congressional members from the House and Senate announced that they have reached a bipartisan deal to fund the government before the Dec. 20 spending deadline. The deal in principle follows weeks of negotiations between the Democratic-led House, the Republican-led Senate and the Trump administration. Both chambers will now need to clear the spending measures, and President Donald Trump would have to sign them.
For progress updates or for more information about these and other bills that would strengthen Social Security and Medicare programs, visit the Bill Tracking section of our website or follow TSCL on Twitter.
