While insurers and medical device manufacturers are heading into the holidays with a windfall from Congress, consumers lost big as lawmakers failed to protect them from surprise medical bills and high drug prices.
Lawmakers gave a major handout to the industry when it repealed three Affordable Care Act taxes: a 40% excise tax on employer-provided health plans that exceed certain thresholds; a health insurance tax; and a 2.3% excise tax on medical devices. The tax repeal, which lawmakers chose not to offset, will cost federal taxpayers nearly $400 billion over the next decade, according to the Congressional Budget Office.
"At a moment when policymakers should focus on reducing health costs and raising revenue to expand health coverage, this legislation repeals an important cost-reducing measure and sacrifices hundreds of billions in revenue," said Robert Greenstein, the outgoing president of the left-leaning Center on Budget and Policy Priorities.
But consumers were left nearly empty-handed on Monday when policies that would have cracked down on surprise medical billing and lowered drug costs were almost entirely left out of the funding agreement. Ultimately, some seniors will pay more for drugs next year.
"Without any real relief on drugs or surprise bills, there's not a whole lot to celebrate," said Shawn Gremminger, senior director of federal relations at the consumer advocacy group Families USA.
On prescription drug pricing, congressional negotiators eschewed a comprehensive, bipartisan package authored by Senate Finance Chair Chuck Grassley (R-Iowa) and ranking Democrat Ron Wyden of Oregon. A provision in the Grassley-Wyden proposal that would have made drugmakers pay back Medicare for price hikes that outpaced inflation enraged the drug industry and alienated Senate Republicans.
The negotiators only included an incremental drug-pricing measure that would keep brand drugmakers from gaming safety regulations.
The situation for patients taking prescription drugs only gets worse starting Jan. 1, as drugmakers will likely take their customary price hikes at the beginning of the year. Seniors with high costs in Medicare Part D will have to pay more to reach the catastrophic phase of the benefit.
Because cost-sharing reductions included in the Affordable Care Act expire next year, the annual catastrophic threshold for Medicare Part D beneficiaries jumps from $5,100 this year to $6,350 in 2020. Beneficiaries will not pay the full $1,250 jump because drugmaker discounts count toward the threshold, but beneficiaries who reach the new threshold could pay over 20% more in 2020 than 2019.
"People on Medicare, older people who vote, will see their prices go up. They will see that those guys promised to fix it, and it just keeps getting worse," said David Mitchell, president of the consumer advocacy group Patients for Affordable Drugs.
Mitigating the out-of-pocket cliff proved politically dicey because drugmakers would have benefited and insurers lost if Congress decided to lower the catastrophic threshold in 2020.
AARP, which receives a significant portion of its revenue from insurers, refused to advocate for a lower catastrophic threshold for beneficiaries in 2020 because drugmakers would also have benefited. In stark contrast, when AARP chose to lean on lawmakers to delay a cut to the medical expense deduction, Congress listened. The deduction for the next two years, a minor consumer win, allows patients to deduct some medical expenses from their tax liability if their medical expenses exceed 7.5% of their gross income, compared with 10% without the fix.
A Senate Finance Committee aide expressed ambivalence about seniors' cost hikes from the out-of-pocket cliff in 2020 and dismissed the concerns as overblown earlier this month. The aide tried to pitch increased liability for drugmakers in the Medicare Part D coverage gap passed 2018 as a roundabout way of addressing the cliff.
"I understand that any increase is not OK when people are already spending too much, but I can't remember if it's like $200 to $300. It's not the $1,500 or what have you that people are reporting it is," the aide said.
Consumer advocates were focused on ensuring a cap on out-of-pocket drug costs for the future, so they lost focus on the immediate out-of-pocket cliff. The Finance Committee's drug-pricing bill would have capped Part D costs at $3,100 annually, and House Democrats' proposal would have imposed a $2,000 cap.
Mitchell said he takes several expensive drugs for his multiple myeloma, which means he will be hurt by the out-of-pocket cliff next year.
"Should we have pushed for the cliff? In retrospect you could say yes, but all of us wanted to make sure we get something bigger done," Mitchell said.
The powerful corporate interests that stalled major action on both drug pricing and surprise billing have similar arguments: if patients are insulated from immediate financial pain, the public outrage will be relieved. However, healthcare policy experts say that structural reform is needed beyond a narrow focus on out-of-pocket spending, because taxpayers ultimately foot the bill for payment arrangements behind the scenes.
Drugmakers and hospitals acknowledged that the funding deal did not contain consumer protections and committed to work with Congress moving forward.
The branded-drug industry said it supported passing the Creating and Restoring Equal Access To Equivalent Samples (Creates) Act, and maintained that the problem is patients' out-of-pocket costs, not drug list prices.
"We will continue working with policymakers to develop practical affordability reforms such as capping out-of-pocket costs, sharing negotiated savings with patients at the pharmacy counter and promoting value-based contracts," a spokesperson for Pharmaceutical Research and Manufacturers of America said in a statement.
Provider groups, which ultimately stalled action on surprise medical billing, argue that they want patients to be held harmless from surprise bills. But they refused to support a compromise package from Senate health committee Chair Lamar Alexander (R-Tenn.) and leaders of the House Energy and Commerce Committee that included several provider-friendly tweaks.
Hospital groups have praised the delay on action to address surprise medical bills, and they commended an 11th-hour, one-page vague outline the House Ways and Means leaders released.
"Congress is acting prudently to allow time to develop sound policy to protect patients from surprise bills and lower prescription drug costs," Federation of American Hospitals CEO Chip Kahn said.
Benedic Ippolito, a research fellow at the right-leaning American Enterprise Institute who has frequently testified before Congress on balance billing and drug pricing, said providers' argument that Congress needs more time to weigh surprise billing proposals is ludicrous.
"There is no shortage of information out there. This is as simple as these issues get. Give me a break. Nothing new we are going to learn is going to change this," he said.
Solving balance billing in a way that saves the healthcare system overall is important, Ippolito said, because allowing a limited number of providers to balance-bill patients means insurers pay more, which raises premiums across the board.
In the meantime, patients remain unprotected.
But all prospects for lowering drug costs and addressing balance billing during this Congress is not yet lost. Lawmakers extended funding for several Medicaid and Medicare programs until May 22, which could set up another legislative vehicle.
Lawmakers who worked on surprise billing legislation this session committed to keep working on the issue in 2020.
Senate health committee ranking Democrat Patty Murray of Washington state, who did not formally endorse the bicameral compromise surprise billing legislation, said she is hopeful lawmakers can move next year in a way that does not shift costs onto patients or interfere with state efforts.
"I believe the bicameral agreement we've been working on meets these goals, and I'm very optimistic that we can get a final deal across the finish line next year that does as well," Murray said.
Alexander pledged to work with Murray, and reiterated his commitment to addressing surprise billing legislation. Alexander will retire at the end of this congressional session.
"We need to get it done. It's going to be my top priority," Alexander said.
House Energy and Commerce ranking Republican Greg Walden of Oregon expressed regret that politics got in the way of passing a bipartisan, bicameral bill that had support from the White House and committed to pushing the bill in 2020.
But legislative prospects in the thick of campaign season are dim, and House and Senate leaders have shown no appetite to force their members to vote on an issue that divides powerful interests.
"There's a promise that we'll get you next time, but a May time frame is an abysmal time to make major bipartisan legislation," Gremminger said.
