Tom Williams/CQ Roll Call via AP Images
Speaker Nancy Pelosi and Senate Minority Leader Charles Schumer, August 1, 2019
Congress has been out of session for six weeks and in that time produced nearly the same output as it did when in session during the first seven months of the year. There's this thing called gridlock, you see.
However, at least some members of the Trump administration (not Trump himself, who's busy building a scale model of Hurricane Dorian striking Alabama) are getting antsy that the president has no policy agenda heading into an election year, and a thin résumé of legislative accomplishments. Even the low-hanging fruit, the few items everyone thought would yield a rough consensus, have gone nowhere.
That said, there are a few opportunities available before the calendar turns to 2020 and Congress packs it in for elections. As much as Democrats want action on gun violence, that’s highly unlikely to get past the Senate’s conservative brick wall. Representative Rosa DeLauro (D-CT), who has been negotiating with the U.S. trade representative on the NAFTA update, recently said that any action on the treaty would “seep into next year,” as Democrats have continued to demand enforcement of labor provisions and excising monopoly patent provisions on prescription drugs. And while the administration just released a plan to privatize mortgage giants Fannie Mae and Freddie Mac, it’s riddled with incomplete parts and Congress isn't too enthused about filling them in.
On health care, however, both Congress and the president do have motivations to put points on the board before the elections. But special-interest lobbying and ideological sparring make the end result hard to predict. Here's what to look for in the weeks ahead:
Surprise Billing. As Eileen Appelbaum and Rosemary Batt outline in a superb piece for the Prospect today, Congress is looking to address the large out-of-network bills patients unexpectedly receive from doctors, even if the hospitals they visit for care are in their network. Private equity firms have taken over physician staffing firms and emergency services at many hospitals, and are exploiting the fact that nobody shops around when they’ve broken their leg to spring huge bills on patients.
The Senate Health, Education, Labor and Pensions (HELP) Committee passed a bill that would benchmark out-of-network charges to the median negotiated rate. The House version added a special-interest loophole: limited arbitration for doctors seeking higher reimbursement. The Senate is discussing adding arbitration in a compromise measure, and other House committees have yet to weigh in; Ways and Means in particular (under its business-friendly chair, Massachusetts Democrat Richie Neal) could end up expanding arbitration and making the bill much worse. Action in both chambers is expected in September.
A $13 million dark-money ad campaign aimed at killing the legislation entirely (which, like Democratic rhetoric on health care, treats insurance companies as the sole villain) suggests that private equity–owned price gougers think loopholes won’t go far enough. And in the face of sustained lobbying, what was seen as a slam-dunk bill before recess now is in peril.
There's another wrinkle to this. While surprise-billing legislation passed the Senate HELP Committee 20-3, two of the dissenters were Bernie Sanders and Elizabeth Warren. Their rationales seem bizarrely disconnected from the bill itself. Sanders cited flat-funding proposals for health programs elsewhere in the bill, while Warren’s office forwarded me her statement that the bill lacked “meaningful steps to halt the administration’s shameful sabotage of health coverage.”
These reasons seem entirely beside the point of the bill, and appear intended to provide cover for not wanting to give Trump—who one or the other may end up running against next year—a win on health care. The combination of this reticence and the hospital lobby picking off support could doom a commonsense plan to not saddle patients with unconscionable costs.
Drug Prices. This was supposed to be the one area where something would get done, even with record spending on drug company lobbying. Everybody had an interest in curtailing runaway drug prices. But Speaker Nancy Pelosi decided to get too cute by half, running to negotiate with the Trump administration rather than getting behind something with the power to rally popular support.
Pelosi's top health policy staffer Wendell Primus devised a bill (with the help of corporate lobbyists and a think tank operating off a grant co-funded by a former hedge fund manager) that also involves an arbitration panel determining costs, this time as a resolution to negotiations between the government and drug companies on certain medications. The Primus plan split with the concept that had the support of the majority of the caucus. Texas Democrat Lloyd Doggett’s bill would have allowed direct negotiations on Medicare-covered drugs, with the government empowered to pull patents and license them to generic competitors if the drug company failed to fairly negotiate.
Attempting to placate her caucus, Pelosi expanded the drugs covered under these negotiations, which could therefore see lower prices, from 25 to 250, and then opened the benefits up to all patients, including those covered by private insurance. But none of that matters now; the White House/Pelosi negotiations, which were heating up at one point in the summer, have stalled. That wasted nearly a year while confusing the distinctions between the parties on this critical issue. And because Trump is fairly desperate to do something on drug prices (“The president will not be outflanked on the left on drug prices,” Trump official Joe Grogan told conservatives in July), a more unified caucus might have even been able to make progress.
Attention has now turned to a bipartisan Senate Finance Committee bill from Chuck Grassley (R-IA) and Ron Wyden (D-OR), which passed out of that committee in July. The main provisions of Grassley-Wyden cap out-of-pocket spending in Medicare Part D at $3,100 a year (currently, there's a partial cap at $5,100), and force drug companies to rebate Medicare for price increases above inflation.
This is a small-beer reform that really only affects seniors. Plus, the requirement for rebates infuriated Republicans, who failed to pull that from the bill in committee by just one vote. That piece would be ripe for elimination by Mitch McConnell on the Senate floor. Yet the Trump administration has latched onto Grassley-Wyden, pushing Senate Republicans to support it. House committees of jurisdiction could soon take up companion bills, the Prospect has been told.
Trump appears to be using his threat of an executive order to index Medicare drugs to international prices, which has drawn fire from conservatives, to get Republicans to swallow Grassley-Wyden, a far less disruptive option for drug companies.
If everyone wants to declare victory and go home, the Senate Finance bill, which allows lawmakers to claim “lower drug burdens for seniors” while doing nothing on prices, presents an opportunity.
PBMs. Previously, Pelosi appeared to get Trump to scuttle a plan to end the rebates that pharmacy benefit managers, middlemen between health plans and drugmakers, negotiate (and then skim for their profits). Pelosi publicly savaged the idea, and dropping the plan seemed like an olive branch during negotiations on drug prices.
Now that those negotiations have ebbed, however, Senator Grassley has talked about reinstating the plan, perhaps through the drug pricing legislation previously discussed. In Grassley’s formulation, rebates would be passed through directly to patients at the point of sale, rather than going into the PBM, with little transparency about how the PBM allocates them.
Grassley-Wyden also includes measures to limit “spread pricing,” a particularly nasty scheme where PBMs give the various players in a transaction different prices and collect the difference. So the health plan is told that, say, the PBM needs $10 to reimburse the pharmacist, and then the PBM only reimburses $5. Grassley-Wyden would crack down on that tactic, though PBMs are a powerful enough industry with enough allies that this could easily be held off as well.
