Democrats weigh health care provisions in $3.5 trillion bill

Elements of policy wish list could be pared back or limited to satisfy different party factions

Sen. Bernie Sanders, I-Vt., speaks during a rally in Washington to protest high prescription drug prices on Sept. 21. (Tom Williams/CQ Roll Call)
Sen. Bernie Sanders, I-Vt., speaks during a rally in Washington to protest high prescription drug prices on Sept. 21. (Tom Williams/CQ Roll Call)
Posted September 30, 2021 at 10:42am

Democratic leaders struggling to satisfy both progressive and moderate factions’ demands are still trying to resolve divisions over scaling back the expansive health care policy wish list in their $3.5 trillion budget reconciliation package.

A smattering of members in both chambers have concerns with key issues ranging from drug pricing to Medicare spending, while Democratic holdouts like Sen. Joe Manchin III of West Virginia and Sen. Kyrsten Sinema of Arizona oppose the legislation’s overall price tag.

House Speaker Nancy Pelosi recently acknowledged that the $3.5 trillion number must come down. The Senate has yet to unveil companion text.

Democrats could try to shorten the duration of programs or focus on certain policies instead of others if the total amount falls. But some Democrats view adding end dates for programs as risky, since it would require lawmakers to extend them in the future.

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“We have a tremendous opportunity right now with Democratic majorities in the House and Senate and a Democratic president,” Rep. Lauren Underwood, D-Ill., said on a Wednesday press call with the advocacy group Protect Our Care. “While we have the opportunity to do this work, I think we should take advantage of it because it is an assumption that is made that several years down the line we will have the opportunity to extend.”

Here are the biggest health care issues under consideration.

Drug pricing

Letting Medicare negotiate drug prices directly with manufacturers is a white whale for Democrats, who are gunning for the political victory as much as for the $700 billion in potential savings it would offer to fund their remaining health care agenda. But the party is dealing with several defections among members in both chambers that could derail or change the proposals, given Democrats’ slim majorities.

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The House bill would set maximum prices for the most expensive drugs under the Medicare Part D prescription drug program and Part B outpatient program at 120 percent of the average paid by other wealthy countries. The bill would also levy an excise tax of up to 95 percent on manufacturers that don’t comply and require drugmakers to pay rebates when they raise prices faster than inflation.

Forecast: Tossup. The outcome depends on how the party wants to define success. House Democrats’ sweeping drug pricing bill is the foundation of discussions, but a recent bill from Rep. Scott Peters, D-Calif., demonstrated the possibility of designing a much narrower law that still achieves some negotiation. Holdout Sinema has also reportedly signaled opposition to negotiation as currently constructed.

The provision is central to the rest of Democrats’ health care agenda, since other spending largely depends on how far lawmakers are willing to go to generate savings from drug pricing measures.

Expanded insurance premium assistance

Democrats temporarily expanded tax credits for insurance premiums under the 2010 health care overhaul law as part of the $1.9 trillion COVID-19 aid law in March. The party now wants to extend the more generous credits permanently through the 10-year budget window at a rough cost of around $200 billion.

Households making up to 150 percent of the federal poverty level would receive fully covered insurance on the health law's exchanges. The legislation would permanently eliminate a cap on subsidy assistance to households making more than 400 percent of the poverty level. Premiums would also be limited to 8.5 percent of a household’s income, making the insurance more affordable for people across the income spectrum.

Forecast: Best bet. Democrats have campaigned on the 2010 law for more than a decade, and retook the House in 2018 amid Republican attempts to repeal it. The provision has the broadest support within the caucus and the most manageable price tag. The expanded coverage would also help reach higher earners who want insurance in the individual market, and who suffer the brunt of the law’s infamous premium increases since they don’t qualify for subsidies.

Plugging the Medicaid coverage gap

All but 12 states expanded Medicaid under the 2010 health care law to cover households making up to 138 percent of the poverty level, despite Democrats’ attempts to sway the remaining Republican governors with additional financial incentives. Democrats are now attempting to close the gulf with a lookalike Medicaid program that would be run on the federal level, while covering eligible individuals on the exchanges until the new program is stood up.

House Majority Whip James E. Clyburn, D-S.C., said during a call with the left-leaning Center for American Progress last week that he would be open to a five-year authorization to expand Medicaid to start.

He argued on a separate press call Wednesday that it would be “un-American” for lawmakers to expand other benefits while leaving behind the vulnerable populations in those dozen states.

Forecast: Better odds. The Medicaid expansion is another piece of the 2010 law and important to Democrats’ platform. But questions over drug pricing savings and the slate of competing priorities is throwing the scope and duration of the program into doubt.

Democrats’ short-term solution to include would-be Medicaid recipients on the exchanges is a more expensive way to provide care, since Medicaid is a lower-cost program that pays providers lower rates. The cost is expected to total around $250 billion to $300 billion over 10 years.

Medicare dental, hearing and vision benefits

The traditional Medicare benefit has gaps, leaving many seniors without services like dental, hearing or vision care. Private Medicare Advantage or Medigap supplemental insurance plans help fill the gap, but lawmakers like Sen. Bernie Sanders, I-Vt., are pushing to cover them under the traditional benefit to ensure broader access.

But spending concerns are at the forefront of the discussion. The Congressional Budget Office previously estimated that adding the benefits would cost as much as $358 billion over 10 years.

Forecast: Longer odds. Spending constraints and the time needed for the Centers for Medicaid and Medicare Services to set up a new benefit forced the House to delay dental coverage under its bill until 2028, with patients responsible for more cost-sharing than under Medicare’s traditional Part B outpatient benefit. Democrats are debating ways to cram the provision into a final package, but further cuts to the scope and duration may be necessary.

The American Dental Association — which opposes a broad Medicare benefit — has also made headway with some skeptical Democrats. Rep. Kurt Schrader, D-Ore., plans to introduce an ADA-backed measure that would tailor dental benefits to low-income enrollees instead.

Home health

President Joe Biden is asking Congress for $400 billion over eight years to boost home- and community-based health services. The money would fund historically underpaid care workers’ salaries and boost Medicaid funding for states that take steps to improve home health programs.

Forecast: Tossup. Heavyweights like the Service Employees International Union back the full amount, but the House language only includes $190 billion over 10 years. Some senators are pushing for more, though. And although treating people at home is less expensive than treating them in an institution, the upfront investment is still a major debit on Democrats’ $3.5 trillion scorecard.

The provision is also less flashy than other priorities like expanding insurance, Medicare or Medicaid coverage, where many Democrats are directing the bulk of their efforts. Senate Finance Committee Chair Ron Wyden, D-Ore., a former advocate for the elderly, said he favors shortening the number of years to provide increased funding rather than cutting the topline number.

“If there are changes in the number, topline, I personally — and the caucus will talk about it — I personally would favor a shorter number of years,” Wyden said. “If you have 10,000 people turning 65 every day for years to come, and you have two options — good quality home- and community-based services versus institutional care. That’s not a close call in my book.”