Do Bipartisan Healthcare Cost Solutions Exist?
A D.C. insider’s perspective on the chances of major drug pricing and ACA reform in 2021
Stephanie Kennan, senior vice president of federal public affairs at McGuire Woods Consulting and former policy advisor to Senator Ron Wyden (D-OR), the new Chairman of the Senate Finance Committee, gives her take on what to expect during the first year of the Biden presidency.
As a part of her work, Kennan drafted the first bipartisan Medicare drug benefit proposal and has played a part in every piece of Medicare and Medicaid legislation passed in the last 25 years, either as a congressional staffer or while representing clients before Congress and the administration. She also served as director of federal relations for Maryland’s Department of Health, and as assistant director of government affairs for the American College of Emergency Physicians.
Q
What do you think are the odds that we see sweeping prescription drug pricing legislation come out of Congress and what would be important contours of that kind of proposal?
A
Let me take a step back and provide some context. Congress has over the past couple of decades tried to address drug prices. At times they have made significant changes including trying to prevent companies from creatively extending exclusivity, encouraging competition, encouraging generics, and other steps. In your question, you ask about “sweeping” legislation. Sweeping may be in the eye of the beholder.
In the last Congress, Senators Grassley and Wyden were able to get a bipartisan proposal through Finance Committee. Yet, a majority of the committee members said they felt the bill needed more work before it came before the full Senate for consideration. Senator Grassley continued to work on it and yet no Republicans would support his revised version of the bill and Sen. Wyden did not support the revised bill.
In the House, several bills that were similar to sections of the Finance Committee bill did pass but were not considered by the Senate. So, it would seem logical that the Senate Finance Committee legislation before revisions, could again be a starting place. Sen. Wyden, the incoming Chairman of the Senate Finance Committee has said he wants to tackle the issue of drug pricing. Mostly likely he will build off the original bipartisan bill and cap drug costs for Medicare beneficiaries and require drug manufacturers to provide Medicare inflation rebates, paying back the government for price increases. In addition, the issue of allowing the government to negotiate drug prices is still very much active.
Q
President Biden stated on the campaign trail, and signaled through early Executive Actions, that he has intentions to bolster the Affordable Care Act (ACA) and move toward offering a public health insurance option in order to expand coverage. What are potential bipartisan policy solutions to lower healthcare costs?
A
That is a hard question. There has been very little bipartisanship in healthcare coverage. I remember when the Medicare drug benefit was passed. Ten Senate Democrats voted for it and the backlash was substantial because the program was not in the form most Democrats supported. Today, no one really thinks about it. For a long time, a Republican member would not support efforts in states to move forward with Medicaid expansion and other offshoots of the ACA.
To be honest, I am not sure there are potential “bipartisan” policy solutions on healthcare costs that will get passed. However, I really hope I am incorrect.
Q
Do you think there’s any appetite to look at Medicare Advantage as a model of a private market and public program partnership that expands coverage and curbs costs?
A
I think using Medicare Advantage as a model for a public option to expand coverage and contain costs would be a good bipartisan compromise. Essentially, that was how the Medicare drug benefit was passed – creating a public program that uses the private sector to manage and deliver the drug benefit. I do not know, however, that Republicans will want to discuss coverage expansion let alone negotiate on that.
Q
Defined contribution solutions like Individual Coverage Health Reimbursement Accounts (ICHRAs) have gained traction among employers as a viable coverage option. Are there other nontraditional funding strategies you think might gain popularity in the private insurance market?
A
I think finding more ways for individuals to have more choice about how they are covered and how patients choose to spend their healthcare dollars is an evolving, ongoing process. Sometimes the tax code slows down the progress. There will always have to be safeguards for consumers to ensure the coverage they are choosing is appropriately comprehensive and that individuals are not discriminated against because of pre-existing health conditions. I can’t say there is a specific developing proposal, but I know this is an area that policy makers are interested in and concerned about, so it will get attention.
Q
States like Maryland have established reinsurance programs through Sec. 1332 of the ACA to offset claims costs. Do you think these programs are sustainable and if so, what are critical elements of a successful model?
A
Most of the states that opted to establish reinsurance programs through Section 1332 waivers were doing so in an attempt to stabilize their markets as the Trump Administration unwound portions of the ACA. They continue to be needed and important in keeping markets stable.
However, with a new Administration and their vision of strengthening the ACA and expanding coverage, in a perfect world, the reinsurance programs would not be needed in their current form. If the Administration can shore up the ACA through the regulatory process and can provide expanded coverage options, the Section 1332 waivers may not be necessary. However, they are needed until the Administration is able to reinforce the ACA.
