Magazine Article | September 9, 2020

Democratic And Republican Health Priorities In The Next Administration

Source: Life Science Leader

By John McManus, president and founder, The McManus Group

With the conventions and a contentious summer behind them, both political parties are laying out their agendas for the next four years. What are the Democratic and Republican health priorities?

To bolster support on his left flank, former Vice President Biden worked closely with Senator Bernie Sanders, the socialist from Vermont, on writing the Democratic platform. Senator Sanders remarked, “The goals of the task force were to move the Biden campaign into as progressive a direction as possible, and I think we did that. … On issue after issue, whether it was education, the economy, healthcare, climate, immigration, criminal justice, I think there was significant movement on the part of the Biden campaign.”

Citing the COVID-19 crisis for impeding their ability to convene delegates for a convention committee on the platform, Republicans adopted a resolution foregoing any policy platform whatsoever at their convention. No detailed policy positions were adopted at all. Rather, the convention simply resolved to “enthusiastically support the President’s America-first agenda.”

Democratic Priorities

Joe Biden’s first priority is shoring up the Affordable Care Act (ACA) that the Obama-Biden administration enacted a decade ago. Most significantly, he proposes adding a government-run “public option” plan to compete against the private insurance plans in the exchanges. This proposal was pushed by liberal Democrats during the consideration of the ACA but rejected under virulent opposition by healthcare providers and insurers.

In addition, as a work-around to the Supreme Court decision that found that the federal government cannot compel states to expand Medicaid, Biden’s plan would offer premium-free access to the public option for eligible individuals in states that have not expanded Medicaid.

The plan would increase premium subsidies and offer them to more individuals than currently eligible. It would eliminate the cap for means-based subsidies for exchange plans, which currently limits subsidies for individuals and families up to 400 percent of the federal poverty level (or about $105,000 for a family of four). Secondly, it would lower the threshold of income devoted to health premiums from 9.86 to 8.5 percent. Finally, the subsidies would be based on the more generous gold plan rather than the silver plan.

Drug Pricing Reforms

The Biden campaign enumerates a familiar list of liberal prescription drug pricing priorities, including:

  • repeal the noninterference clause to allow for Medicare price negotiation by the secretary of HHS (Health and Human Services)
  • establish an independent review board to assess drug launch prices and recommend a price based on prices in other countries
  • limit drug price increases to inflation with penalties for noncompliance
  • allow for drug reimportation
  • end the tax deduction for direct-to-consumer prescription drug ads
  • reform patent laws to prevent delay of generic market entry.

Savings derived from the pharmaceutical industry from these reforms, along with significant tax hikes, would be used to help finance the coverage expansions.

Republican Priorities

With no formal platform, discerning Republican priorities can only be made based on previous actions rather than forward-looking policy positions.

President Trump spent the first full year of his presidency, ending with the failed Senate vote cast by Senator John McCain in December 2017, trying to dismantle and replace the ACA. Later in his presidency, he was more successful in repealing unpopular financing aspects of the law, including the individual mandate tax and several other industry-focused taxes.

Should he win a second term, he may be confronted with a Supreme Court decision that does the dirty work for him. Texas and 19 other states sued, arguing that repeal of the individual mandate tax meant the entire ACA law is now unconstitutional since the taxation aspect of the mandate was the basis for upholding the constitutionality of ACA, according to Chief Justice Roberts. Oral arguments before the Supreme Court in California v. Texas are expected to occur one week after the election, with a decision rendered in early 2021.

The Trump administration has supported the Texas position that the ACA is unconstitutional, yet it has not developed a comprehensive replacement to that law should it be struck down. The policy and political complexities of replacing the sprawling law could consume the first year of his next term as well. Unlike many budget hawks in the Republican party, President Trump has shown no interest in reforming entitlements such as Medicare and Social Security in order to rein in spending.

Prescription Drug Priorities

The Trump administration supported bipartisan reforms approved by the Senate Finance Committee last year, including a restructuring of Part D that increased manufacturer liability, limits beneficiary out-of-pocket spending, and limits price increases to inflation. That legislation did not advance to the floor, and a House Democratic bill that tied prices of the most costly drugs to an international pricing index did not receive support from the Trump administration.

More recently, President Trump issued executive orders that would slash U.S. prices to the lowest price offered by a developed country and create a pathway for reimportation. It’s unclear whether and how those proposals will advance, as staff-level discussions with industry have focused on more modest proposals that would not upend the industry’s entire business model.

Control of Congress May Dictate Agenda

Regardless of which presidential candidate prevails, the real agenda may be dictated by who controls Congress. Republicans currently control the Senate 53 to 47, but have more members in jeopardy than Democrats and have little chance of taking back the House of Representatives.

A Democratic sweep gives Democrats the opportunity to rapidly pass health legislation under “budget reconciliation” rules, which require a bare minimum 50 votes in the Senate. In addition, many senior Democrats have already mulled scrapping the filibuster rules, which give the minority power to block legislation that does not have at least 60 of 100 votes.

The House has already passed Speaker Pelosi’s prescription drug bill twice, and that would be the baseline for legislative action next year. That bill would cap Medicare and commercial plan prices at an international index and empower the HHS Secretary to “negotiate,” under threat of 95 percent excise taxes, for still lower prices. Only two Democrats crossed party lines to vote against those bills previously.

Could the pharmaceutical industry fend off such radical legislation in the future by offering alternatives or ginning up opposition from Democrats where they have heavy employee concentrations, in states such as New Jersey, California, and Massachusetts? Members of Congress typically try to protect high  wage, high tech jobs, particularly when they are producing desired goods demanded around the world.

Even if those members engage, could they derail a proposal that levels international pricing and has the support of either a President Biden or President Trump? That appears to be a tough row to hoe, as there seems to be more political benefit in demonizing the industry for political gain than focusing solutions on ways to lower patients’ out-of-pocket costs.

John McManus is president and founder of The McManus Group, a consulting firm specializing in strategic policy and political counsel and advocacy for healthcare clients with issues before Congress and the administration. Prior to founding his firm, McManus served Chairman Bill Thomas as the staff director of the Ways and Means Health Subcommittee, where he led the policy development, negotiations, and drafting of the Medicare Prescription Drug, Improvement and Modernization Act of 2003. Before working for Chairman Thomas, McManus worked for Eli Lilly & Company as a senior associate and for the Maryland House of Delegates as a research analyst. He earned his Master of Public Policy from Duke University and Bachelor of Arts from Washington and Lee University.