Forward Movement on Health Care Policies

Blog Post
Tuesday, July 30, 2019

There are some promising recent developments on health care policy in Congress and in the Center for Medicare and Medicaid Services (CMS) that are worth highlighting, despite the recent vote in the House of Representatives to eliminate the “Cadillac Tax.” (A vote which drove over 100 economists and health care policy experts, including our Executive Director Bob Bixby, to sign a letter pleading with the Senate to not follow suit.)

On Monday, CMS proposed a rule to increase transparency in the health care market. The rule would encourage hospitals to publicize the amount they charge on services that patients can plan ahead for (so-called “shoppable services”) like imaging or joint replacements. Hospitals would also, for the first time, have to disclose the prices on services negotiated between them and insurance companies.

Ideally this increase in transparency would provide for greater competition and thus lower prices for consumers in their decision-making while also giving insurance companies more power to negotiate better deals with hospitals. However, it’s clear that without other reforms, the rule will not be a panacea and there are still questions about the rule itself, such as whether the $300-a-day fine for non-compliance will be enough to alter hospital behavior.

Another development was last week’s vote in the Senate Finance Committee to advance a bill aimed at lowering prescription drug costs in Medicare and Medicaid. The bill, sponsored by Finance Committee Chairman Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.), would save the federal government around $100 billion over 10 years, according to the Congressional Budget Office (CBO). It would do a number of things to better align incentives in the design of Medicare Part D’s prescription drug benefit, change how Medicare Part B pays providers for drugs, and reform how Medicaid drug rebates and pricing are determined. The CBO director testified that in addition to saving the federal government money, the bill would likely reduce patient out-of-pocket costs and premiums.

The bill still faces a long road before passage with disputes arising between the Trump Administration (which largely supports the effort) and other Congressional Republicans. There is also a dispute between Senate Democrats and Senate Republicans over whether they should vote to protect the Affordable Care Act prior to acting on the bill.

The final development is the movement of bipartisan legislation through Congress to address the problem of surprise medical bills for patients who get treated at hospitals in their insurance network by doctors who are not in their insurance network. This activity represents a complete market failure because these bills are nearly unavoidable, especially when they arise in emergency situations.

One proposal has passed through committees in both the House and Senate. In addition to fixing the problem of surprise bills, it would save the federal government around $25 billion over 10 years. The bill is nearer to passage than the prescription drug legislation but still faces some legislative hurdles, such as competition from an inferior proposal in the House that would likely increase deficits.

In a summer that has seen dramatic disappointments in the fiscal relm, whether through the budget deal to eliminate discretionary spending caps, or through the “Cadillac tax” repeal vote, it is always worth looking at areas where both parties can find common ground and take small steps forward on fiscal issues. Hopefully Congress and the Administration will continue to pursue those mentioned above.

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