CBO Releases Highly Anticipated Report on Single-Payer Health Care

The CBO released its report on single-payer health care last week. The report, requested by House Budget Chairman John Yarmuth (D-Ky.), does not make any recommendations but is instead an analysis of the potential impact of switching to a single-payer health care system. It examines what types of services would be covered, how people would enroll, the kinds of decisions that lawmakers would have to make in crafting such a policy, and the potential budgetary and economic impact of such legislative proposals. It does not include any formal consideration or score of Medicare for All legislation or estimates of how many people would gain or lose coverage under the system currently being advocated by Sen. Bernie Sanders (I-Vt.) and Rep. Pramila Jayapal (D-Wash.). CBO states that government spending on health care under a single-payer system would “increase substantially” and outlines the significant economic disruptions that could occur if the switch were to be made. Substantial changes would result in the sources and extent of health care coverage, provider payment rates, and the financing of the nation’s health care. The report warns of the increased demand for services and the possible added pressure of a single-payer system on providers. The budget office states that disruptions could be minimized by phasing in changes gradually. CBO also includes a high-level discussion of options to finance prescription drugs in a single-payer system, such as direct negotiation with the manufacturer. Chairman Yarmuth has expressed hopes that the report will accelerate the move to a single-payer system, which he has described as inevitable, while Ranking Member Steve Womack (R-Ark.) used the report to highlight the potential negative impacts of a “one-size-fits-all” approach to health care.

The House Budget Committee will hold a hearing on single-payer health care during the third week of May, focusing on the recent CBO report. The House Ways and Means Committee has also confirmed plans to hold a hearing on singlepayer health care. Leadership of the House Energy and Commerce Committee, the other House panel with health care jurisdiction, has not committed to hold a hearing on the issue but has instead reiterated a commitment focusing on legislation to lower health care costs.

CBO Details Cost of WH Rebate Rule

The CBO released a new analysis indicating that the administration’s plan to eliminate drug-manufacturer rebates to PBMs in Medicare and Medicaid would increase federal spending by $177 billion over the next decade. The White House proposal would significantly curtail the use of rebates between pharmaceutical companies and PBMs. CBO found that the move would increase spending for both the Medicare ($170 billion) and Medicaid ($7 billion) programs. The estimated increase in cost would be a result of higher insurance premiums – rebates can currently be used to broadly lower premiums. CBO also found that the rebate proposal would result in lower out-of-pocket costs for some Medicare beneficiaries, which could lead to higher drug utilization. CBO predicts that the policy would lead to manufacturers withholding 15 percent of the amounts they currently rebate to PBMs in Medicare and Part D.

House Speaker Nancy Pelosi (D-Calif.) has reportedly asked the CBO to determine how much would be saved by delaying the rebate proposal. A delay or full repeal of the policy could be combined with other Democratic drug pricing proposals, such as capping Medicare out-of-pocket costs for prescriptions and then included as a part of must-pass legislation, like raising the budget caps.

CBO Releases Updated Estimates of ACA Mandate Repeal

The CBO estimates that the repeal of the Affordable Care Act’s (ACA) individual mandate will result in seven million more people without health insurance by 2020. The agency’s latest report projects that the number of uninsured will continue to grow – from 28 million in 2017 to 35 million by 2029. CBO attributes this increase not only to the repeal of the individual mandate but also to rising health insurance premiums and an increase in the number of people choosing plans that do not meet the definition of health insurance (short-term, limited-duration plans). Subsidies in the ACA marketplace are estimated to increase from $62 billion in 2019 to $79 billion in 2029, while the number of people who receive subsidies is projected to drop from eight million people to six million people. CBO’s most recent projections are similar to those made by the budget office in 2018.

Talks on Prescription Drug Pricing Continue

President Trump met with a group of Democratic lawmakers, including House Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.), last week, pledging to work together to lower the cost of prescription drugs. According to the White House, the President and Democratic leaders agreed to another meeting on prescription drug prices in the near future. The President’s promise was met with skepticism from some members of Congress, such as Senate Finance Committee Ranking Member Ron Wyden (D-Ore.), who have pointed to the lack of detailed proposals coming from the administration. Wyden is hopeful that a bipartisan drug pricing bill will be advanced through the Finance Committee this year.

House Energy and Commerce Chairman Frank Pallone (D-N.J.) and Ways and Means Chairman Richard Neal (D-Mass.) held a closed door meeting last week with the Congressional Progressive Caucus regarding potential legislation to lower drug prices. The chairmen told the liberal Democrats that they have not ruled out a policy that would strip drug manufacturers of their monopolies if they refuse to negotiate a reasonable price with the federal government. Members of the Progressive Caucus have expressed concerns that this policy has been abandoned in favor of a proposal from House Speaker Nancy Pelosi’s (D-Calif.) office that would use a binding arbitration approach to drug price negotiation.

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