HealthCare Roundtable e-News – July 17, 2019

Congress Expected to Vote on the ACA’s “Cadillac” Tax Repeal Today

House lawmakers are gearing up to vote on a full repeal of the Affordable Care Act’s “Cadillac Tax” today, according to House Majority Leader Steny Hoyer (D-Md.). The tax, which is an excise tax of 40 percent levied on health plans above a certain threshold has been largely opposed by members of both parties and repeatedly delayed by Congress. While health economists view the tax as an important component for addressing health costs, employers have opposed the tax. 

“Health care coverage is not a luxury good, and it shouldn’t be taxed that way. This is a tax on average working families with average health coverage,” said James Klein,President of the American Benefits Council. (InsideHealthPolicy). 

recent analysis from the Kaiser Family Foundation estimates that the Cadillac tax would affect approximately 21% employers offering health benefits, unless they update their health plans before the current 2022 deadline for implementation. The analysis projects that the Cadillac tax would affect a growing share of employers over time, reaching 37% in 2030. 

The Roundtable strongly supports the repeal of the Cadillac Tax and has consistently advocated for legislation to do so since the passage of the ACA. We will keep members up to date as we learn more.

Trump Administration Abandons Rule to Eliminate Drug Rebates

The White House announced last Thursday (Jul. 11) that the administration is dropping its proposal to curb drug prices by eliminating rebates in Medicare Part D and Medicaid managed care, according to administration officials. The announcement comes not too long after a federal judge blocked a separate rule in the administration’s agenda that required drug manufacturers to list drug prices in television ads. 

The rule had been championed by the White House since 2018, but President Trump withdrew the rebate rule following sharp opposition from a range of stakeholder organizations. Sen. Lamar Alexander told Inside Drug Pricing the administration ran into “the same [issue] we ran into, which is that when you eliminate the rebates, all that money has to go somewhere.” 

HHS Secretary Alex Azar had shared last week that, among other reasons, the rule had been withdrawn due to the President’s concern for its effects on the senior population, where many plans would be forced to increase premiums. Analysts say the administration will likely look to move forward on a separate proposal to create an “international pricing index” to compare drug prices in other countries, part of the White House’s agenda to lower health and drug costs. 

Pelosi Looks to Expand Government Drug Price Negotiation Plan to Cover Part D, Medicaid

Democratic House leaders are looking to propose a draft plan to ensure that prices negotiated on the most expensive drugs would apply to all payers-not only the government-including employers and insurers, according to House aids. Speaker Nancy Pelosi (D-Calif.) was initially expected to negotiate with the White House on Medicare Part D, but it’s been revealed that the negotiation plans also expand beyond Part D to Medicaid and benefit Americans on private health insurance plans, as well. (InsideHealthPolicy).

Pressure from Pelosi’s more progressive colleagues encouraged increases in price negotiations from 25 drugs annually to 250. Pelosi staff confirmed that the 250 drugs account for more than half of Medicare spending on drugs and, of that number, approximately 150 would be retail and the other 100 would be doctor-administered. (InsideHealthPolicy). 

The current system enables price negotiations to be conducted only between pharmacy benefit managers (PBMs) and drugmakers on a plan-by-plan basis. Democratic lawmakers have argued that the HHS secretary should be responsible for negotiating prices with support from the Centers for Medicare & Medicaid Services (CMS). It’s expected that the plan from Pelosi and other lawmakers would authorize the HHS secretary to negotiate the prices of the 250 most expensive drugs.