Sen. Chuck Grassley (R-IA) recently introduced the bipartisan Prescription Drug Pricing Reduction Act of 2019. The bill provides incentives to slow the spending curve in the Medicaid drug program. Grassley says, “When states decide which drugs will be covered and included on their preferred drug lists, taxpayers and Medicaid patients ought to have assurances the system is fair. Transparency is the best guardrail to ensure safety and effectiveness to deliver the best value for taxpayers and the best outcomes for Medicaid patients.”
Last week, Reps. Ami Bera, MD (D-CA) and Jason Smith (R-MO) introduced an HSA correction and expansion bill, HR 3796, that eliminates some of the discriminatory practices against working seniors and allows more Americans to own HSAs and enjoy the benefits of HSA ownership longer than they can under current law. Retirees who already own an HSA would be able to continue to contribute to their accounts, and those who have never had an opportunity to open an HSA could do so. This means that 58 million retirees would feel less pressure from the financial vise and leave them with more funds to receive the high-value care that they need.
Congress has twice delayed the Cadillac Tax—originally set to take effect in 2018—and weakened it by allowing employers to deduct the levy itself from their profits. But repealing the Cadillac tax is a bad idea. Instead, Congress should modify it to encourage the use of health savings accounts. It would be better to shift the tax advantage toward HSAs and away from third-party payment—especially high-cost employer-sponsored insurance—to encourage consumers to shop around and assess what’s worth the cost. This would give employees greater control over their health spending and reduce the incentive to overconsume care in the mistaken belief that someone else is paying for it.
If there is one thing that tends to unite economists across the political spectrum it’s the view that the government should not give unlimited tax subsidies to employer-provided health insurance. Yet that is what we have been doing. To remedy the problem, in place of the Cadillac Tax, we should offer employers and their employees the option of a dollar-for-dollar tax credit up to the amount of the tax subsidy they have been getting through the tax exclusion. This would solve the problem economists complain about, put health insurance and take-home pay on a level playing field at the margin, and greatly reduce the incentives we all have to over-spend on health care.
A closer look at the evolution of Medicare Advantage demonstrates that the private sector has proven to be a remarkable laboratory for innovation and progress in our health system’s core evolution—to align the payment and care delivery system with value and the outcomes we care about most for America’s seniors.
Lawmakers are trying to set aside their irreconcilable differences over the Obama-era Affordable Care Act and work to reach bipartisan agreement on a more immediate health care issue, lowering costs for people who already have coverage.
Returning from their Fourth of July recess, the Senate and House are pushing to end surprise medical bills, curb high prices for medicines, and limit prescription copays for people with Medicare.
“Specifically, we are concerned about proposals for open-ended arbitration, which have been floated as a solution to the problem. If arbitration appears innocuous, it is to a large extent because it is not transparent. Experience suggests that arbitration would be cumbersome to deploy, and highly favorable to those health care providers who charge high prices today. If Congress were to endorse arbitration, it could potentially open the door to a system quite unintended – establishing an inflationary dynamic that accommodates and encourages the rapid growth of costs.”
AEI economist Benedic N. Ippolito testified before the Senate HELP Committee on the Lower Health Care Costs Act. Ippolito applauded the bipartisan effort to “meaningfully increase competition and transparency in health care markets…lowering costs would also improve access to health care.”
Senate HELP Committee leaders Wednesday unveiled their wide-ranging bill to address health care costs including “surprise” medical bills. [While surprise medical bills are a serious problem and the goal is laudable, Congress has tried in the past to address this issue, leading to unintended and expensive consequences. All of the proposals before the HELP committee are controversial, and Congress must proceed carefully to avoid exacerbating the problem.]
Of all the things we might do to improve our health care system, the one reform that is more important than any other is almost never discussed.
It is ignored by Republicans. By Democrats. By the experts. By the think tanks. And by just about everybody who has an opinion on health policy.
Here it is: If we want the system to work well, we must make it profitable to take care of sick people.