The Trump Administration has proposed using its demonstration authority under section 1115A of the Social Security Act to test a method of reimbursement for physician-administered drugs based on prices in 14 countries. The proposal is controversial, raising constitutional questions about the agency’s authority to modify Medicare reimbursement absent congressional action, as well as objections to the use of international reference pricing. A recent paper from the Foundation for Research on Equal Opportunity (FREOPP) makes a useful contribution to this debate. The FREOPP paper recommends that the administration construct a market-based international index (MBII) that would exclude “industrialized countries with little room for market-based pricing.” This report examines the drug pricing and reimbursement policies in MBII countries and finds that these policies are generally not market-based. Secondly, it presents data showing that many drugs introduced between 2011 and 2018 are not available to consumers in MBII countries. Under the proposal advanced by the administration and that suggested by FREOPP, Medicare reimbursement for physician-administered drugs would largely be based on international reference prices in which the regulatory agency of one government sets drug prices based at least in part on those set by regulatory agencies in other countries. Importing these mutually reinforcing, centralized decisions into Medicare may reduce reimbursement for physician-administered drugs, but the new reimbursement system cannot be said to be based on market prices.
Galen Institute president Grace-Marie Turner testified before the House Energy and Commerce Committee on Feb. 13 about preserving consumer protections in health insurance while giving consumers more choices of affordable coverage. She focused on:
- The Trump administration’s Section 1332 guidance which gives states new authority to help their individual and small group markets heal from the damage the ACA has done. Early waivers have seen premium costs reduced by 30% or more and enrollment in health coverage increase.
- The importance of the administration’s new rule allowing people to purchase temporary health insurance (so called Short-Term Limited Duration Plans) to help them bridge gaps between coverage, either because they are between jobs, starting new businesses, or retiring early
- The strong commitment on both sides of the political aisle to pre-existing condition protections
- And the value of private agents and brokers in doing outreach for exchange enrollment—enrolling 40% of policyholders vs 1% for the ACA-created Navigators
Most of the real action on health reform is likely to happen in the regulatory space over the next two years, and the Trump administration can build on the opportunities it already has created with a regulatory fix that would increase access to health insurance for working families.
We submitted a comment letter on Friday recommending a change to the administration’s proposed rule that adds flexibility to Health Reimbursement Arrangements. We recommend the administration also allow funds from one spouse to be used to buy into group health coverage offered by the employer of the other working spouse.
About one-fourth of employees offered health insurance at work do not participate, generally because of cost. This change would increase uptake by allowing spouses to use funds deposited into an HRA account by one employer to obtain a family insurance policy offered by the other spouse’s employer.
Replacing our health care financing system with a single-payer system could have profound and unforeseeable consequences on the capacity of doctors, hospitals and other providers to deliver quality care. Substituting government financing for ESI would: 1.) Place fiscal burdens on taxpayers that the private sector now voluntarily bears; 2.) Require workers with ESI to pay more to finance care for others; and 3.) Eliminate the higher reimbursement rates that private insurers typically pay for medical care.
Congress in 2014 ordered the Centers for Medicare and Medicaid Services to develop a new payment system for the more than 400 million clinical laboratory tests that Medicare pays for each year so that prices would be more closely aligned with those paid by private insurers.