The debate over extending Covid-era subsidies on the Obamacare exchanges is reigniting pressure on lawmakers to enact legislation aimed at fixing the broader cost of health care.
The Affordable Care Act’s core subsidies will continue, but enhanced tax credits implemented under President
Time is running out before premiums spike on Jan. 1, hampering lawmakers’ ability to solve the health-care system’s underlying problems before then. But a ticking clock can also yield the best chance to break the legislative logjam stalling individual proposals, since mammoth bills often emerge from the 11th-hour scramble.
Votes on several health bills are expected next week. Democrats say extending the tax credits is imperative to prevent crippling costs from booting people off their insurance. Most Republicans say the exchanges are a fraud-riddled failure, and are pushing proposals to expand health savings accounts instead.
But health insurance premiums are based largely on the cost of care, and industry observers say lawmakers should also target things like price transparency and market consolidation to help bring down prices for prescription drugs, hospitals, and doctor offices.
“I don’t know how you solve the marketplace problem until you solve the broader issue,” said Caroline Pearson, executive director of the Peterson Center on Healthcare.
Transparency Push
Frustration with the predicament was on display at last week’s Senate Health, Education, Labor and Pensions Committee hearing, where Chair
The legislation would codify existing rules requiring hospitals and health insurers to publish detailed pricing information, and extend the requirement to ambulatory surgical centers, clinical labs, and imaging providers.
“Transparency efforts—and I know there’s bipartisan agreement on a number of them—will inform this committee in major ways of what we need to do to extract reforms and make sure this isn’t just a profit-motivated system,” said Sen.
The bill also prohibits insurers and other third-party service providers from blocking self-insured employers’ access to claims and spending data related to their health plans. The issue is at the heart of a series of legal battles employers are waging against insurers and pharmacy benefit managers, which oversee drug benefits.
“Our theory on this transparency data is that you want to make health-care providers compete on cost and quality,” Pearson said. “But right now it’s easier for everybody in health care to raise prices than to deliver value or operate more efficiently.”
Consolidation, Spread Pricing
Lawmakers also should tackle provider consolidation, Wesley Yin, a UCLA economics professor and former Biden administration official, said.
“Site-neutral” policies—which pay the same rate for a particular service regardless of where it was performed—would help slow the rate of hospitals acquiring physician practices, he said.
“That type of vertical integration, there’s really no statutes around that,” he said, noting consolidation strengthens hospitals’ ability to implement anticompetitive contracts. “And that can lead to a lot of higher prices.”
Lawmakers have also signaled interest in limiting tactics like “spread pricing,” in which PBMs charge health plans more than they pay the pharmacy for a particular drug, and “delinking” manufacturer rebates from the price of the drug. On the drugmaker side, lawmakers have embraced a series of bills aimed at patent abuses.
Legislation on these ideas has repeatedly cleared initial hurdles with strong bipartisan support, but hasn’t made it across the finish line.
Language around PBM spread pricing, drug patents, and price transparency were all included in the original version of a government funding bill last December, only to disappear after incoming President
Site-neutral language for Medicare services was also included in a House-passed health bill in 2023, and could resurface in GOP bills expected next week.
Industry Resistance
Industry groups have fought the proposals. The American Hospital Association in October told the Senate Aging Committee that transparency requirements are an administrative burden, and that site-neutral cuts don’t account for the sicker patients who use hospital outpatient departments more.
The Pharmaceutical Care Management Association, which represents PBMs, condemned the 2024 spending bill as “government intrusion” when it was released.
And the Pharmaceutical Research and Manufacturers of America has resisted drug patent reforms, arguing that increasing oversight of patents could threaten innovation.
Congress had the same conversations while passing the ACA in 2009, said Karen Ignagni, president and CEO of EmblemHealth and former leader of health insurance lobby group AHIP.
“The very broad cost goals, they were not pursued because of the sense that—not our sense, but the sense politically—that it was going to be hard to do both,” she said.
‘Stars Are Aligned’
Industry groups collectively wield more clout than Congress can usually withstand while drafting major legislation. But increasing pressure around health care in both parties is arguably weakening their influence.
“I think that the stars are aligned for us to get our heads together and do something in December and January,” Marshall said.
“The timeline is very, very short for something this complicated,” said Sen.
Congress is often most effective under a deadline, when bipartisan bills frequently hitch a ride on larger, must-pass legislation. But the timeline also hinders lawmakers’ ability to hash out last-minute opposition.
“If you want to do a bill for next year, you got to be very focused on next year. So you can’t do a lot of things,” Cassidy said. “You can only do what you get accomplished.”
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