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100 Days, Zero Progress?

President Biden
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By Yuval Rosenberg and Michael Rainey
Monday, March 27, 2023

Happy Monday! On this date in 1973, “The Godfather” won the Academy Award for best picture. That’s right, it’s been 50 years.

Here’s what else we’re watching.

100 Days, Zero Progress?

President Joe Biden is set to travel to Durham, North Carolina, tomorrow to tout the economic gains and infrastructure improvements made under his administration — and, reportedly, to take a few more shots at the GOP’s agenda.

“With House Republicans dragging their feet on releasing an FY 2024 budget proposal, Biden will talk this week about what he sees as the GOP’s budgetary priorities. And because House Republicans haven’t put out their budget yet, Biden can spin it any way he wants,” Punchbowl News noted this morning. “The longer it takes for House Republicans to release their budget – and then pass it – the longer Biden will have the strategic advantage to define the GOP’s positions.”

Punchbowl’s John Bresnahan also adds that, given lawmakers’ schedule over the next few weeks and the lack of progress on raising the debt ceiling, “the White House and Congress will have pretty much wasted the first 100 days of the 118th Congress doing nothing on the biggest issue they face this year.”

GOP Tax Cuts Are Driving US Debt Ratio Higher: Analysis

Although they are struggling to come up with a budget proposal of their own, Republicans are unified behind the idea that the federal deficit is the product of excess spending and therefore a problem to be solved by slashing government programs.

Democrats, on the other hand, lay much of the blame for persistent budget shortfalls on the tax cuts that Republicans tend to push through every time they gain control in Washington. On Monday the liberal think tank Center for American Progress released an analysis laying out the case that GOP tax cuts are the driving force behind the country’s worsening fiscal outlook.

The argument in a nutshell:

“Tax cuts initially enacted during Republican trifectas in the past 25 years slashed taxes disproportionately for the wealthy and profitable corporations, severely reducing federal revenues. In fact, relative to earlier projections, spending is down, not up. But revenues are down significantly more. If not for the Bush tax cuts and their extensions — as well as the Trump tax cuts — revenues would be on track to keep pace with spending indefinitely, and the debt ratio (debt as a percentage of the economy) would be declining. Instead, these tax cuts have added $10 trillion to the debt since their enactment and are responsible for 57 percent of the increase in the debt ratio since 2001, and more than 90 percent of the increase in the debt ratio if the one-time costs of bills responding to COVID-19 and the Great Recession are excluded. Eventually, the tax cuts are projected to grow to more than 100 percent of the increase.”

Specifically, CAP says that the tax cuts passed under President George W. Bush will cost more than $8 trillion through the end of 2023, while the Trump tax cuts will cost $1.7 trillion. Republican plans to extend the Trump tax cuts would add $2.6 trillion to the total, while the effort to rescind IRS funding would add billions more.

“A series of massive, permanent tax cuts have created large federal budget primary shortfalls and continue to exert upward pressure on the debt ratio,” the CAP analysis concludes. “If Congress wants to decrease deficits, it should look first toward reversing tax cuts that largely benefited the wealthy, which were responsible for the United States’ current fiscal outlook.”

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Ohio AG Charges Pharmacy Benefit Companies With Price Fixing

Ohio Attorney General Dave Yost filed suit Monday against several companies that manage prescription drug benefits, accusing them of colluding to drive up drug prices, contrary to their stated business purpose.

The lawsuit says that industry consolidation has left three large players controlling more than 75% of the pharmacy benefit management (PBM) market, with tremendous power over prescription drug pricing and reimbursement rates. It alleges that Cigna Group, Humana and Prime Therapeutics used a Swiss subsidiary to coordinate pricing and share information, “effectively eliminating all competition between themselves” and gaining leverage in negotiations with drugmakers. The suit charges the companies with violating Ohio’s antitrust law.

“Defendants have morbidly manipulated both sides of the market, demanding higher drug prices while negotiating larger fees from the manufacturers,” the lawsuit alleges. “Patients pay more, manufacturers get less, and the PBMs profit.”

What are these companies? “The companies play a largely hidden but important role in the prescription-drug supply chain, serving as middlemen among the companies that make drugs, the health insurers that pay for the treatments and the pharmacies that dispense them,” Jared S. Hopkins writes at The Wall Street Journal. “Governments, employers and unions hire PBMs to manage their payments for prescription medicines. In addition to processing payments to pharmacies, the PBMs aim to control spending by deciding which drugs they will pay for depending on the rebates they negotiate with pharmaceutical companies.”

The battle over prescription drug pricing has seen plenty of finger-pointing between drug companies, insurers and pharmacy benefit managers, with Republicans frequently defending the pharmaceutical companies and lining up against the PBMs. Critics say that the benefit managers, rather than keeping costs down, lead to inflated drug prices because they can then negotiate larger rebates and make more money themselves.

Yost, a Republican, called PBMs the disease plaguing drug pricing and the attorney general’s office noted that his filing differs from other similar lawsuits in that “it targets PBMs only, not the pharmacies or manufacturers that are being strong-armed by PBMs.”

“PBMs are modern gangsters,” Yost said in a statement. “They were designed to protect and negotiate on behalf of employers and consumers after Big Pharma was criticized for overpricing medications, but instead they have absolutely destroyed transparency, scheming in the shadows to control drug prices on all sides of the market.”

The Pharmaceutical Care Management Association, an industry trade group, argues that its members lower drug costs and that pharmaceutical companies are the fundamental drivers of high prices.

Chart of the Day: Shorter Lives, Poorer Health

Researchers announced late last year that U.S. life expectancy had fallen for a second year in a row in 2021, an unusual occurrence that pushed the measure of life expectancy at birth down to 76.1 years. Last week, we learned that maternal mortality hit a new and unwelcome high last year, and that mortality rates for young people are rising, as well.

Noting that life expectancy in the U.S. is now lower than in Cuba and in Lebanon, NPR’s Selena Simmons-Duffin took a look this weekend at declining health measures in the U.S. “Across the lifespan, and across every demographic group, Americans die at younger ages than their counterparts in other wealthy nations,” she writes. “In a country that prides itself on scientific excellence and innovation, and spends an incredible amount of money on health care, the population keeps dying at younger and younger ages.”

How could this happen? Highlighting a study done a decade ago, titled “U.S. Health in International Perspective: Shorter Lives, Poorer Health,” Simmons-Duffin says that the cause is a uniquely American mix of factors, including but not limited to obesity, child poverty, racial segregation, access to guns, fatal car crashes, drug abuse and a lack of universal access to health care.

Experts say that while the recent plunge in life expectancy is driven in part by the upswing in deaths related to Covid-19, the long-term trends are more important. “If you add up the excess deaths that have occurred in the United States because of this unfolding problem, it dwarfs what happened during COVID-19, as horrible as COVID-19 was,” Steven Woolf, director emeritus of the Center on Society and Health at Virginia Commonwealth University, told NPR. “We've lost many more Americans cumulatively because of this longer systemic issue. And if the systemic issue is unaddressed, it will continue to claim lives going forward.”

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Number of the Day: 1.2 Seconds

Doctors at health insurance giant Cigna rejected more than 300,000 medical claims over a two-month period last year, spending an average of 1.2 seconds reviewing each case, according to an analysis published Saturday by ProPublica. The shockingly brief review time is the product of a computer algorithm that enables doctors to reject large numbers of medical claims at once, without having to read the files.

“The company has built a system that allows its doctors to instantly reject a claim on medical grounds without opening the patient file, leaving people with unexpected bills,” ProPublica’s Patrick Rucker, Maya Miller and David Armstrong write. “A Cigna algorithm flags mismatches between diagnoses and what the company considers acceptable tests and procedures for those ailments. Company doctors then sign off on the denials in batches, according to interviews with former employees who spoke on condition of anonymity.”

“We literally click and submit,” one former Cigna doctor told the authors. “It takes all of 10 seconds to do 50 at a time.”

Cigna, which earned roughly $7 billion in 2022 providing health insurance to about 18 million people, says the computerized review system it has used for a decade was intended to accelerate payments to service providers by automatically approving eligible requests. The company denies that it uses the system, known as PXDX, to reject claims without review. But insiders who spoke to ProPublica say otherwise, including one doctor who said it would be an expensive “administrative hassle” to require doctors to actually review the files they were rejecting.

For the full story, including the Kafkaesque tale of a patient whose request for a test for a vitamin deficiency was rejected because he hadn’t had a vitamin deficiency in the past, see the article at ProPublica.

Send your feedback to yrosenberg@thefiscaltimes.com.

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