Trump White House Rejects Pelosi Drug Plan

Trump White House Rejects Pelosi Drug Plan

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Plus, another huge tax windfall for the wealthy?
Tuesday, November 5, 2019

White House Rejects Pelosi Drug-Pricing Plan as ‘Unworkable’: Report

The White House on Tuesday rejected House Speaker Nancy Pelosi’s plan to lower prescription drug prices, with an unnamed senior White House official telling the Associated Press that the plan is “unworkable.”

The White House has been in talks with Pelosi’s office on drug prices, but it signaled last week that President Trump would instead back a more modest bipartisan Senate drug-pricing proposal from Sens. Charles Grassley (R-IA) and Ron Wyden (D-OR).

The Senate legislation would require drugmakers to pay rebates to Medicare if they raise prices by more than the rate of inflation, and it would limit out-of-pocket expenses for seniors. But it does not call for the government to negotiate drug prices with manufacturers, as Pelosi’s bill does. Trump has in the past backed the idea of allowing Medicare to negotiate prices, an idea vehemently opposed by other Republicans, who reject Pelosi’s plan as “socialist.”

“The White House official pointed to the lack of Republican support for the Pelosi bill and objected that it’s structured to essentially give Medicare the power to dictate prices,” AP’s Ricardo Alonso-Zaldivar reported.

Pelosi’s plan, which would also lower drug prices for people with private insurance, would save Medicare $345 billion over seven years, according to a preliminary analysis by the Congressional Budget Office. The Grassley-Wyden plan would save $85 billion, CBO has said.

A Pelosi spokesperson responded to the White House decision with a sharp warning to Trump: “Working people won’t like it if he sells them out on one of the most important kitchen table issues in America right now.”

Why it matters: “The falling out imperils chances for legislation this year, already seen as a long shot,” Alonso-Zaldivar says.

Trump Open to Short-Term Funding Bill That Would Extend Shutdown Deadline: Report

Just two days after President Trump raised fresh concerns about the possibility of a government shutdown when stopgap federal funding expires on November 21, the White House said Tuesday that it is open to another short-term spending extension that would push the deadline into December.

Eric Ueland, the White House director of legislative affairs, told reporters Tuesday that Trump wants “the spending process to continue to unfold and the government to continue to be funded,” according to the Associated Press. Ueland reportedly indicated that, as long as Democrats don’t look to restrict Trump’s efforts to fund barrier construction along the border with Mexico, Trump is open to signing a short-term funding bill.

“It seems as if the center of gravity around here is coalescing around a date in December,” Ueland said, according to Bloomberg News.

Trump on Sunday had left open the possibility that he might not sign off on another stopgap funding bill. But with 16 days to go before the federal government runs out of money, key lawmakers reportedly greeted those comments with a healthy dose of skepticism, essentially dismissing them as Trump posturing.

Even before Ueland’s comments, appropriators and congressional aides remained optimistic that they’ll be able to keep the government funded, according to reports in The Wall Street Journal and The Hill.

Congress has yet to pass any of the annual spending bills required for the fiscal year that started on October 1 and appropriators have made little progress in overcoming disagreements — particularly over funding for Trump’s border barriers — that have bogged down their negotiations. Key lawmakers have said that another short-term extension will be needed to keep the government running after the current eight-week stopgap funding runs out.

The length of that extension remains unclear, though. House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell have reportedly agreed to try to pass all 12 of the required full-year funding bills by the end of the year, but top appropriators have indicated that a short-term extension might run through February or March.

Wealthy Could See a Huge Tax Windfall if Obamacare Is Overturned

The lawsuit by 18 state attorneys general seeking to invalidate the Affordable Care Act would provide an enormous tax cut for wealthy households if it succeeds, according to an analysis by the Center on Budget and Policy Priorities published Monday.

Backed by the Trump administration, the suit claims that the ACA became unconstitutional when the Tax Cuts and Jobs Act effectively eliminated the mandate that required all Americans to purchase health insurance, starting this year. If the ACA is overturned, more than 20 million people could lose their health insurance and costs would likely increase significantly for millions more.

But a victory for the plaintiffs would also create financial winners, once the taxes that help fund the ACA are eliminated. Those include an 0.9% Medicare tax and a 3.8% tax on unearned income for high-income filers.

Here’s how wealthier taxpayers would be affected:

  • Households reporting earnings over $250,000 a year for couples and $200,000 for singles would receive a tax windfall of about $45 billion.
  • Most of the tax reductions would occur in households earning more than $1 million per year.
  • The top 0.001% — 1,400 households with incomes above $53 million — would receive an average tax cut of $2.7 million, worth about $3.8 billion altogether.

Pharmaceutical firms would also be big winners, with the elimination of $2.8 billion in fees based on the sale of brand-name drugs.

Overall, the ACA lawsuit could have strongly regressive consequences. “In effect”, CBPP said, “the Administration and the state attorneys general are seeking a massive transfer of income from low- and moderate-income Americans to people on the top rungs of the income ladder.”

What’s next: A decision in the lawsuit could come as soon as this month, though the result would likely face appeals that could keep it in the courts for far longer. Seema Verma of the Centers for Medicare & Medicaid Services recently said that the Trump administration wouldn’t allow millions to lose their health coverage, claiming that the White House had a plan to deal with the situation if the ACA is overturned — though she refused to provide any details about the plan to a congressional committee.

Medical Costs Stress Even Those on Medicare

More than half of all seriously ill people on Medicare face financial hardships related to their illness, according to a new study in the journal Health Affairs.

A survey found that 53% of seriously ill Medicare beneficiaries reported trouble paying a medical bill, with prescription drugs and hospital bills posing the biggest hardships.

“Medicare is considered relatively good insurance,” the report says. “But traditional Medicare has well-known gaps in financial protection—notably, the lack of a cap on out-of-pocket spending.”

A separate study released this week by the Kaiser Family Foundation found that the average Medicare enrollee spent $5,460 out of pocket on health care in 2016, including premiums and services. A bit more than half of that was spent on medical and long-term care services ($3,166), on average, with the rest going toward premiums for Medicare and supplemental insurance ($2,294).

Spending varied considerably, though, for different groups. People over the age of 85 spent more than twice as much on average, at $10,307, and men spent about $600 more than women. And the roughly 20% of Medicare beneficiaries who lacked supplemental coverage were at greater risk of paying more.

“The fact that traditional Medicare does not have an annual out-of-pocket limit and does not cover certain services that older adults are more likely to need may undermine the financial security that Medicare provides, especially for people with significant needs and limited incomes,” the report says. “Addressing these gaps would help to alleviate the financial burden of health care for people with Medicare, although doing so would also increase federal spending and taxes.”

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