Happy St. Patrick’s Day! Here’s a quick fiscal update before you head into the weekend.
GOP Senators Take Aim at Biden’s Student Loan Forgiveness Plan
With the fate of President Joe Biden’s plan to forgive billions of dollars in student loan debt now in the hands of the Supreme Court, some Republican lawmakers want to ensure that the program never gets enacted.
On Friday, Republican Sens. Bill Cassidy (LA), John Cornyn (TX) and Joni Ernst (IA) announced that they will introduce a resolution that would “overturn President Biden’s student loan cancelation scheme.”
The resolution will be based on a ruling Friday by the Government Accountability Office that the Biden debt relief plan, which would forgive up to $20,000 in student loan debt per borrower and cost an estimated $400 billion over 10 years, is a rule subject to the Congressional Review Act, giving the Senate the authority to overturn the debt forgiveness plan on a majority vote.
Democratic control of the Senate means the GOP resolution is unlikely to pass. However, some Democratic lawmakers, including Sen. Joe Manchin (WV), have been critical of the Biden plan, raising the odds that the resolution could see some Democratic backing.
Insulin Makers Lowered Prices to Save — and Make — Money
Drugmaker Sanofi said Thursday that it will cut the list price of its most widely prescribed insulin by 78% and cap out-of-pocket costs for the drug at $35 a month for all patients with private insurance. The moves, set to take effect in 2024, come after Eli Lilly and Novo Nordisk made similar announcements. The three companies are the top manufacturers of insulin, with a combined 80% of the market.
The price reductions follow years of pressure from patients, politicians and advocates angered by the soaring prices of the drug needed by diabetics, many of whom resorted to rationing doses as they struggled to afford their medication. The Inflation Reduction Act passed by congressional Democrats last year limited the monthly cost of insulin for Medicare beneficiaries to $35, adding to the pressure.
“Sanofi is the latest company to recognize that charging hundreds of dollars for insulin that costs $10 to produce is just wrong, especially when the lives of so many children, parents, and grandparents depend on it,” President Biden said in a statement.
But as a number of publications have pointed out, the pricing changes by drugmakers aren’t entirely altruistic. “The companies said they decided to lower costs to ensure that patients could afford their medications. But Novo Nordisk and Sanofi's changes kick in on Jan. 1 and coincide with the elimination of a cap that limits how much manufacturers have to rebate Medicaid,” Oriana González writes at Axios. “Eli Lilly, Sanofi and Novo Nordisk's new low costs will save them from owing the government millions.”
The Medicaid rebate reforms were part of the American Rescue Plan Act of 2021. The changes could have cost insulin makers millions. By contrast, cutting their insulin prices now could actually help them make money from Medicaid.
“By dropping the cost of its Humalog and Humulin insulins, Lilly could sidestep $430 million per year in new Medicaid rebates and make more than $85 million in new annual profit,” Bloomberg’s Ilena Peng and Emma Court reported this week, citing an analysis by Spencer Perlman, the director of health-care research at Veda Partners. “Novo, meanwhile, could avoid about $350 million in new 2024 rebates on [insulin products] NovoLog and Levemir and add earnings of nearly $210 million, Perlman said. He estimated that both companies currently earn nothing on Medicaid sales.”
Number of the Day: $30
The majority of elderly Americans in nursing homes have their care paid for by Medicaid, which requires its impoverished beneficiaries to turn over their incomes — including Social Security and pensions — to cover costs. The residents receive a monthly stipend called a personal needs allowance for necessities like toothpaste and clothing. Congress established the stipend at $25 per month in 1972, raised it to $30 in 1987 — and left it at that level to this day. Although most states have increased the stipend modestly on their own, many nursing home residents within the Medicaid system struggle to afford even the most basic purchases.
Currently, four states — Alabama, Illinois, North Carolina and South Carolina — maintain the $30 stipend. The others have unilaterally raised the stipend by a few dollars, including California ($35), Mississippi ($44) and Pennsylvania ($45). According to the American Council on Aging, only four states exceed $100, and all but one fall below the $180 per month that would be the minimum if the stipend had been indexed to inflation.
“When Marla Carter visits her mother-in-law at a nursing home in Owensboro, Kentucky, the scene feels more 19th-century poorhouse than modern-day America,” writes Matt Sedensky of the Associated Press, who reported on the stipend issue this week. “With just a $40 allowance, residents are dressed in ill-fitting hand-me-downs or hospital gowns that drape open. Some have no socks or shoes. Basic supplies run low. Many don’t even have a pen to write with.”
Quote of the Day
“I would bet you, not a lot of money, but a beer, that everyone on the Appropriations Committee wants to get it done by the end of September. When there’s that kind of push, especially from leadership, there’s a real chance of making this happen.”
– Sen. Jon Tester (D-MT) in a Roll Call article detailing the determination of new Senate Appropriations Committee Chair Patty Murray (D-WA) and ranking member Susan Collins (R-ME) to return the chamber’s process for passing 12 annual appropriations bills to regular order for the first time in years.
“We have made it clear that a return to regular order is good for the process and for the country,” Murray and Collins said in a joint statement last week after the White House released President Biden’s budget proposal. “No one is saying it’s going to be easy but we believe senators on both sides of the aisle share our commitment to work together, find common ground, and make progress for the American people.”
Read more about this year’s budget and appropriations process at Roll Call.
- A New Federal Student Loan Program Will Move Millions Toward Forgiveness – New York Times
- Recession, Yes. But Markets Cling to Hope Crisis Will Be Avoided – Bloomberg
- At a Steam-Age Arsenal, U.S. Army Forges Cannons for a Digital Era, War in Ukraine – Wall Street Journal
- Summers Warns Fed Against ‘Financial Dominance,’ Urges Rate Hike – Bloomberg
- After Silicon Valley Bank Collapse, Washington Asks: Is It to Blame? – Washington Post
- Here’s Why the ‘Too Big to Fail’ Banks Bailed Out First Republic – The Hill
- Biden, Divided Congress Seek Common Ground on Health Care Reforms – The Hill
- Republicans Seek to Flip the Script on Social Security – The Hill
- Markups? Floor Votes? Senate Appropriators Say ‘Yes We Can’ – Roll Call
- Republicans Take Aim at Biden Student Loan Forgiveness – Roll Call
- Pharma Lowers Insulin Costs to Save Money – Axios
- The Top 3 Insulin Makers Recently Announced Price Cuts. Here’s What to Know – Washington Post
- Everybody in Washington Wants a Byte of the CHIPS Law – Politico
Views and Analysis
- Threatening a U.S. Default Was Bad Before. Now, It’s Colossally Idiotic – Catherine Rampell, Washington Post
- It’s Time for Both Parties to Own the Debt — and Then Address It – G. William Hoagland, The Hill
- How the Fed Is Forced to "Walk and Chew Gum" at the Same Time – Neil Irwin, Axios
- From Bank Runs to a Credit Crunch, the Financial Future Looks Bleak – Sebastian Mallaby, Washington Post
- Three Questions That Remain After Three Years of Covid – Leana Wen, Washington Post
- The Fed’s Balance Sheet Looks Like Silicon Valley Bank’s – Peter Coy, New York Times
- Powell on the Ropes – Robert Kuttner, American Prospect
- It’s the Banking Regulations, Stupid – Antonio Foglia, Project Syndicate
- Revisiting America’s War of Choice in Iraq – Richard Haas, Project Syndicate