“Democrats have a multi-pronged strategy for addressing drug prices in the Build Back Better Act. First, they would allow Medicare to negotiate with pharmaceutical manufacturers on the prices of a certain number of prescription drugs, something they have been promising to do for years. But Democrats also want to limit drug companies’ ability to hike the prices of their medications for everyone — regardless of what kind of health insurance they have — in the future.
To do that, Congress has proposed requiring drugmakers to pay rebates for any price increases, in either the Medicare health program or the commercial health plans that cover 180 million Americans.
But, as Politico reported this week, the plan to apply the inflation-indexed rebates to the commercial market could be in trouble.
Senate Republicans — at the urging of the drug industry — plan to challenge whether the rebates for commercial health plans are permissible in a bill passed through the budget reconciliation process.”
“the Byrd Rule requires that all the provisions in a budget reconciliation bill directly change federal spending or revenue.
Republicans will argue that the purpose of the provision is to control drug prices for the private plans, full stop, and that does not have anything to do with federal spending or revenue — at least not directly.
The Democratic counterargument would be that applying these rebates to commercial plans would have a serious, more than incidental, effect on the federal budget. The federal government subsidizes almost all private insurance plans in one way or another, and so lower or higher costs for those plans could have major implications and lower costs for private health plans could also mean higher wages for workers, who would then pay more in taxes.
Who wins is likely ultimately a decision for the Senate parliamentarian.”
“what would happen if the parliamentarian determines rebates covering commercial plans cannot be allowed under the Byrd Rule?
The big fear, voiced by advocates of the Democrats’ plan, is that drug companies would extract higher prices from the commercial market in order to make up for the revenue they would lose from Medicare once that program’s new price controls take effect.
According to several experts, that appears unlikely. Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, covered why in a lengthy analysis published in September.
“Fundamentally, for this to occur, it would have to be the case that drug companies are benevolently choosing not to profit-maximize at present,” Adler told me this week, “which I find rather difficult to believe.””
“Under the current plan, drugmakers would pay a rebate based on their sales volume in both the Medicare and commercial markets. In that scenario, there would be little reason to raise list prices faster than inflation, because you are paying the penalty based on the entire market.
But if those rebates can’t include the commercial market, the penalty will be based on the Medicare market only — making it a smaller price to pay if a company does decide to hike the list price of a drug at a rate higher than inflation.”
“A key climate policy designed to phase out fossil fuels will likely be cut from Democrats’ upcoming reconciliation package due to opposition from Sen. Joe Manchin (D-WV), who has reportedly refused to back the measure as negotiations over the budget bill continue.
According to the New York Times’s Coral Davenport, who first reported the news on Friday, Manchin, who chairs the Senate Energy and Natural Resources Committee, will not support the sweeping clean electricity program widely seen as the centerpiece of the bill’s climate plan.
The $150 billion program — officially known as the Clean Electricity Performance Program, or CEPP — would reward energy suppliers who switch from fossil fuels like coal and natural gas to clean power sources like solar, wind, and nuclear power, which already make up about 40 percent of the industry, and fine those who do not.
Experts believe the program is the most effective way to slash US carbon emissions significantly enough to prevent the global temperature from rising by 1.5 degrees Celsius, a threshold which would have drastic consequences for the planet if exceeded.”
“Manchin’s home state of West Virginia is one of the largest producers of coal in the US, and Manchin himself benefits financially from the coal industry.
Manchin’s spokesperson, Sam Runyon, told the New York Times that Manchin opposed the CEPP because he couldn’t support “using taxpayer dollars to pay private companies to do things they’re already doing.””
“Manchin is correct in saying that some companies are indeed changing over to sustainable electricity production; currently, almost 40 percent of electricity generated in the US comes from a clean energy source, either nuclear or renewable. But corporations are ultimately concerned about their bottom line, and the carrot-and-stick approach of the proposed clean electricity program incorporates that reality by incentivizing companies to make the drastic changes necessary to address climate change — and penalizing them if they don’t.
The other reason a clean electricity program could prove key to addressing climate change is that it creates a national standard, as opposed to the patchwork of municipal and state legislation and individual efforts currently in place. Among other impacts, the program would help bring lagging areas up to speed with the ambitious targets set by the Biden administration, which call for 80 percent of the nation’s electricity to come from renewable sources by 2030, and 100 percent by 2035.”
“the Senate can’t pass an unlimited number of reconciliation bills; typically Congress passes one per year. Given a legislative backlog in 2020, Democrats were on track to do two reconciliation bills in the near term — one addressing the budget of the 2021 fiscal year, and one for the budget of the 2022 fiscal year.
According to a Schumer aide, his team is now trying to make the case that Democrats would be able to pass up to three budget reconciliation bills this year. In arguments to the Senate parliamentarian, an in-house procedural expert, aides are pushing for a third bill by citing an arcane rule that hasn’t been used before.”
“Whether Democrats are ultimately able to do this is heavily dependent on the parliamentarian”
“Reconciliation is weird. First, Congress needs to adopt a budget resolution (which it doesn’t always do) laying out tax and spending priorities for the future. These resolutions are not laws, the president doesn’t have to sign them, and they pass by simple majority vote. Then with a budget in place you get to write one — but only one — bill that aims to “reconcile” national tax and spending priorities with the framework laid out in the budget. This reconciliation bill cannot be filibustered. It also cannot change Social Security, or otherwise make big legislative changes that are not directly focused on the budget.
At Vox, we have often focused on the limits the reconciliation process places on what can be achieved on climate policy or aspirations for Medicare-for-all. A reconciliation bill also can’t increase the budget deficit over the long run.
But while these limits are very real, they also do open up some fairly large horizons.”
“a reconciliation bill can do the following:
Increase the generosity of the social safety net
Raise taxes on the rich
Impose the tax increases after the safety net increases, generating short-term stimulus”
“Consider the following ideas Biden has embraced:
Creating a new universal child allowance to help parents and slash child poverty.
Creating a fully funded rental housing voucher program to ensure that every family that needs help gets it.
Expanding the Affordable Care Act to cover millions more and make coverage more generous for those who get it.
A climate plan that centers investments in clean energy, rather than taxes on dirty energy.
A huge increase in funding to low-income school districts.
Biden does not need to treat these ideas as separate from the short-term need to stimulate the economy. He can simply do all five of them, and throw in a short-term boost to unemployment insurance and state/local budgets and some cash for specific public health interventions. Then the long-term increases in spending can be offset by enacting his proposed tax increases on the rich. That will ensure the deficit falls over the long run. But since the short-term deficit is not a problem and the whole idea is to stimulate the economy, the tax cuts can be delayed until 2023.”
“To get it done, Biden needs to convince members of Congress that it’s in their collective interest for him to have a successful presidency with a roaring economy and real accomplishments. And if they don’t want to curb the filibuster, they need to get the job done with a massive reconciliation bill.”
“if Biden thinks that his personal charm can bring back the low-polarization Senate he remembers from his service there in the 1970s and ’80s he’s mistaken. And if he genuinely tries to do that, he’s setting himself up for catastrophic failure. Times have changed, the media has changed, institutions have changed, and incentives have changed. The good old days aren’t coming back.
Still, Biden can break the toxic allure of obstruction by refusing to be obstructed.”