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Common Sense Policy – COVID Money, Insulin, and Medicaid

President at Paragon Health Institute
Brian Blase, Ph.D., is the President of Paragon Health Institute. Brian was Special Assistant to the President for Economic Policy at the White House’s National Economic Council (NEC) from 2017-2019, where he coordinated the development and execution of numerous health policies and advised the President, NEC director, and senior officials. After leaving the White House, Brian founded Blase Policy Strategies and serves as its CEO.

Today’s newsletter features two important new op-eds from Paragon experts. First, in a May 8 Wall Street Journal op-ed, Dr. Joel M. Zinberg, the director of Paragon’s Public Health and American Well-being Initiative, outlined the benefits of rescinding unspent COVID funds. Second, on the eve of a congressional hearing on insulin, Theo Merkel, the director of Paragon’s Private Health Reform Initiative, provided crucial context for what policymakers need to know prior to additional legislating in this area in a May 9 National Review piece. I also highlight Paragon’s recent report on the importance of states doing timely and effective Medicaid determinations.

Don’t Let Unspent Covid Funds Become Slush Funds

Joel’s piece discussed a component of the House-passed Limit, Save, Grow Act of 2023, which would raise the debt ceiling and reduce federal spending by nearly $5 trillion over the next decade. From Joel’s piece:

Congress appropriated $4.6 trillion for pandemic response and recovery in six Covid-19 relief laws enacted between March 2020 and March 2021. More than two years later, $444 billion of the total remains unspent. More than $114 billion hasn’t even been “obligated,” or committed to pay for goods and services ordered or received. Of this amount, $90.5 billion remains available for obligation and $23.7 billion has expired, meaning that it can’t be used to incur new obligations. …
 
Bureaucratic agencies never return unused funds. They always spend them regardless of the merits. If these unobligated funds, which agencies haven’t found worthwhile uses for in more than two years, stay with the agencies, they will be obligated and spent.
 
The funds should be returned to the Treasury. That would reduce the deficit and restore decision-making authority to Congress. If future projects are truly valuable, lawmakers should fund them.
 
Cutting the deficit will require hard choices. Recovering unspent Covid funds well after the emergency has ended is an easy choice.

Read Joel’s entire op-ed here.

Congress is Confused about Insulin

Theo’s piece is aimed at educating policymakers on the key issues pertaining to the insulin market. Importantly, insulin prices, both what patients and insurers pay, have been declining. According to Theo, “Medicare beneficiaries spent less out-of-pocket for insulin prescriptions in 2020 than in 2015. Average copayments for patients with Medicare and commercial insurance declined 27 percent from 2018-2021. Overall, copayments for three-quarters of insured insulin prescriptions are already under $35.”
 
According to Theo’s analysis, “Competition is working.” The reason: “[T]he FDA opened a new biosimilar approval pathway in March 2020. Since that time we have seen two biosimilar competitors approved with nine more in the pipeline.”
 
Several proposals would have negative unintended consequences, including copay caps. Theo writes:

Copay caps are actually favored by the largest incumbent manufacturers because they make it harder for insurers to use price differentials to steer patients to more affordable options. This reduces incentives for new competitors trying to undercut the incumbent’s price to invest in the expensive development process. Further, making consumers less sensitive to their share of the price of a medication enhances the manufacturer’s leverage to increase the overall price.

Unfortunately, such price controls are easier for politicians to explain than the benefits of competition. While price controls would produce several detrimental effects, Theo discusses a solution proposed by the Trump administration to require federally qualified community health centers to make insulin available at the heavily discounted price they receive under the 340B program to people in households below 350 percent of the poverty line.
 
Read Theo’s entire op-ed here.

Importance of Timely and Effective Medicaid Redeterminations

On May 3, Paragon released a new report, Pandemic Unwinding: How States Should Clean Up Their Medicaid Rolls, on the upwards of 18 million ineligible Medicaid enrollees, the reasons why states should expeditiously redetermine eligibility, and the steps that states should take for efficient redeterminations. I summarized this information in a Forbes piece. One key point: the vast majority of people enrolled in Medicaid who are ineligible already have other sources of coverage or will transition to other sources of coverage when their Medicaid enrollment ends.

Recent Newsletters

Pandemic Unwinding: Cleaning Up Medicaid
MACRA, ICHRA, and Congressional Testimony

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