Today Paragon Health Institute released an analysis of the publicized provisions of a reconciliation bill that will likely be considered by congressional Democrats in the coming weeks. The policy brief, “Reconciliation Bill: Misguided Drug Price Controls and Unwise Health Insurance Subsidies” was authored by me, Dr. Joel Zinberg, and Drew Keyes.
The policy brief dissects both of the drug pricing proposals, which would empower the Secretary of Health and Human Services to set prices in Medicare Part D as well as limit price increases in both Medicare and the private market. These provisions would harm patients by reducing drug research and development, creating shortages of existing medications, and leading to higher launch prices for some drugs.
The legislation would also extend expanded Obamacare subsidies, which go directly to health insurer coffers with subsidy increases that are greater for wealthier households than for working-class households. Most of the higher subsidy spending is on behalf of people who already have coverage and will thus increase inflationary pressure in the economy. The expanded subsidies would also lead many employers to no longer offer coverage to their employees.
Although the legislation is being scored as reducing the federal budget deficit, the true cost is being hidden by budget gimmicks. Here is our recommendation: “Rather than legislation with poor policy and budget gimmicks, policymakers should instead look to policies that empower patients, reform underlying problems in government programs, and ensure Americans are not left more vulnerable to inflation eating away at their incomes and savings.”
Here are the main takeaways from our analysis of the reconciliation proposal:
- It would harm patients and lower American life expectancy and the quality of life by reducing pharmaceutical investment.
- It would induce drug shortages and higher launch prices for some medications.
- It would benefit the wealthy and health insurers with much higher ACA subsidies.
- It would increase inflationary pressures by replacing private spending with government spending.
- It includes major budget gimmicks, making it unlikely to reduce federal budget deficits.
Paragon’s experts will continue to monitor developments as the reconciliation debate unfolds and the legislation is undoubtedly modified.
All the best,
Paragon Health Institute