{"id":1266,"date":"2022-07-27T16:04:56","date_gmt":"2022-07-27T20:04:56","guid":{"rendered":"https:\/\/paragoninstitute.org\/index.php\/2022\/07\/27\/policy-brief-reconciliation-bill-misguided-drug-price-controls-and-unwise-health-insurer-subsidies\/"},"modified":"2024-04-18T15:39:19","modified_gmt":"2024-04-18T19:39:19","slug":"reconciliation-bill-misguided-drug-price-controls-and-unwise-health-insurer-subsidies","status":"publish","type":"post","link":"https:\/\/paragoninstitute.org\/medicare\/reconciliation-bill-misguided-drug-price-controls-and-unwise-health-insurer-subsidies\/","title":{"rendered":"Reconciliation Bill \u2014 Misguided Drug Price Controls and Unwise Health Insurer Subsidies"},"content":{"rendered":"<section class=\"l-section wpb_row height_small\"><div class=\"l-section-h i-cf\"><div class=\"g-cols vc_row via_flex valign_top type_default stacking_default\"><div class=\"vc_col-sm-12 wpb_column vc_column_container\"><div class=\"vc_column-inner us_custom_65256d4f\"><div class=\"wpb_wrapper\"><div class=\"w-btn-wrapper align_left\"><a class=\"w-btn us-btn-style_1 icon_atright\" target=\"_blank\" href=\"https:\/\/paragoninstitute.org\/wp-content\/uploads\/2023\/12\/Reconciliation-Policy-Brief.pdf\"><span class=\"w-btn-label\">Download<\/span><i class=\"far fa-download\"><\/i><\/a><\/div><div class=\"wpb_text_column us_custom_972c33a7\"><div class=\"wpb_wrapper\"><p><em>As Americans face rising inflation<\/em><span id=\"cmfSimpleFootnoteLink1-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink1\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\"Cox, Jeff. \u201cInflation rose 9.1% in June, even more than expected, as consumer\r\npressures intensify.\u201d CNBC, 2022.\" data-extlink=\"https:\/\/www.cnbc.com\/2022\/07\/13\/inflation-rose-9point1percent-in-june-even-more-than-expected-as-price-pressures-intensify.html\" data-extlink_label=\"\">1<\/a><\/sup><\/span><em> and recession risk,<\/em><span id=\"cmfSimpleFootnoteLink2-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink2\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\" Rugaber, Christopher. \u201cYellen downplays US recession risk as economic\r\nreports loom.\u201d Associated Press News, 2022.\r\n\" data-extlink=\"https:\/\/apnews.com\/article\/inflation-economy-prices-janet-yellen-948009cdbc67f5b6f9742a35f7214feb\" data-extlink_label=\"\">2<\/a><\/sup><\/span><em> Congressional Democrats have proposed a misguided budget reconciliation bill focusing on health care. The legislation would set price controls on prescription drugs and limit price increases to the rate of inflation. It would extend elevated Affordable Care Act (ACA) subsidies\u2014enacted under the American Rescue Plan and set to expire after 2022\u2014for at least two more years. The legislation purports to reduce the deficit, but much of the \u201cpaper\u201d savings result from the budget gimmick of repealing a Trump-era drug rebate rule that has been challenged in court, delayed by the Biden administration, and will likely never go into effect.<\/em><\/p>\n<p><em>The reconciliation bill would harm patients and taxpayers. The drug price controls would decrease the number of innovative drugs developed, thereby diminishing Americans\u2019 quality and length of life. The insurance subsidies would expand federal spending without enacting any meaningful reform to a broken system. Critically, both proposals would incite inflationary pressure when inflation is already at a 40-year high.<\/em><\/p>\n<\/div><\/div><\/div><\/div><\/div><div class=\"vc_col-sm-12 wpb_column vc_column_container has_text_color has_bg_color\"><div class=\"vc_column-inner us_custom_3d1a3a43\"><div class=\"wpb_wrapper\"><div class=\"wpb_text_column us_custom_b570b43b\"><div class=\"wpb_wrapper\"><h3>Key Takeaways<\/h3>\n<ul>\n<li><em>The reconciliation bill would harm patients and lower American life expectancy and the quality of life by reducing pharmaceutical investment and the number of innovative, life-saving drugs.<\/em><\/li>\n<li><em>The reconciliation bill would induce drug shortages and higher launch prices for some medications.<\/em><\/li>\n<li><em>The reconciliation bill would benefit the wealthy and health insurers with much higher ACA subsidies.<\/em><\/li>\n<li><em>The reconciliation bill would increase inflationary pressures by replacing private spending with government spending.<\/em><\/li>\n<li><em>The reconciliation bill includes major budget gimmicks, making it unlikely to reduce federal deficits.<\/em><\/li>\n<\/ul>\n<\/div><\/div><\/div><\/div><\/div><div class=\"vc_col-sm-12 wpb_column vc_column_container\"><div class=\"vc_column-inner\"><div class=\"wpb_wrapper\"><div class=\"wpb_text_column us_custom_3b8f9481\"><div class=\"wpb_wrapper\"><h3>Drug Price Controls<\/h3>\n<\/div><\/div><div class=\"wpb_text_column\"><div class=\"wpb_wrapper\"><p>The reconciliation proposal would address drug prices in three ways.<span id=\"cmfSimpleFootnoteLink3-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink3\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\"United States Senate Committee on Finance. Prescription Drug Pricing\r\nReform, 2022.\" data-extlink=\"https:\/\/www.finance.senate.gov\/imo\/media\/doc\/070622%20Prescription%20Drug%20Pricing%20Reform%20Leg%20Text.pdf\" data-extlink_label=\"\">3<\/a><\/sup><\/span> First, it would allow the Secretary of Health and Human Services (HHS) to \u201cnegotiate\u201d prices for a limited number of prescription drugs. Second, it would require drug companies to pay rebates if they increase their Medicare and commercial prices faster than inflation. Finally, the bill would limit Medicare beneficiaries\u2019 annual out-of-pocket Medicare Part D drug costs to $2,000.<\/p>\n<p>This bill is the third recent Democratic drug pricing proposal. Each allows the HHS Secretary to directly \u201cnegotiate\u201d with drug makers by revoking the provision in the Part D statute that prohibits the HHS Secretary from interfering in negotiations between private Part D plan sponsors and drug makers. Currently, in Part D, insurers compete on benefits and prices and negotiate discounts to keep costs down, and costs have consistently been below projections.<\/p>\n<p>In reality, there would be no meaningful negotiation under the Democratic proposal. The secretary would have all the negotiating leverage. The proposal states that the Secretary\u2019s determination of negotiation-eligible drugs would not be subject to administrative or judicial review. And companies that fail to negotiate to the Secretary\u2019s satisfaction or adhere to the Secretary\u2019s set price would be subjected to confiscatory penalties\u2014an excise tax up to 95 percent of sales of the drug. The Secretary would be making price \u201coffers\u201d that manufacturers could not refuse.<\/p>\n<\/div><\/div><div class=\"wpb_text_column us_custom_972c33a7\"><div class=\"wpb_wrapper\"><h5 style=\"color: #002e6d;\">Bad Policy for an Overstated Problem<\/h5>\n<p>The legislation builds on the commonly held misconception that prescription drug prices are rapidly increasing. The legislation\u2019s proponents have focused on increases in drugs\u2019 list prices. While small numbers of patients bear a disproportionate burden from list prices, the \u201cnet\u201d prices most Americans pay after rebates and discounts are considerably lower.<\/p>\n<p>General inflation is alarming: prices are up 9.1 percent over the past year.<span id=\"cmfSimpleFootnoteLink4-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink4\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\" \u201cTable 2. Consumer Price Index for All Urban Consumers (CPI-U): U.S. city\r\naverage, by detailed expenditure category.&quot; Bureau of Labor Statistics, 2022.\" data-extlink=\"https:\/\/www.bls.gov\/news.release\/cpi.t02.htm\" data-extlink_label=\"\">4<\/a><\/sup><\/span> Yet even in this period of supply chain disruptions and widespread shortages, drug inflation is up just 2.5 percent year-to-year.<\/p>\n<p>In fact, total drug spending growth has been stable the last 15 years and has been much lower than the growth in health care spending.<span id=\"cmfSimpleFootnoteLink5-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink5\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\"\u201cDrug Expenditure Dynamics 1995-2020.\u201d IQVIA Institute, 2021.\" data-extlink=\"https:\/\/www.iqvia.com\/-\/media\/iqvia\/pdfs\/institute-reports\/drug-expendituredynamics\/drug-expenditure-dynamics-19952020.pdf?&#038;_=1658924366010\" data-extlink_label=\"\">5<\/a><\/sup><\/span> Low drug price inflation is the result of rebates, discounts, and increased drug approvals, especially generics that increase competition. While prices of a relatively few branded, specialty medicines are extremely high, Americans use more generics (9 out of 10 prescriptions) and pay less for them (16 percent lower on average) than patients in other developed nations.<span id=\"cmfSimpleFootnoteLink6-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink6\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\"\u201cPrescription Drug Prices in the United States Are 2.56 Times Those in Other\r\nCountries.\u201d RAND Corporation, 2021.\" data-extlink=\"https:\/\/www.rand.org\/news\/press\/2021\/01\/28.html\" data-extlink_label=\"\">6<\/a><\/sup><\/span><\/p>\n<\/div><\/div><div class=\"wpb_text_column us_custom_972c33a7\"><div class=\"wpb_wrapper\"><h5 style=\"color: #002e6d;\">Shortages and Higher Launch Prices<\/h5>\n<p>The proposal would also require manufacturers to rebate price increases on their Medicare and private market drugs that exceed general inflation. Setting artificial caps on price increases would distort market mechanisms that reflect the value added of a drug. Price increases for drugs with high or growing value are a signal to producers to increase supply. Limiting that increase could result in shortages that impair some patients\u2019 health.<\/p>\n<p>The Congressional Budget Office (CBO) analyses of these types of inflation controls have said they might induce higher launch prices for new drugs.<span id=\"cmfSimpleFootnoteLink7-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink7\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\"Martin, Kristi. \u201cInflation Rebate Penalty for Drug Companies.\u201d The\r\nCommonwealth Fund, 2021.\" data-extlink=\"https:\/\/www.commonwealthfund.org\/publications\/explainer\/2021\/jun\/inflation-rebate-penalty-drug-companies\" data-extlink_label=\"\">7<\/a><\/sup><\/span> Currently, manufacturers might temper their launch prices for a variety of reasons, including to gain market share or to aid a vulnerable patient population, if they are confident of being able to subsequently raise prices to match market conditions. But with the proposed limits on price increases, manufacturers would be less likely to moderate launch prices. This would likely increase list prices and possibly even net prices for some new drugs. This could result in higher out-of-pocket payments\u2014normally based on list prices\u2014for insured patients and higher actual prices for patients without drug coverage who are stuck with list prices. Some of these people will end up forgoing treatments because of increased costs.<\/p>\n<p>This would affect the very drugs that are the most innovative and valuable for improving health. For example, new gene therapies may yield a cure for sickle-cell disease. The disease disproportionately affects low-income and minority populations. Higher launch prices might put these life-saving treatments out of reach for these vulnerable populations.<\/p>\n<\/div><\/div><div class=\"wpb_text_column us_custom_972c33a7\"><div class=\"wpb_wrapper\"><h5 style=\"color: #002e6d;\">A Faulty Methodology that Could Harm Patients with High Use Drugs<\/h5>\n<p>The proposal would direct the HHS Secretary to negotiate the price of sole source drugs on which Medicare spent the most during the preceding year. But high expenditures can result from high prices or high usage. In other words, a high-use drug would likely be subject to negotiation, regardless of whether its price was unreasonably high. This could depress drug supply and harm patients.<\/p>\n<p>In fact, recent growth in total retail pharmaceutical spending was driven by volume, not prices, which decreased by 1.0 percent in 2018 and 0.4 percent in 2019. Even in 2020, the first year of the pandemic, total retail prescription drug prices continued to fall by 0.1 percent.<span id=\"cmfSimpleFootnoteLink8-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink8\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\" \u201cNational Health Spending in 2020 Increases due to Impact of COVID-19\r\nPandemic.\u201d Centers for Medicare &amp; Medicaid Services, 2021.\" data-extlink=\"https:\/\/www.cms.gov\/newsroom\/press-releases\/national-health-spending-2020-increases-due-impact-covid-19-pandemic\" data-extlink_label=\"\">8<\/a><\/sup><\/span><\/p>\n<\/div><\/div><div class=\"wpb_text_column us_custom_972c33a7\"><div class=\"wpb_wrapper\"><h5 style=\"color: #002e6d;\">Harm to Patients by Decreasing the Number of Life-Saving New Drugs<\/h5>\n<p>Innovative, new drugs effectively decrease the price of health by reducing the need for other medical services and by extending and improving the quality of life. For example, new HIV drugs transformed a uniformly fatal disease that could not be effectively treated at any price into a chronic condition. New Hepatitis C drugs cured a life-threatening and debilitating disease that was previously poorly treated using expensive drugs with severe side effects.<\/p>\n<p>Drug development is a risky and expensive business. The process normally takes ten years or more. Only about one-in-ten products make it to market. Once failures and the cost of capital are calculated, the costs per success are in the billions. Pharmaceutical companies invest in research and development in anticipation of future profits. They will decrease investment if future profits are limited by government.<\/p>\n<p>A systematic review of published academic studies between 1995 and 2020 showed a significant negative relationship between drug price controls and both investment in pharmaceutical research and development (R&amp;D) and access to innovative drugs.<span id=\"cmfSimpleFootnoteLink9-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink9\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\"x Labrie, Yanick. \u201cIs there any evidence that regulating pharmaceutical prices\r\nnegatively affects R&amp;D or access to new medicines? A systematic literature\r\nreview.\u201d Canadian Health Policy, 2020.\" data-extlink=\"https:\/\/www.researchgate.net\/publication\/342783080_Is_there_any_evidence_that_regulating_pharmaceutical_prices_negatively_affects_RD_or_access_to_new_medicines_A_systematic_literature_review\" data-extlink_label=\"\">9<\/a><\/sup><\/span> For every 10 percent decrease in prices, there was a 5 to 6 percent decrease in R&amp;D investment leading to decreased future drug discovery. And countries with drug price controls suffer drug launch delays and decreased access to new drugs compared to the U.S.<span id=\"cmfSimpleFootnoteLink10-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink10\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\"Danzon, Patricia M., Y. Richard Yang and Liang Wang. \u201cThe impact of price\r\nregulation on the launch delay of new drugs\u2014evidence from twenty-five\r\nmajor markets in the 1990s.\u201d Health Economics, 2005.\" data-extlink=\"https:\/\/onlinelibrary.wiley.com\/doi\/10.1002\/hec.931\" data-extlink_label=\"\">10<\/a><\/sup><\/span><\/p>\n<p>The Council of Economic Advisers estimated that the first version of the Democrats\u2019 proposal\u2014H.R. 3, the Lower Drug Costs Now Act of 2019\u2014would lead to as many as 100 fewer new drugs available to Americans over the next decade.<span id=\"cmfSimpleFootnoteLink11-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink11\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\"\u201cHouse Drug Pricing Bill Could Keep 100 Lifesaving Drugs from American\r\nPatients.\u201d Council of Economic Advisors, 2019.\" data-extlink=\"https:\/\/trumpwhitehouse.archives.gov\/articles\/house-drug-pricing-bill-keep-100-lifesaving-drugs-american-patients\/\" data-extlink_label=\"\">11<\/a><\/sup><\/span> That is about a third of the total number of drugs currently expected to enter the market. This decreased access to drugs would reduce Americans\u2019 average life expectancy by an estimated four months.<\/p>\n<p>University of Chicago economist Tomas Philipson estimated that the second version of the Democrats\u2019 proposal\u2014the Build Back Better bill\u2014could lead to a 29 to 60 percent reduction in R&amp;D and 167 to 342 fewer new drug approvals over the next 20 years.<span id=\"cmfSimpleFootnoteLink12-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink12\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\" Philipson, Tomas J. and Troy Durie. \u201cIssue Brief: The Evidence Base on the\r\nImpact of Price Controls on Medical Innovation.&quot; The University of Chicago,\r\n2021.\" data-extlink=\"https:\/\/cpb-us-w2.wpmucdn.com\/voices.uchicago.edu\/dist\/d\/3128\/files\/2021\/08\/Issue-Brief-Price-Controls-and-Drug-Innovation-Philipson.pdf\" data-extlink_label=\"\">12<\/a><\/sup><\/span><\/p>\n<p>The price controls in the current reconciliation proposal would be just as destructive. By limiting new R&amp;D investment, the bill would decrease the number of innovative new drugs that improve health, extend life, and eventually become the low-priced generics used by most Americans.<\/p>\n<p>Limiting price increases to the level of inflation would also damage innovation and harm patients. Economists estimated that if controls had limited the growth rate of U.S. drug prices to the rate of inflation, R&amp;D spending would have been 30 percent lower, resulting in 330-365 fewer new drugs\u201438 percent of all new drugs marketed worldwide\u2014coming to market between 1980 and 2001.<span id=\"cmfSimpleFootnoteLink13-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink13\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\" Giaccotto, Carmelo, Rexford E. Santerre and John A. Vernon. \u201cDrug Prices\r\nand Research and Development Investment Behavior in the Pharmaceutical\r\nIndustry.\u201d The Journal of Law &amp; Economics, 2005.\" data-extlink=\"https:\/\/www.jstor.org\/stable\/10.1086\/426882\" data-extlink_label=\"\">13<\/a><\/sup><\/span><\/p>\n<\/div><\/div><div class=\"wpb_text_column us_custom_3b8f9481\"><div class=\"wpb_wrapper\"><h3>More Subsidies for Insurers<\/h3>\n<\/div><\/div><div class=\"wpb_text_column\"><div class=\"wpb_wrapper\"><p>The second main component of the proposed reconciliation package would continue the misguided policy of obscuring the unaffordability of ACA plans with increased taxpayer subsidies to health insurers. The ACA\u2019s insurance mandates caused premiums and deductibles for individual market coverage to soar. In 2020, the average family plan carried a combined premium and deductible of $25,000,<span id=\"cmfSimpleFootnoteLink14-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink14\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\"Helm, Lisa. \u201c$25,000: Cost of premiums and deductibles for a family ACA\r\nplan in 2020.\u201d BenefitsPRO, 2020.\" data-extlink=\"https:\/\/www.benefitspro.com\/2020\/06\/22\/25000-cost-of-premiums-and-deductibles-for-a-family-aca-plan-in-2020\/?slreturn=20220623112438\" data-extlink_label=\"\">14<\/a><\/sup><\/span> and the average plan provides access to far fewer providers than group plans.<span id=\"cmfSimpleFootnoteLink15-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink15\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\"Haislmaier, Edmund and Abigail Slagle. \u201cPremiums, Choices, Deductibles,\r\nCare Access, and Government Dependence Under the Affordable Care Act:\r\n2021 State-by-State Review.\u201d The Heritage Foundation, 2021.\" data-extlink=\"https:\/\/www.heritage.org\/health-care-reform\/report\/premiums-choices-deductibles-care-access-and-government-dependence-under\" data-extlink_label=\"\">15<\/a><\/sup><\/span> Most enrollees receive large subsidies\u2014referred to as premium tax credits (PTCs)\u2014that substantially reduce their share of the premium. The ACA\u2019s PTCs limit the percentage of income that households pay for a benchmark plan (the second-lowest cost plan available in the exchange). The PTCs phase out as household income increases and were capped at 400 percent of the federal poverty level (FPL).<\/p>\n<p>Rather than reform the underlying program, which has resulted in such unattractive plans, congressional Democrats have focused on increasing subsidies. In the American Rescue Plan (ARP) Act, Congress made the subsidies for 2021 and 2022 more generous by reducing the maximum percentage of income that households must pay for a benchmark plan and by expanding eligibility to people with incomes above 400 percent of the FPL. This caused a surge of Obamacare spending. CBO estimates that the expanded subsidies will cost about $30 billion in 2022.<span id=\"cmfSimpleFootnoteLink16-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink16\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\"A May 2022 CBO report projects PTC and related spending at $89 billion in\r\n2022 and $60 billion in 2023. The decline is almost entirely because the\r\nexpanded subsidies expire after 2022.\r\n\u201cThe Budget and Economic Outlook: 2022 to 2032.\u201d Congressional Budget\r\nOffice, 2022.\" data-extlink=\"https:\/\/www.cbo.gov\/system\/files\/2022-05\/57950-Outlook.pdf\" data-extlink_label=\"\">16<\/a><\/sup><\/span> The expanded subsidies are poor public policy.<\/p>\n<\/div><\/div><div class=\"wpb_text_column us_custom_972c33a7\"><div class=\"wpb_wrapper\"><h5 style=\"color: #002e6d;\">Unfair Benefit for Wealthy Households<\/h5>\n<p>The largest benefit of the expanded subsidies accrues to households with income above 400 percent of the FPL. The benefit is also larger for older households and households in higher premium areas since the subsidy structure limits premiums to a certain amount based on household income, regardless of the age of the household members or the actual premium.<\/p>\n<p>On average, in 2021, a family-of-four headed by a 60-year-old qualified for a $21,327 subsidy if they earned 401 percent of the FPL. If that household earned eight times the FPL\u2014or $212,000\u2014the subsidy exceeded $12,000. In some parts of the country, households with incomes of more than $500,000 qualified for subsidies in 2021 and 2022. For example, in 2021, a 64-year-old couple with no dependents in Kay County, Oklahoma and an income of $500,000 per year, faced a benchmark premium of $49,897 and qualified for a subsidy of $7,397.<\/p>\n<\/div><\/div><div class=\"w-image us_custom_5593d0e9 style_shadow-1 align_center\"><a href=\"https:\/\/paragoninstitute.org\/wp-content\/uploads\/2022\/07\/Figure1_Reconciliation-Policy-Brief-01.webp\" aria-label=\"Figure1 Reconciliation Policy Brief 01\" class=\"w-image-h\"><img decoding=\"async\" width=\"2239\" height=\"1565\" src=\"https:\/\/paragoninstitute.org\/wp-content\/uploads\/2022\/07\/Figure1_Reconciliation-Policy-Brief-01.webp\" class=\"attachment-full size-full\" alt=\"Figure1 Reconciliation Policy Brief 01\" loading=\"lazy\" srcset=\"https:\/\/paragoninstitute.org\/wp-content\/uploads\/2022\/07\/Figure1_Reconciliation-Policy-Brief-01.webp 2239w, https:\/\/paragoninstitute.org\/wp-content\/uploads\/2022\/07\/Figure1_Reconciliation-Policy-Brief-01-300x210.webp 300w, https:\/\/paragoninstitute.org\/wp-content\/uploads\/2022\/07\/Figure1_Reconciliation-Policy-Brief-01-1024x716.webp 1024w\" sizes=\"(max-width: 2239px) 100vw, 2239px\" \/><\/a><\/div><div class=\"wpb_text_column us_custom_972c33a7\"><div class=\"wpb_wrapper\"><h5 style=\"color: #002e6d;\">Crowd Out of Private Financing and Increased Inflation<\/h5>\n<p>CBO originally estimated that nearly 75 percent of the spending on the expanded subsidies was for individuals who already had health insurance\u2014either existing exchange enrollees or new exchange enrollees who previously had another source of coverage.<span id=\"cmfSimpleFootnoteLink17-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink17\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\"\u201cReconciliation Recommendations of the House Committee on Ways and\r\nMeans.\u201d Congressional Budget Office, 2022.\" data-extlink=\"https:\/\/www.cbo.gov\/system\/files\/2021-02\/hwaysandmeansreconciliation.pdf\" data-extlink_label=\"\">17<\/a><\/sup><\/span> In other words, most of the new government spending simply replaced household spending, permitting these households to spend more in other ways. This contributes to inflation by increasing aggregate demand without an increase in aggregate supply.<\/p>\n<\/div><\/div><div class=\"wpb_text_column us_custom_972c33a7\"><div class=\"wpb_wrapper\"><h5 style=\"color: #002e6d;\">Higher Health Care Prices and Higher Premiums<\/h5>\n<p>The ACA\u2019s subsidy design gives insurers pricing power since almost the entire premium increase is paid by the government. The ARP\u2019s expanded subsidies worsened the problem by making the subsidies even more expensive and bringing more households into the perverse structure. According to CBO\u2019s May 25, 2022, report, premiums for exchange plans are rising faster than they anticipated, as are the subsidies.<span id=\"cmfSimpleFootnoteLink18-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink18\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\" \u201cThe Budget and Economic Outlook: 2022 to 2032.\u201d Congressional Budget\r\nOffice, 2022.\" data-extlink=\"https:\/\/www.cbo.gov\/system\/files\/2022-05\/57950-Outlook.pdf\" data-extlink_label=\"\">18<\/a><\/sup><\/span><\/p>\n<\/div><\/div><\/div><\/div><\/div><div class=\"vc_col-sm-12 wpb_column vc_column_container has_text_color has_bg_color\"><div class=\"vc_column-inner us_custom_7887758b\"><div class=\"wpb_wrapper\"><div class=\"wpb_text_column us_custom_b570b43b\"><div class=\"wpb_wrapper\"><h3><em>In Focus:\u00a0<\/em>West Virginia<\/h3>\n<p>If the enhanced PTCs expire after 2022, the largest per person subsidy loss is for people with income above 400 percent of the FPL. Not many exchange enrollees in West Virginia have income above 400 percent of the FPL. According to estimates from University of Minnesota economist Steve Parente, fewer than 1,200 West Virginians with income above 400 percent of the FPL are currently enrolled in the exchanges<\/p>\n<\/div><\/div><\/div><\/div><\/div><div class=\"vc_col-sm-12 wpb_column vc_column_container\"><div class=\"vc_column-inner\"><div class=\"wpb_wrapper\"><div class=\"wpb_text_column us_custom_972c33a7\"><div class=\"wpb_wrapper\"><h5 style=\"color: #002e6d;\">Loss of Employer Coverage<\/h5>\n<p>The ACA subsidies are not available to households with an offer of affordable employer coverage. As the size of the subsidies increase, so does the incentive for employers to not offer coverage. Small employers\u2014those with fewer than 50 full-time employees\u2014will be particularly incentivized to not offer coverage since they are exempt from the employer mandate tax penalties.<\/p>\n<\/div><\/div><div class=\"wpb_text_column us_custom_972c33a7\"><div class=\"wpb_wrapper\"><h5 style=\"color: #002e6d;\">Benefiting Insurers, Not Consumers<\/h5>\n<p>The ACA subsidies are sent directly from the U.S. Treasury to health insurance companies. A recent economics study found consumers value the subsidies at less than half of their cost.<span id=\"cmfSimpleFootnoteLink19-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink19\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\"Polyakova, Maria and Stephen P. Ryan. \u201cSubsidy Targeting With Market\r\nPower.\u201d National Bureau of Economic Research, 2021.\" data-extlink=\"https:\/\/www.nber.org\/system\/files\/working_papers\/w26367\/w26367.pdf\" data-extlink_label=\"\">19<\/a><\/sup><\/span> This study found that the big winners from the flawed subsidy design are health insurers, confirming earlier studies that show that health insurer profits soared after the ACA took effect.<span id=\"cmfSimpleFootnoteLink20-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink20\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\"\u201cThe Profitability of Health Insurance Companies.\u201d The Council of Economic\r\nAdvisors, 2018.\" data-extlink=\"https:\/\/trumpwhitehouse.archives.gov\/wp-content\/uploads\/2018\/03\/The-Profitability-of-Health-Insurance-Companies.pdf\" data-extlink_label=\"\">20<\/a><\/sup><\/span><\/p>\n<\/div><\/div><div class=\"wpb_text_column us_custom_972c33a7\"><div class=\"wpb_wrapper\"><h5 style=\"color: #002e6d;\">Perpetual, Costly Problem<\/h5>\n<p>The ARP\u2019s two-year expansion of the ACA subsidies was designed as a temporary, pandemic relief measure. In Washington, short-term extensions of government spending programs, which generally foreshadow additional temporary or permanent extensions, are a budget gimmick to keep the perceived cost of the legislation down. A permanent extension of the expanded subsidies would be very expensive, partly because of much greater decline of employer-provided coverage which has a much lower budgetary cost than the ACA PTCs. According to CBO\u2019s estimates, a ten-year elevated subsidy extension would increase deficits by $248 billion\u2014$306 billion in PTC costs offset by $67 billion in higher federal tax revenue.<span id=\"cmfSimpleFootnoteLink21-0\" class=\"cmf_has_footnote_custom\"><sup><a href=\"#cmfSimpleFootnoteLink21\" class=\"et_smooth_scroll_disabled cmf_simple_footnote_link show-tooltip type1\" title =\"Swagel, Phillip L. \u201cHealth Insurance Policies.\u201d July 21, 2022. Congressional\r\nBudget Office.\" data-extlink=\"https:\/\/www.cbo.gov\/system\/files?file=2022-07\/58313-Crapo_letter.pdf\" data-extlink_label=\"\">21<\/a><\/sup><\/span><\/p>\n<\/div><\/div><div class=\"wpb_text_column us_custom_3b8f9481\"><div class=\"wpb_wrapper\"><h3>Conclusion<\/h3>\n<\/div><\/div><div class=\"wpb_text_column us_custom_972c33a7\"><div class=\"wpb_wrapper\"><p>The reconciliation proposal being considered in Congress would do far more harm than good. The proposal would increase government power over Americans\u2019 health care. It would add inflationary pressures by raising health insurance premiums and costs during an inflation crisis. Worse, the proposal would subsidize the insurance industry and wealthier Americans at the cost of life-saving cures. The bill\u2019s drug pricing control mechanisms are unnecessary and would diminish Americans\u2019 health by decreasing the number of innovative, life-enhancing drugs in the future. If they precipitate an increase in new drugs\u2019 launch prices, they will exacerbate rather than alleviate high drug prices.<\/p>\n<p>Much of the projected budgetary savings from the bill are illusory, paper savings that result from the repeal of a Trump-era rebate rule that is unlikely to ever go into effect. And the two-year elevated ACA subsidy extension is another gimmick.<\/p>\n<p>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.<\/p>\n<\/div><\/div><div class=\"wpb_text_column us_custom_3b8f9481\"><div class=\"wpb_wrapper\"><h3>Footnotes<\/h3>\n<\/div><\/div><div class=\"wpb_text_column us_custom_5195ec9e\"><div class=\"wpb_wrapper\"><div class=\"pg-ft-sep\"><div class=\"sep-brdr\" style=\"width:25%; border-bottom:1px solid #000;\"><\/div><\/div><div id=\"cmfSimpleFootnoteDefinitionBox\"><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink1\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink1\">1<a href=\"#cmfSimpleFootnoteLink1-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\">Cox, Jeff. \u201cInflation rose 9.1% in June, even more than expected, as consumer\r\npressures intensify.\u201d CNBC, 2022.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.cnbc.com\/2022\/07\/13\/inflation-rose-9point1percent-in-june-even-more-than-expected-as-price-pressures-intensify.html\"target=\"_blank\">https:\/\/www.cnbc.com\/2022\/07\/13\/inflation-rose-9point1percent-in-june-even-more-than-expected-as-price-pressures-intensify.html<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink2\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink2\">2<a href=\"#cmfSimpleFootnoteLink2-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\"> Rugaber, Christopher. \u201cYellen downplays US recession risk as economic\r\nreports loom.\u201d Associated Press News, 2022.\r\n<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/apnews.com\/article\/inflation-economy-prices-janet-yellen-948009cdbc67f5b6f9742a35f7214feb\"target=\"_blank\">https:\/\/apnews.com\/article\/inflation-economy-prices-janet-yellen-948009cdbc67f5b6f9742a35f7214feb<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink3\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink3\">3<a href=\"#cmfSimpleFootnoteLink3-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\">United States Senate Committee on Finance. Prescription Drug Pricing\r\nReform, 2022.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.finance.senate.gov\/imo\/media\/doc\/070622%20Prescription%20Drug%20Pricing%20Reform%20Leg%20Text.pdf\"target=\"_blank\">https:\/\/www.finance.senate.gov\/imo\/media\/doc\/070622%20Prescription%20Drug%20Pricing%20Reform%20Leg%20Text.pdf<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink4\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink4\">4<a href=\"#cmfSimpleFootnoteLink4-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\"> \u201cTable 2. Consumer Price Index for All Urban Consumers (CPI-U): U.S. city\r\naverage, by detailed expenditure category.\" Bureau of Labor Statistics, 2022.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.bls.gov\/news.release\/cpi.t02.htm\"target=\"_blank\">https:\/\/www.bls.gov\/news.release\/cpi.t02.htm<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink5\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink5\">5<a href=\"#cmfSimpleFootnoteLink5-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\">\u201cDrug Expenditure Dynamics 1995-2020.\u201d IQVIA Institute, 2021.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.iqvia.com\/-\/media\/iqvia\/pdfs\/institute-reports\/drug-expendituredynamics\/drug-expenditure-dynamics-19952020.pdf?&#038;_=1658924366010\"target=\"_blank\">https:\/\/www.iqvia.com\/-\/media\/iqvia\/pdfs\/institute-reports\/drug-expendituredynamics\/drug-expenditure-dynamics-19952020.pdf?&_=1658924366010<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink6\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink6\">6<a href=\"#cmfSimpleFootnoteLink6-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\">\u201cPrescription Drug Prices in the United States Are 2.56 Times Those in Other\r\nCountries.\u201d RAND Corporation, 2021.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.rand.org\/news\/press\/2021\/01\/28.html\"target=\"_blank\">https:\/\/www.rand.org\/news\/press\/2021\/01\/28.html<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink7\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink7\">7<a href=\"#cmfSimpleFootnoteLink7-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\">Martin, Kristi. \u201cInflation Rebate Penalty for Drug Companies.\u201d The\r\nCommonwealth Fund, 2021.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.commonwealthfund.org\/publications\/explainer\/2021\/jun\/inflation-rebate-penalty-drug-companies\"target=\"_blank\">https:\/\/www.commonwealthfund.org\/publications\/explainer\/2021\/jun\/inflation-rebate-penalty-drug-companies<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink8\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink8\">8<a href=\"#cmfSimpleFootnoteLink8-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\"> \u201cNational Health Spending in 2020 Increases due to Impact of COVID-19\r\nPandemic.\u201d Centers for Medicare & Medicaid Services, 2021.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.cms.gov\/newsroom\/press-releases\/national-health-spending-2020-increases-due-impact-covid-19-pandemic\"target=\"_blank\">https:\/\/www.cms.gov\/newsroom\/press-releases\/national-health-spending-2020-increases-due-impact-covid-19-pandemic<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink9\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink9\">9<a href=\"#cmfSimpleFootnoteLink9-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\">x Labrie, Yanick. \u201cIs there any evidence that regulating pharmaceutical prices\r\nnegatively affects R&D or access to new medicines? A systematic literature\r\nreview.\u201d Canadian Health Policy, 2020.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.researchgate.net\/publication\/342783080_Is_there_any_evidence_that_regulating_pharmaceutical_prices_negatively_affects_RD_or_access_to_new_medicines_A_systematic_literature_review\"target=\"_blank\">https:\/\/www.researchgate.net\/publication\/342783080_Is_there_any_evidence_that_regulating_pharmaceutical_prices_negatively_affects_RD_or_access_to_new_medicines_A_systematic_literature_review<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink10\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink10\">10<a href=\"#cmfSimpleFootnoteLink10-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\">Danzon, Patricia M., Y. Richard Yang and Liang Wang. \u201cThe impact of price\r\nregulation on the launch delay of new drugs\u2014evidence from twenty-five\r\nmajor markets in the 1990s.\u201d Health Economics, 2005.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/onlinelibrary.wiley.com\/doi\/10.1002\/hec.931\"target=\"_blank\">https:\/\/onlinelibrary.wiley.com\/doi\/10.1002\/hec.931<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink11\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink11\">11<a href=\"#cmfSimpleFootnoteLink11-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\">\u201cHouse Drug Pricing Bill Could Keep 100 Lifesaving Drugs from American\r\nPatients.\u201d Council of Economic Advisors, 2019.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/trumpwhitehouse.archives.gov\/articles\/house-drug-pricing-bill-keep-100-lifesaving-drugs-american-patients\/\"target=\"_blank\">https:\/\/trumpwhitehouse.archives.gov\/articles\/house-drug-pricing-bill-keep-100-lifesaving-drugs-american-patients\/<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink12\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink12\">12<a href=\"#cmfSimpleFootnoteLink12-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\"> Philipson, Tomas J. and Troy Durie. \u201cIssue Brief: The Evidence Base on the\r\nImpact of Price Controls on Medical Innovation.\" The University of Chicago,\r\n2021.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/cpb-us-w2.wpmucdn.com\/voices.uchicago.edu\/dist\/d\/3128\/files\/2021\/08\/Issue-Brief-Price-Controls-and-Drug-Innovation-Philipson.pdf\"target=\"_blank\">https:\/\/cpb-us-w2.wpmucdn.com\/voices.uchicago.edu\/dist\/d\/3128\/files\/2021\/08\/Issue-Brief-Price-Controls-and-Drug-Innovation-Philipson.pdf<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink13\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink13\">13<a href=\"#cmfSimpleFootnoteLink13-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\"> Giaccotto, Carmelo, Rexford E. Santerre and John A. Vernon. \u201cDrug Prices\r\nand Research and Development Investment Behavior in the Pharmaceutical\r\nIndustry.\u201d The Journal of Law & Economics, 2005.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.jstor.org\/stable\/10.1086\/426882\"target=\"_blank\">https:\/\/www.jstor.org\/stable\/10.1086\/426882<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink14\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink14\">14<a href=\"#cmfSimpleFootnoteLink14-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\">Helm, Lisa. \u201c$25,000: Cost of premiums and deductibles for a family ACA\r\nplan in 2020.\u201d BenefitsPRO, 2020.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.benefitspro.com\/2020\/06\/22\/25000-cost-of-premiums-and-deductibles-for-a-family-aca-plan-in-2020\/?slreturn=20220623112438\"target=\"_blank\">https:\/\/www.benefitspro.com\/2020\/06\/22\/25000-cost-of-premiums-and-deductibles-for-a-family-aca-plan-in-2020\/?slreturn=20220623112438<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink15\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink15\">15<a href=\"#cmfSimpleFootnoteLink15-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\">Haislmaier, Edmund and Abigail Slagle. \u201cPremiums, Choices, Deductibles,\r\nCare Access, and Government Dependence Under the Affordable Care Act:\r\n2021 State-by-State Review.\u201d The Heritage Foundation, 2021.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.heritage.org\/health-care-reform\/report\/premiums-choices-deductibles-care-access-and-government-dependence-under\"target=\"_blank\">https:\/\/www.heritage.org\/health-care-reform\/report\/premiums-choices-deductibles-care-access-and-government-dependence-under<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink16\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink16\">16<a href=\"#cmfSimpleFootnoteLink16-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\">A May 2022 CBO report projects PTC and related spending at $89 billion in\r\n2022 and $60 billion in 2023. The decline is almost entirely because the\r\nexpanded subsidies expire after 2022.\r\n\u201cThe Budget and Economic Outlook: 2022 to 2032.\u201d Congressional Budget\r\nOffice, 2022.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.cbo.gov\/system\/files\/2022-05\/57950-Outlook.pdf\"target=\"_blank\">https:\/\/www.cbo.gov\/system\/files\/2022-05\/57950-Outlook.pdf<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink17\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink17\">17<a href=\"#cmfSimpleFootnoteLink17-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\">\u201cReconciliation Recommendations of the House Committee on Ways and\r\nMeans.\u201d Congressional Budget Office, 2022.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.cbo.gov\/system\/files\/2021-02\/hwaysandmeansreconciliation.pdf\"target=\"_blank\">https:\/\/www.cbo.gov\/system\/files\/2021-02\/hwaysandmeansreconciliation.pdf<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink18\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink18\">18<a href=\"#cmfSimpleFootnoteLink18-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\"> \u201cThe Budget and Economic Outlook: 2022 to 2032.\u201d Congressional Budget\r\nOffice, 2022.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.cbo.gov\/system\/files\/2022-05\/57950-Outlook.pdf\"target=\"_blank\">https:\/\/www.cbo.gov\/system\/files\/2022-05\/57950-Outlook.pdf<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink19\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink19\">19<a href=\"#cmfSimpleFootnoteLink19-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\">Polyakova, Maria and Stephen P. Ryan. \u201cSubsidy Targeting With Market\r\nPower.\u201d National Bureau of Economic Research, 2021.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.nber.org\/system\/files\/working_papers\/w26367\/w26367.pdf\"target=\"_blank\">https:\/\/www.nber.org\/system\/files\/working_papers\/w26367\/w26367.pdf<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink20\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink20\">20<a href=\"#cmfSimpleFootnoteLink20-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\">\u201cThe Profitability of Health Insurance Companies.\u201d The Council of Economic\r\nAdvisors, 2018.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/trumpwhitehouse.archives.gov\/wp-content\/uploads\/2018\/03\/The-Profitability-of-Health-Insurance-Companies.pdf\"target=\"_blank\">https:\/\/trumpwhitehouse.archives.gov\/wp-content\/uploads\/2018\/03\/The-Profitability-of-Health-Insurance-Companies.pdf<\/a><\/div><div class=\"cmfSimpleFootnoteDefinitionItem cmfSimpleFootnoteLink21\"><span class=\"cmfSimpleFootnoteDefinitionItemId\" id=\"cmfSimpleFootnoteLink21\">21<a href=\"#cmfSimpleFootnoteLink21-0\" class=\"cm-footnote-backlink et_smooth_scroll_disabled\">\u2191<\/a> <\/span><span class=\"cmfSimpleFootnoteDefinitionItemContent\">Swagel, Phillip L. \u201cHealth Insurance Policies.\u201d July 21, 2022. Congressional\r\nBudget Office.<\/span> <a class=\"cm_footnote_extlink\" href=\"https:\/\/www.cbo.gov\/system\/files?file=2022-07\/58313-Crapo_letter.pdf\"target=\"_blank\">https:\/\/www.cbo.gov\/system\/files?file=2022-07\/58313-Crapo_letter.pdf<\/a><\/div><\/div>\n<\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/section>\n","protected":false},"excerpt":{"rendered":"DownloadAs Americans face rising inflation1 and recession risk,2 Congressional Democrats have proposed a misguided budget reconciliation bill focusing on health care. The legislation would set price controls on prescription drugs...","protected":false},"author":5,"featured_media":5296,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_price":"","_stock":"","_tribe_ticket_header":"","_tribe_default_ticket_provider":"","_tribe_ticket_capacity":"0","_ticket_start_date":"","_ticket_end_date":"","_tribe_ticket_show_description":"","_tribe_ticket_show_not_going":false,"_tribe_ticket_use_global_stock":"","_tribe_ticket_global_stock_level":"","_global_stock_mode":"","_global_stock_cap":"","_tribe_rsvp_for_event":"","_tribe_ticket_going_count":"","_tribe_ticket_not_going_count":"","_tribe_tickets_list":"[]","_tribe_ticket_has_attendee_info_fields":false,"footnotes":""},"categories":[756],"tags":[368,486,514,439,521],"external-media-outlet":[],"featured":[728],"location":[],"publication-type":[727],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Reconciliation Bill \u2014 Misguided Drug Price Controls and Unwise Health Insurer Subsidies<\/title>\n<meta name=\"description\" content=\"This policy brief examines the reconciliation bill and argues that the proposal will harm patients by reducing innovation.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/paragoninstitute.org\/medicare\/reconciliation-bill-misguided-drug-price-controls-and-unwise-health-insurer-subsidies\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Reconciliation Bill \u2014 Misguided Drug Price Controls and Unwise Health Insurer Subsidies\" \/>\n<meta property=\"og:description\" content=\"This policy brief examines the reconciliation bill and argues that the proposal will harm patients by 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