Senate Democrats pass sweeping healthcare, tax, climate bill

Senate Democrats on Sunday passed a sweeping health, tax and climate change bill that will allow Medicare to negotiate the cost of prescription drugs — a significant political victory as the party seeks to send a message ahead of the midterm elections that it is its keeps promises.

The drug pricing plan is at the heart of Democrats’ bill, the Inflation Reduction Act of 2022. The measure would also incentivize efforts to tackle the climate crisis, impose new taxes on businesses and set aside $4 billion for the Bureau of Reclamation to help combat drought in the West — a Last minute addition.

The bill, approved through an expedited legislative process that did not allow for a Republican filibuster, passed by a 50-50 vote, with Vice President Kamala Harris breaking the tie.

No Republican supported the bill. It will now go to the House of Representatives, where a vote is expected on Friday.

Before passage, senators trudged through dozens of unsuccessful votes on amendments tabled mostly by Republicans to try to stop the bill or at least make it politically difficult for Democrats.

Republicans managed to get rid of a provision that violated Senate budget rules. It would have capped the price of insulin in the private insurance market at $35 a month.

President Biden and Congressional Democrats desperately need victory as they head into the midterm election that has traditionally favored party impotence.

The package comes at the end of a remarkably productive sprint for the tightly divided Senate. In recent weeks, the chamber has enacted a bipartisan gun law, a boost to semiconductor manufacturing and help for veterans exposed to toxic burn pits.

Passing the Medicare drug negotiation policy — which Democrats have been pushing for nearly two decades — would be a significant achievement that’s likely to be popular with voters desperate to crack down on drugmakers.

It’s the largest health policy change since the Affordable Care Act was passed in 2010, but it will initially have a limited impact on the wallets of the nearly 64 million seniors on Medicare.

Negotiations between Medicare and drugmakers would not begin until 2026 and would initially be limited to 10 drugs, with more added over time.

Senator Bernie Sanders (I-Vt.), a longtime supporter of Medicare price negotiations, called that part of the bill “pretty weak.”

But Democrats rejected his amendment Sunday to strengthen Medicare provisions.

Under the plan, Medicare will be able to negotiate some of the most expensive drugs on the market, saving the federal government an estimated $288 billion over a decade, according to the bipartisan Congressional Budget Office.

Likely negotiation targets include Eliquis, an atrial fibrillation drug used by well over 2 million Medicare beneficiaries; diabetes drug Januvia; prostate cancer drug Xtandi; and the rheumatoid arthritis drug Orencia, according to industry players tracking the legislation. That list could change if more expensive drugs hit the market over the next four years.

Chris Condeluci, founder of CC Law & Policy and a former Republican staffer on the Senate Finance Committee, predicted that negotiations would not have a significant impact on the vast majority of Medicare beneficiaries because most are not using the most expensive drugs and are therefore unlikely to see direct savings.

“If your premiums don’t go down, it doesn’t matter if Medicare spends less overall,” he said.

But the bill would also limit Medicare beneficiaries’ drug spending to $2,000 per year, a guideline that could help the roughly 1.4 million enrolled people who reach that amount each year, according to the Kaiser Family Foundation.

Drug makers generally like the out-of-pocket cap because the federal government lifts the bill after patients spend the maximum.

The measure would also put a cap on drugmakers’ price hikes, though Democrats had to lower the inflation cap on Saturday when the bipartisan Senate representative ruled it flouted Senate rules.

The inflation cap isn’t a huge win for the pharmaceutical industry because “companies have been self-policing,” said Ipsita Smolinski, health policy adviser and chief executive of Capitol Street, a research and consulting firm.

“They know that if they raised the prices of their products intolerably, they would be on the front page of the Wall Street Journal or the New York Times,” she said.

But drugmakers have fought hard to negotiate their prices with Medicare. Drugmakers and Republicans warn that allowing negotiations would stifle innovation of new drugs, which pharmaceutical companies suspect would affect them. They also say the prospect of negotiations could prompt drugmakers to charge more when drugs first hit the market.

Medicare was eliminated from drug price negotiations in 2003 with the establishment of the Medicare Part D drug program. The ban essentially allows drug companies to set their own costs for Medicare, even though other state programs like Veterans Affairs may negotiate lower rates.

Drug makers once had one of the most powerful lobby groups in Washington and still lead the way in terms of spending to influence lawmakers. But their political power has waned in recent years amid high-profile price hikes, such as former Turing Pharmaceuticals chief executive Martin Shkreli’s decision to raise the price of an older drug by 5,000%.

The legislation is just a fraction of what Democrats originally hoped to enact — a $3.5 trillion proposal that would have rewritten much of the nation’s social safety net, including home healthcare, child care and universal pre-K -Programs. Those efforts ended when Sen. Joe Manchin III (DW.V.) said in December he would not go along with such an ambitious plan.

But after secret negotiations between Manchin and Senate Majority Leader Charles E. Schumer (DN.Y.), they revived parts of the bill last month.

The bill also targets climate change. In an attempt to reduce emissions, it provides incentives for consumers to buy energy-efficient appliances and cars, and for manufacturers to make such products. Climate policy would reduce emissions by about 40% by 2030, according to Democrats.

Approximately $9 billion would go to at-home consumer discount programs. Low- and middle-income people would be eligible for a tax credit of $4,000 for a clean used car purchase and up to $7,500 for a new car purchase. Billions more would be spent to accelerate US production of solar panels, electric vehicles and other clean products.

Finally, the bill would impose new taxes on wealthy corporations and their stock buyback programs — and give the Internal Revenue Service new funds, which the agency says it will use to crack down on wealthy tax dodgers.

https://www.latimes.com/politics/story/2022-08-07/democrats-pass-healthcare-climate-bill Senate Democrats pass sweeping healthcare, tax, climate bill

Alley Einstein

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