President Trump’s Medicare drug discount cards face uncertain path

Health and Human Services Secretary Alex Azar and Seema Verma, administrator of the Centers for Medicare and Medicaid Services, are distancing themselves from the idea, each emphasizing that they were not consulted by the White House before the president’s announcement, said three officials familiar with their thinking. Still, Verma has been involved in the plan’s development, officials said.

The cards — and letters telling people they will be arriving — cannot be issued unless a plan is approved by the White House’s Office of Management and Budget. Health officials say OMB has been reviewing drafts, but a senior administration official declined to confirm that, saying only that a plan is at HHS.

Outside the administration, Trump’s intended drug debit cards are drawing criticism from the pharmaceutical industry, budget and health policy experts of both political parties, and even a conservative publication.

A trio of senior House and Senate Democrats is calling on the Government Accountability Office to undertake a quick critique of how the administration wants to carry out the idea, contending that it “fails to comply with relevant federal laws and regulations.” The members — House Ways and Means Committee Chairman Richard E. Neal (Mass.), House Energy and Commerce Committee Chairman Frank Pallone Jr., (N.J.) and Sen. Ron Wyden (Ore.), the Senate Finance Committee’s ranking Democrat — also dispatched a letter to Azar, accusing the president of “attempting to buy votes just weeks before the election using taxpayer dollars.”

Democrats are not alone in perceiving a whiff of vote-buying aimed at Medicare recipients.

“This is just unseemly,” said G. William Hoagland, senior vice president of the Bipartisan Policy Center and formerly a longtime Republican staff director of the Senate Budget Committee. “I just find the whole way this administration kind of thwarts the power of the purse . . . is something I’ve never seen in all my years in this town.”

The struggle to create a policy rationale for a spur-of-the-moment speech addition is creating doubts about whether a defensible basis can be devised.

“This might not happen” once the policy is fully vetted by OMB, said one senior administration official familiar with the inner workings of the plan.

The White House declined to comment.

The Centers for Medicare and Medicaid Services said in a statement, “The Administration is committed to lowering out of pocket costs for our nation’s seniors. We will provide more information about the prescription drug cards soon.”

The uphill path to make the cards a reality, led by the White House’s domestic policy council, began after Trump tucked the idea into a health-care speech in Charlotte on Sept. 24.

Azar and Verma were given a clue the president might make the announcement less than a day in advance, three individuals said. Immediately after the speech, a White House official called the idea “a last-minute thing” that had originated in the office of the president’s chief of staff, Mark Meadows.

Before that, the idea of a drug card had surfaced near the end of negotiations late this summer with the pharmaceutical industry over a possible package of strategies to try to lower drug costs, a key public concern. Industry officials have said the negotiations fell apart when Meadows insisted that drug manufacturers pay for $100 drug debit cards, possibly bearing Trump’s name, that would be sent to older Americans before November.

“We could not agree to the administration’s plan to issue one-time savings cards right before a presidential election,” said Priscilla VanderVeer, a spokeswoman for PhRMA, the industry’s main trade group. “One-time savings cards will neither provide lasting help, nor advance the fundamental reforms necessary to help seniors better afford their medicines.”

When Trump announced a variant on the idea weeks later in the electoral swing state of North Carolina, the White House had doubled the card’s amount and decided the government would pay.

The most recent Washington Post-ABC national poll found Trump and his Democratic rival, former vice president Joe Biden, essentially even in support among likely voters 65 and older, with 48 percent for Trump and 49 percent for Biden. By contrast, Trump won Americans in that age group in 2016 by between seven and nine percentage points, according to exit polls and surveys of confirmed voters.

At first, a White House official said an estimated cost of $7 billion would be covered through savings from a policy that has been proposed but not adopted, pegging the price of certain drugs to those charged in nations where they are not as expensive.

But a draft plan last week, obtained by Politico and confirmed as authentic by the individuals familiar with the work, altered important elements. The cards would now cost nearly $8 billion and be sent to a wider group of 39 million of the nearly 63 million people on Medicare: those with drug coverage who do not receive significant assistance that Medicare provides low-income people to help afford medicine.

Last week’s draft said the cards could be used for up to two years or when the $200 ran out, whichever came first. They would be distributed between this month and the end of December, costing $7.8 billion if everyone who received a card used the money. In addition, the government would spend nearly $51 million to buy, mail and track use of the card. The project also will cost an estimated $19 million for letters to describe the program, $18 million to support higher volume to a Medicare call-in center because consumers will have questions, and a few smaller expenses.

The letters were to be mailed as early as this week, but that no longer is the case.

“Just knowing how difficult it is to get letters out to 40 million beneficiaries,” one administration official said, “they’d have to be licking the stamps right now.”

In a major shift since the president’s announcement, the project would be defined as an experiment, undertaken through a provision of a 1967 law that allows Medicare to try “demonstrations” — that is, experiments — to test whether changing the program’s payment or reimbursement methods can increase the “efficiency and economy” of health services used in the program.

Health policy specialists question whether the drug cards would be a legal way to use the provision, known as Section 402.

Edwin Park, a research professor at Georgetown University’s Health Policy Institute and onetime health adviser in the Clinton White House, said Section 402 has rarely been used in the decade since the Affordable Care Act created an innovations center to test potential reforms in Medicare and Medicaid. Through its history, Park said, 402 has been used mainly to try new payment models and ways of coordinating care — not the benefits that people receive.

The drafts of the discount card plan said the question being tested would be whether helping Medicare recipients lower out-of-pocket spending on prescriptions leads them to be more compliant in taking their medicine — and, if so, whether that leads to fewer emergency room visits and the use of other medical services.

“There’s nothing novel, there’s nothing innovative that’s being tested here,” Park said. “It’s widely accepted that, if you have lower cost-sharing, you use medications more.”

Drug discount cards have been part of Medicare before. Under the 2003 law that created Medicare’s Part D, its drug coverage, Congress created a temporary Medicare Prescription Drug Discount Card Program that provided a $600 credit to be used for medicine in 2004 and again in 2005, before the drug coverage began the following year.

Tricia Neuman, senior vice president of the Kaiser Family Foundation who oversees its work on Medicare policy, said a real experiment needs to include two comparison groups — in this case, a group that receives a debit card and another with the same medication needs that does not. Instead, the drafts say such a control group will consist of people who are mailed the card but do not use it, “which doesn’t sound like a control,” Neuman said.

Neuman said there is little reason to believe that a one-time payment would have a lingering effect on taking medicine. “The drug cards may offer a little bit of help to a lot of people on Medicare, but not a lot of relief to people who take expensive, lifesaving medications,” she said.

The draft plan does not address high-cost drugs. But it notes that, for 2020, standard Medicare drug plans require people to pay a $435 deductible, then 25 percent of the price of their medicine until they reach an out-of-pocket threshold.

The card idea has drawn criticism from Trump’s usual allies on the right, including a signed column in the Federalist, a conservative online magazine. “In granting election year largesse to seniors, and in legally questionable ways,” the column late last month said, “Trump most resembles the behavior of his immediate predecessor, Barack Obama.”

The column noted the GAO in 2012 reviewed and criticized the use of Section 402 to justify a project devised by that administration to give financial bonuses to high-quality health plans participating in Medicare Advantage, the program’s private-sector, managed-care version.

This week, a GAO spokesman, Chuck Young, said the agency is still reviewing the congressional Democrats’ request to look into the drug discount cards.