In a gambit to boost President Donald Trump’s flagging poll numbers among seniors, the Trump administration is hastily assembling a plan that would put $200 debit cards for prescription drugs in the hands of most Medicare beneficiaries.
But the authority they’re using to bypass Congress is shaky at best, and illegal at worst, according to a number of legal and policy experts who spoke to HuffPost this week.
As first reported by Politico’s Dan Diamond, administration officials want to send roughly 39 million seniors a special debit card that can be used at pharmacies to pay for medications. The cards, worth $200 each, would go out between the end of October and the end of the year.
In case the political ramifications weren’t clear enough, the Centers for Medicare and Medicaid Services (CMS) plans to spend about $19 million on letters — to be sent out before Election Day — informing seniors that they’ll be receiving this debit card as a result of Trump’s efforts.
The cost of the program — the money itself, as well as the costs of producing the debit cards, sending out letters, and building a database to track cards and health outcomes — is nearly $8 billion. The administration has indicated that it will cover the costs of the cards by dipping into Medicare funds, although the exact funding arrangement is not clear.
But if this seems like the government’s version of robbing Peter to pay Paul, just so Trump can claim right before the election that he’s lowering prescription drug costs for seniors, the White House claims the program could actually save Medicare money and improve health outcomes.
A senior White House official confirmed to HuffPost on Thursday that the administration had been working for months on a deal with the pharmaceutical industry to lower drug prices by Election Day, potentially including the distribution of one-time debit cards that the industry would finance. When that deal fell apart, as The New York Times first reported, the administration came up with this plan to finance the debit cards on its own.
Twisting The Law, Or Maybe Just Breaking It
The administration says it has the authority to distribute and use funds to finance the drug cards, without an appropriation or any other kind of authorization from Congress, because of power it has under an amendment to the Social Security Act ― specifically, Section 402, which dates back to a law Congress passed in 1967. (People are probably more familiar with the preceding section: 401(k).)
Under Section 402 waivers, the Department of Health and Human Services can conduct certain kinds of experiments to try out potential improvements in Medicare. But these test projects have to satisfy certain conditions.
One criterion is budget neutrality. A demonstration project can’t simply call for spending more money; it has to reduce spending or, at the very least, pay for itself.
The Trump administration claims it can offset the cost of the drug cards with the savings from yet another planned initiative ― specifically, a proposal to reduce Medicare spending on drugs by using the lower prices negotiated by governments in some other countries. But that international pricing program is not yet in place, and many experts doubt it ever will be because it still has to clear a number of regulatory hurdles and is almost certain to face court challenges.
“There’s no pretense that these drug cards are in some sense budget-neutral,” said Eliot Fishman, a former HHS official during the Obama administration who is now senior director for health policy at the liberal health care advocacy group FamiliesUSA.
Past Is Prologue
Another criterion for Section 402 waivers is that the projects are supposed to be real, meaningful experiments, designed to test unknown propositions that can guide policy in the future. Among the recent examples is a test of “disease management” programs during the George W. Bush administration.
The hope was that those programs would yield big savings. They didn’t. Both Medicare and private insurance took note and backed off plans to integrate such payment designs into their policies.
The Trump administration says the drug cards will test whether giving seniors extra money increases the likelihood that they take medications they need. But there is zero mystery about whether that will happen, experts pointed out. It will ― and there are years of research to show it.
“It is hard to see this as a research and demonstration project, unless your question is whether giving $200 to people immediately before an election gets them to vote for you,” said Timothy Jost, a professor emeritus and expert on health care law at Washington and Lee University.
What Are We Trying To Learn?
The real tell here, experts said, is the design of the Trump administration’s “experiment.” A serious effort to test whether the debit cards increase the use of necessary medications would require some kind of control group ― ideally, a group that didn’t get the money whose behavior could then serve as a basis for comparison.
But there are no signs that the administration has designed the program in that way ― or that it even has mechanisms in place to track and then collect the data it would need to draw those kinds of conclusions about health outcomes.
Edwin Park, a research professor at Georgetown University who has been working on health care policy since he served in the Clinton administration, said there are many unanswered questions right now. “Logistically, for the cards itself, how is CMS going to track individuals?” he asked. “How is the card even going to be used in conjunction with Part D plans? How do pharmacies process these cards? They are doing this completely on the fly apparently.”
Park said it seemed extremely unlikely that the administration has answered these questions, given Politico’s report that HHS scrambled to devise this rationale in September as part of a last-minute, desperate attempt to give Trump a drug pricing initiative that he could deploy before the election.
“The design will make it nearly impossible to learn anything of value,” said Stacie Dusetzina, a health policy professor at Vanderbilt University Medical Center. “It is frustrating to see a proposal to spend so much on something that will not provide lasting benefits for patients and that ultimately will leave us with more questions than answers.”
It’s All Politics
Process questions aside, experts said that the drug card proposal completely distorts the purpose of Section 402, which was to encourage improvements in the way Medicare deals with health care providers, insurers and states.
Past administrations certainly stretched that authority. The Bush administration used a questionable 402 demonstration to shore up Part D drug plans when that program was first launching. The Obama administration used a 402 initiative to mitigate deep cuts to private Medicare Advantage plans that were part of the Affordable Care Act. The Government Accountability Office investigated that demonstration and determined, after the fact, that the Obama administration violated Section 402’s intent.
But even those two efforts had plausible justifications ― trying to stabilize the Medicare program as a whole. They weren’t simply plans to deliver an immediate and timely financial benefit to Medicare recipients right as they were voting on the president’s reelection.
To Rep. Frank Pallone (D-N.J.), chairman of the House Energy and Commerce Committee, it’s a “shameless stunt that steals billions from Medicare in order to fund a legally dubious scheme that’s clearly intended to benefit President Trump’s campaign right before Election Day.”
“If the president were serious,” Pallone continued in a statement on Thursday, “he would work with Democrats to follow through on his campaign promise to empower Medicare to ‘negotiate like crazy’ to lower drug prices. Instead, he’s stealing taxpayer funds for a one-time gimmicky ploy that won’t do anything to meaningfully lower drug prices for Americans.”
Fishman, the former Obama HHS official, called it a “naked effort to buy seniors’ votes.”
“This has nothing to do with trying to improve the program,” he said.
What it surely does have something to do with is Trump’s poor poll numbers among seniors. According to two recent polls, Democratic presidential nominee Joe Biden leads Trump by more than 20 percentage points among voters who are 65 and older. This demographic, almost always the most reliable voters, went for Trump in 2016 by a margin of 53% to 44%. So it’s important for his reelection campaign to turn this group around in the closing weeks, hence his renewed focus on prescription drug spending among seniors.
The irony is that reducing drug prices was the one area of health policy that the Trump administration had taken seriously. In addition to promising executive actions, the administration at times indicated strong support for legislation moving through Congress.
But last year Trump threatened to veto legislation that passed the House, following months of direct negotiations with Speaker Nancy Pelosi (D-Calif.), and he has not pushed hard ― or, at least, not hard enough ― to promote bipartisan legislation in the Senate, where Majority Leader Mitch McConnell (R-Ky.) and other leaders have been blocking a vote.
“Some of the [proposed] changes could have been more impactful, helping not just on a one-time basis but on an ongoing basis,” said Rachel Sachs, a law professor and expert on the drug industry at Washington University in St. Louis. “There are things they could have done. And they’re choosing to push something that appears to be a political stunt instead.”
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