Health industry racks up wins in year-end spending deal

Health industry racks up wins in year-end spending deal
© iStock

Congress started the year with heady talk of bipartisan action to lower drug prices and protect patients from surprise medical bills. 

It ended the year with a massive government funding deal that did little to address those issues but did cut taxes on the health care industry by $373 billion. 

The result is a year-end government funding package that was a win for the health care industry and highlighted just how hard it is for lawmakers to overcome powerful industry groups.


Doctors and hospitals lobbied hard against the leading surprise medical billing solution, while the pharmaceutical industry lobbied hard against action on drug prices. 

“It says that the power of special interests is alive and well,” said Shawn Gremminger, senior director of federal relations at Families USA, a liberal health care advocacy group. “Even under new leadership in the House, it’s hard to overcome entrenched special interests.”

It is still possible that drug price and surprise billing legislation could be signed into law next year. Speaker Nancy PelosiNancy PelosiVoters want a strong economy and leadership, Democrats should listen On The Money: Biden to nominate Yellen for Treasury secretary | 'COVID cliff' looms | Democrats face pressure to back smaller stimulus Democrats face increasing pressure to back smaller COVID-19 stimulus MORE (D-Calif.) is pushing for a health care package ahead of a May 22 deadline for extending some expiring health programs like community health center funding. But action deep into an election year will be difficult.

There is particular frustration among backers of the surprise billing effort, which is designed to protect patients from getting bills for thousands of dollars when they go to the emergency room and one doctor happens to be out of their insurance network. 

Bipartisan leaders of the House Energy and Commerce Committee and Senate Health Committee agreed to legislation and pushed for it to be included in the year-end package. The White House also praised their efforts and called for action this year. 

But doctors and hospitals lobbied hard against the bill, and doctor staffing firms owned by private equity groups aired millions of dollars in ads against it. And days before the funding deadline, House Ways and Means Committee Chairman Richard NealRichard Edmund NealOvernight Health Care: Trump announces two moves aimed at lowering drug prices | Sturgis rally blamed for COVID-19 spread in Minnesota | Stanford faculty condemn Scott Atlas Trump announces two moves aimed at lowering drug prices IRS races to get remaining stimulus checks to low-income households MORE (D-Mass.) put forward the outline of a rival plan with a solution more favorable to doctors and hospitals, who worried about damaging cuts to their payments in the rival Energy and Commerce bill. 


With the key House committees split on the issue, leadership delayed taking up legislation.

Backers say it is not a good sign for larger health reform if even relatively small actions like addressing surprise medical bills, which everyone says they want to accomplish, are stalled.  

“This is an issue that is very easy to understand,” said Ben Ippolito, a health economist at the right-leaning American Enterprise Institute. “The fact we couldn’t even get that done, in a way that was fairly generous to providers, is incredible to me.”

On drug prices, Democrats passed a major bill through the House which would allow the government to negotiate lower prices on up to 250 drugs per year, with savings applied to both people on private plans and those on Medicare. 

But Republicans have vowed to block that bill, which Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellFeinstein to step down as top Democrat on Judiciary Committee Voters want a strong economy and leadership, Democrats should listen On The Money: Biden to nominate Yellen for Treasury secretary | 'COVID cliff' looms | Democrats face pressure to back smaller stimulus MORE (R-Ky.) has dismissed as “socialist.” Republicans and the pharmaceutical industry warn it would hinder the development of new treatments for patients. 

That leaves the path forward for bipartisan drug-pricing legislation that can become law unclear. There is a more modest bipartisan bill in the Senate, from Sens. Chuck GrassleyCharles (Chuck) Ernest GrassleyOn The Money: Biden to nominate Yellen for Treasury secretary | 'COVID cliff' looms | Democrats face pressure to back smaller stimulus Loeffler to continue to self-isolate after conflicting COVID-19 test results Loeffler isolating after possible COVID-19 infection MORE (R-Iowa) and Ron WydenRonald (Ron) Lee WydenOn The Money: Push for student loan forgiveness puts Biden in tight spot | Trump is wild card as shutdown fears grow | Mnuchin asks Fed to return 5 billion in unspent COVID emergency funds Grassley, Wyden criticize Treasury guidance concerning PPP loans The FCC is trying to govern content moderation: It doesn't have the authority MORE (D-Ore.). But many GOP senators object to that bill as well. 

The pharmaceutical industry, a powerful force in Washington, is lobbying hard against both bills. 

The year-end package does include one fairly small bill to lower drug prices: the Creates Act, which cracks down on drug companies delaying competition from cheaper generic drugs. But the pharmaceutical industry, after fighting the measure for years, came around to supporting it, easing the way for passage. 

Adding to the health industry’s year-end victories, the spending package also repeals three ObamaCare taxes: the 40 percent tax on generous “Cadillac” health plans, the 2.3 percent medical device tax and the health insurance tax. 

Those tax repeals add up to costing $373 billion. 

All three taxes have drawn bipartisan opposition. Employers and unions alike called for repeal of the Cadillac tax, saying they did not want their health plans to be taxed and warning the tax shifted costs onto workers. 

Backers said repealing the medical device tax will spur innovation from small device companies and that repeal of the health insurance tax will lower premiums.


Pelosi said in a statement on the funding deal that “Democrats are protecting the quality, affordable health care of millions by permanently repealing health care taxes.” She also noted the funding deal blocks President TrumpDonald John TrumpBiden team wants to understand Trump effort to 'hollow out government agencies' Trump's remaking of the judicial system Overnight Defense: Trump transgender ban 'inflicts concrete harms,' study says | China objects to US admiral's Taiwan visit MORE from taking certain actions to “sabotage” ObamaCare, a win for Democrats. 

The Alliance to Fight the 40, a group of employers, insurers and others opposed to the Cadillac tax, said “working families have been facing higher costs and shrinking coverage from this looming tax.”

But some experts decried the loss of so much revenue for the government and the loss of the downward pressure on health costs that the Cadillac tax was supposed to produce. 

The wins for the health industry had many lamenting what they saw as a lost opportunity to tackle costs and other issues — and with little guarantee that lawmakers can make progress next year.

“Congress could have used the past year to deal with true problems by finalizing legislation to stop surprise medical bills and reforming drug pricing,” said Brian Blase, a former health care adviser to President Trump who is now president of Blase Policy Strategies.

“It chose to break the bank on industry-sought tax cuts through a terrible process that shows deficits don’t matter to Washington leaders, and that makes ObamaCare an even more unaffordable budget buster.”

Updated at 10:20 a.m.