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FREE VACCINES WOULD BE PROVIDED TO UNINSURED CHILDREN WITH FAMILY INCOMES OF UP TO 75% OF STATE MEDIAN INCOME UNDER SENATE FINANCE COMMITTEE BUDGET BILL

Executive Summary

Free vaccines provided under a government central bulk purchasing system would be subject to a family income means test under the childhood immunization plan adopted by the Senate Finance Committee June 18 as part of the FY 1994 budget reconciliation bill. Like the House-passed immunization measure, the Finance proposal would provide free vaccines for children who are on Medicaid, are uninsured or have insurance that does not cover immunizations ("The Pink Sheet" May 31, p. 9). However, the Finance Committee added a stipulation that the latter two groups of children would be eligible only if their family income, regardless of family size, does not exceed 75% of a state's median income for a family of four. The Senate bill may address some manufacturer concerns, but only partly. The Senate inclusion of an income test would target the initial eligible population more narrowly than does the House- passed bill. However, there is concern that the public market might be greatly expanded beyond that initial group, particularly because the Senate bill retains the House state purchase option. Senate staffers cite estimates that about 54% of children are in families with incomes below 75% of their state's median. After removing those with insurance coverage, about 45% would be eligible for free vaccines, which staff believes is not significantly different from the current vaccine market. Addressing suggestions that the means test would pose an administrative barrier to wider immunization, the bill would direct HHS to "develop several models for states to implement the program, including a simplified form where eligibility is based on parents' self-verified and declared indication of meeting the income test." Additionally, public clinics would be exempted from using the means test. States would have to retain any current mandates that insurers provide immunization benefits. The state purchase option would allow states to use state-only funds to purchase vaccine for additional groups of children at the federally negotiated price. The Senate proposal does not limit the amount of vaccine that could be purchased at the discount prices but does stipulate that states must inform HHS annually of their anticipated needs "so that the effect of state purchases can be accounted for during price negotiations." While the overall budget bill was hammered out by committee Democrats, the immunization portion received a lot of input from committee Republicans. Sen. Danforth (Mo.), one of the cosponsors of the Republican alternative to Sen. Riegle's (D-Mich.) original childhood immunization bill, said at a June 17 Finance Committee session: "I'm reasonably pleased with this" vaccine proposal, although still concerned about the effect of expanded government purchase on product innovation, and "I'm not sure we've really taken care of that problem." Danforth's main objection is the state purchase option. He is unlikely to offer an amendment to alter that provision, if only because there is limited opportunity to offer Senate floor amendments to the massive budget reconciliation package. During the Finance Committee markup, Sen. Hatch (R-Utah) commented that the committee did "an excellent job in paring back" the original Clinton Administration proposal but cautioned that the revised plan "still may be perceived as a middle-class entitlement." Hatch said the median income in New Jersey, for example, is $56,000; thus families earning $42,000 would be eligible for free vaccines. Funding for the overall immunization proposal would be derived from "recouped savings accruing to existing state and federal programs that currently purchase vaccines outside the CDC [Centers for Disease Control and Prevention] contract for the population that will be covered under this proposal," according to the Senate Finance Committee. Funding for the expanded vaccine purchases would be established as a trust fund under the Social Security Act. The current, more limited, CDC vaccine grant program is a discretionary program requiring annual congressional appropriations. A committee bill summary maintains that "creating a new Social Security Act program assures steady funding levels which is of concern to both states and manufacturers." The program would take effect on Oct. 1, 1994, but would end when immunization coverage is implemented by health care reform. Under the Senate plan, each "state must apply to participate in the federal purchase program and must meet certain conditions including providing assurance that every eligible child receives vaccines without charges for its cost and that every program- registered provider receives vaccine for eligible children," a summary of the Senate plan explains. States that currently have universal vaccine purchase programs do not have to impose the means test but the amount of vaccine they receive would be based on the federal eligibility criteria. Attempting to allay manufacturer concerns about vaccine price negotiations with HHS, the Senate summary states that the department must "account for a reasonable profit to manufacturers." Factors to be considered include research and production of the vaccine being purchased, research for "new or improved" products, shipping and handling, and maintaining an "adequate production capacity for disease outbreak control." HHS may contract with multiple suppliers of a vaccine. Sen. Hatch worried about the "terrible precedent" set if HHS has authority to review company business records in order to gauge these factors. An HHS staffer attending the Finance Committee markup advised that the department would not have blanket authority to review such records and that parameters for the negotiations would be described in regulations. The Senate plan also stipulates that federal Medicaid matching funds would not be available for single-antigen vaccines if HHS determines that a combination vaccine is "medically appropriate and cost beneficial." A policy preference for combination vaccines was supported in a recent General Accounting Office report ("The Pink Sheet" April 12, T&G-7).
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