Debt Proposals Put Off Medicare Cuts To Joint Congressional Committee

Both House Speaker John Boehner and Senate Majority Leader Harry Reid introduced debt ceiling bills that would likely leave potential Medicare/Medicaid Rx reductions to a newly created bipartisan 12-member panel.

Difficult questions of how to cut costs in programs such as Medicare and Medicaid, including their drug benefits, would be left to a future congressional panel, under the two main debt reduction proposals in Congress drafted as part of negotiations to raise the federal debt ceiling.

House Speaker John Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev., are separately proposing that such thorny issues would be considered by a joint committee comprised of 12 members of Congress - three Republican and three Democratic Senators, and three Republican and three Democratic Representatives. The joint committee would write legislation that must be voted on by Congress by the end of the year.

Each legislator released bills called the "Budget Control Act" late July 25, including cuts to discretionary spending and methods for raising the debt ceiling. Each is to be considered as an amendment to legislation already before the chamber - S. 627 in the House and S. 1323 in the Senate.

Either bill faces a difficult road ahead as the Aug. 2 deadline to raise the debt ceiling looms over Congress and the White House. But the congressional panel idea may have some traction if there is a compromise package, since it is contained in measures by a Democrat and Republican leader.

Previous special panels with congressional membership have come up with cost-cutting proposals, notably the president's bipartisan fiscal commission of the fall of 2010. The idea now on the table in Washington calls for a somewhat new approach, in that the panel would actually write legislation that would be forwarded for congressional review upon a simple majority vote of seven panel members. The bills outline rules that would expedite consideration of the legislation by the relevant committees and the full chambers, guaranteeing an up-or-down vote without amendments.

Neither the Boehner nor Reid bills specifically task the joint panel with addressing Medicare, Medicaid or other federal health care programs. But it is generally expected that the panel would have to wade into those programs in order to achieve the proposals' cost-cutting goals.

The House bill sets forth the committee's goal as reducing the federal budget by $1.8 trillion for the period of 2012 through 2021. The Senate bill charges the committee with reducing the federal deficit to 3% or less of the gross domestic product. Both bills set a deadline of Nov. 23, 2011 for the committee to vote on its report, including legislative language, and a deadline of Dec. 23, 2011 for a House and Senate vote.

One proposal that has repeatedly come up from Democrats in Congress - and also proposed by the president's bipartisan fiscal commission - is requiring Medicaid-level rebates on drugs used by Medicare Part D beneficiaries who are also eligible for Medicaid ('Fiscal Commission's Final Plan Includes Rebates On Drugs Used By Medicare/Medicaid Dual Eligibles,' 'The Pink Sheet,' Dec. 2, 2010). The pharmaceutical industry opposes such a policy and has been lobbying throughout the deficit-reduction discussions to prevent such a provision from making it through Congress (Also see "Medicare Part D Rebate Prospects Advancing In Debt Talks? PhRMA Ratchets Up Opposition" - Pink Sheet, 11 Jul, 2011.).

Some members of Congress are more likely to push harder for such a proposal than others. For example, Henry Waxman, D-Calif., the ranking member on the House Energy and Commerce Committee, has long been an advocate for mandatory Part D rebates.

Such issues would make the composition of the panel important - even more so since the joint committee will have only 12 members. Each member's views could thus significantly impact the shape of the proposal that emerges from the panel.

The participants would be chosen by the House speaker and minority leader and the Senate majority and minority leaders (three each), and the speaker and Senate majority leader would each appoint a co-chair, as the two bills now stand.

Other ideas that could get a look, since they have come up in previous cost-cutting proposals, include strengthening the Independent Payment Advisory Board, eliminating "pay for delay" agreements between brand and generic drug manufacturers or reducing the period of market exclusivity granted to innovative biological products (Also see "CMS 2012 Budget Looks To Biosimilars, Brand/Generic Deals To Offset Costs" - Pink Sheet, 21 Feb, 2011.).

-Scott Steinke ([email protected])