February 10, 2016

White House’s 2017 Budget Proposal Would Provide Seniors with Drug Savings

The White House's 2017 budget proposal would provide seniors more affordable prescription drugs and expand Medicaid. The $4.1 trillion budget, released February 9, also provided new troubling information about the Trans Pacific Partnership (TPP) trade deal.

President Obama’s proposal includes several ways to control prescription drug costs by $21 billion over a decade, officials said. For example, it offers states incentives to expand Medicaid and requires drug companies to publicly disclose the costs of their R&D.

It also would reduce the number of years that companies have a monopoly on biologic drugs from 12 years to seven. The administration estimates that change would reduce the deficit by $7 billion over ten years. In addition, the budget calls for blocking drug companies from striking “anti-competitive” deals to restrict access to generics.

The budget proposal would also save money by allowing Medicaid providers to negotiate for high-cost drugs while opening up competitive bidding for medical equipment.

The budget proposal stopped short of giving Medicare power to negotiate prescription drug prices, a policy the Alliance strongly supports.

This budget would make eligibility for Medicaid easier. Under the 2017 budget proposal, the federal government would extend the states’ incentive to expand coverage. It would cover the full cost of expansion for three years, even if a state misses the initial deadline under the 2010 healthcare law.

However the budget also contains some provisions that would increase health care costs for seniors starting in 2020 including:

Implementing additional means-testing for Medicare. The budget makes higher-income seniors pay more for Parts B and D. It would also freeze the higher income threshold until 25% of beneficiaries are subject to paying higher premiums. The Kaiser Family Foundation calculates that if this were in effect today it would affect someone making $47,000.

Modifying the Part B deductible for new beneficiaries. The budget increases the deductible that new beneficiaries pay.

Instituting Home Health co-pays. The budget introduces co-payments for home health care, increasing costs to seniors who need these services.

The Alliance strongly opposes these provisions and urges Congress to reject them.

Finally, the budget document revealed that the Trans-Pacific Partnership would cost the United States about $28 billion in lost tariff revenue over the next 10 years, assuming it goes into effect in 2017. Under U.S. House of Representative rules, that cost would have to be offset before the TPP can gain congressional approval. The figures provide further ammunition to those who argue that the TPP is a flawed agreement and should not be passed.

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