President Donald Trump’s surprise pledge to send $200 drug discount cards to older Americans has left even his top deputies and health officials scrambling to explain how it would all work — assuming it’s even legal.
The administration says it can put the plan in place using existing powers to test new ways of delivering health care. But critics see it as a brazen election year ploy to buy votes that could exceed presidential authority while sapping Medicare’s finances.
Skeptics seized on the way the administration may rely on projected savings from a new drug pricing initiative still under development to justify the more than $6 billion expense as a sign the plan is built on flimsy promises.
Congress also hasn’t authorized spending money on the cards. Administration officials at a briefing Friday morning did not tell senior congressional staff about what pots of money would be tapped to launch the effort, though one former administration official with knowledge said the Medicare trust fund is a likely target.
Administration officials on Friday didn’t answer questions about what the cards would look like — and if they would bear the president’s name, like coronavirus stimulus checks the Treasury sent to tens of millions of Americans this spring.
“The administration’s claim to be using imaginary savings from non-existent drug price reforms means that Trump’s coupons come at Medicare’s expense, and that seniors and taxpayers are paying the price for this stunt,” House Speaker Nancy Pelosi said.
It’s not the first time that a president has tested his power ahead of an election to make a sweeping health care change.
Barack Obama bypassed Congress to reward top-performing private Medicare plans ahead of his re-election campaign. The plan to provide bonus payments sparked Republican-led congressional investigations, and watchdogs at the Government Accountability Office called on the Obama administration to shut it down. The program ended in 2014.
With congressional action on drug prices stalled, Trump has sought to wield executive power to deliver on his pledge to lower costs ahead of Election Day. The drug coupon announcement was just one of a series of recent executive actions on drug pricing that his administration previously considered. Others included a plan to tie Medicare payments to cheaper prices paid abroad and to provide drug discounts directly to seniors. However, neither is expected to have an immediate impact on prices.
The Trump administration two years ago explored the idea of allowing pharmaceutical companies to offer discount cards to help seniors with their prescription drug costs, but noted that it would have to carve out a safe harbor from federal anti-kickback statutes to make the plan work. Officials this summer broached the possibility of drug companies paying for $100 discount cards ahead of the election as part of broader efforts to control drug expenses but were rebuffed by industry officials.
Then, Trump unexpectedly revived the idea during a Thursday health care speech in Charlotte, N.C., catching the drug industry and health care interest groups off guard and putting his aides on the hook to answer legal and logistical questions.
On a call with reporters Friday, federal health officials repeatedly said that more details would be forthcoming, and that the cards would “go out as soon as mechanically possible,” while noting they wouldn’t all be distributed by Election Day.
Much of the focus is on a Medicare program called the 402 demonstration that’s used to test innovations that could save money or improve the quality of care. But health policy experts say a move on this scale is unprecedented and may exceed the scope of Medicare law.
“What’s the rationale for considering a cash payment to Medicare beneficiaries a demonstration? What are they testing?” asked Juliette Cubanski, a deputy director at the Kaiser Family Foundation.
Election-year politics make the legal questions of the administration’s claim to Medicare authority even dicier, said Eliot Fishman of the Washington advocacy group Families USA.
“Politics impact the legality of this, when it’s used for such a transparently electioneering purpose as this,” Fishman said.
Administration officials still were working out key details Friday, leaving congressional staff baffled after a morning briefing.
“They would tell us zero,” said one Democratic congressional staffer on the call. “I got dumber from participating in the call.”
After Trump’s Thursday speech, two White House officials told POLITICO that the cost of the cards would be offset by a plan tie the price Medicare pays for certain drugs to lower prices paid in other countries. But on a Friday press call, a senior HHS official said details of how to pay for the plan “are still yet to come,” and promised more out of the White House “in the near future.”
The confusion has left congressional Democrats unsure what legal grounds they can use to stop the move. It’s not clear who would sue over potential misuse of an obscure Medicare law, Fishman said.
Zachary Brennan contributed to this report.