Jul 25, 2022 - Health

Democrats' high-stakes math game

Illustration of a donkey surrounded by mathematical formulas.

Illustration: Aïda Amer/Axios

As Democrats enter a crucial week in their bid to pass a huge health care bill without Republican votes, they have yet to decide how to target hundreds of billions of dollars in spending — a call heavily dependent on politics and Senate rules.

Why it matters: The party seems willing to do whatever it takes to lower prescription drug prices and prevent massive Affordable Care Act premium hikes in the fall. What else — if anything — can be included in the package will depend on how much money they have available, and how much of that Sen. Joe Manchin is willing to spend.

The big picture: This is the closest that Democrats have come yet to allowing Medicare to negotiate drug prices, a goal the party has had for decades.

  • But the reconciliation measure being considered has gone from a huge catch-all package of domestic policy priorities to a watered-down version of just the health care portions of last year's legislation, which is all Manchin has said he'll accept for now.
  • For example, a plan that would have filled the coverage gap in states that didn't expand Medicaid isn't part of the deal.
  • Passing something now is obviously much better for Democrats than doing nothing before the midterm elections, and it's widely understood that no one wants to upset what is already a very delicate balance.
  • However, the coming days will likely reveal whether there's any wiggle room for some party priorities to be slipped in.

State of play: The agreement Manchin has made with Senate Majority Leader Chuck Schumer is straightforward: He'll accept reconciliation legislation that includes prescription drug pricing reforms and extends the enhanced ACA subsidies for another two years, and that's it.

  • The prescription drug provisions, which were hashed out last year, could save the federal government hundreds of billions of dollars. Extending the subsidies will cost tens of billions.
  • Manchin wants whatever money that isn't spent to go towards reducing the deficit — which means Democrats can't spend the prescription drug savings in all of the ways they had originally planned.

What we're watching: The Senate parliamentarian is expected to rule this week on whether the legislation complies with reconciliation rules, and analysts say she could very well strike some major drug pricing components.

  • Once a ruling is made, Democrats will know how much money they're working with. But they'll still need to figure out how much of that Manchin is willing to spend.

By the numbers: Extending the ACA subsidies for two years will cost around $34 billion, according to a Congressional Budget Office analysis released last week.

  • CBO said earlier this month that the prescription drug provisions, if they're all included, would save the federal government nearly $287.6 billion over 10 years.
  • That means that Democrats could have to decide what to do with as much as $250 billion, depending on how much of the legislation survives the parliamentarian.

Between the lines: There's no shortage of things Democrats would like to use that money for.

  • At the top of the list is more COVID funding, which the White House has been saying it needs for months in order to buy more treatments, tests and vaccines.
  • Some skeptics also question the wisdom of extending the ACA subsidies for only two years, which would have them expire right before the 2024 presidential election. There are murmurs about extending them for another year, which would cost an additional $23 billion, per CBO.
  • There's also a push to use some of the money to respond to Roe v. Wade being overturned. Last week, the GOP blocked Democratic legislation that would roughly double funding for Title X over the next decade, making this a measure to watch.
  • Exclusion of the original Medicaid coverage gap fix bodes especially bad for Sen. Raphael Warnock, whose seat is one of the most at-risk this fall.

The bottom line: Democrats want to pass a big health care bill before they leave town for most of August. No one knows yet exactly how big it will be.

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