Medicaid provides roughly 65 million Americans with health care coverage paid for by taxpayers. This federal-state health insurance program provides a safety net for low-income adults, children, the elderly, and people with disabilities. I worry that it could unravel because of unsustainable spending for unchecked drug pricing.
Medicaid spending is growing and it is fast contributing a larger share to federal health spending. States contributed roughly one-third of the half-trillion Medicaid dollars spent last year.
In addition to doctor and hospital visits, home- and community-based care, and long-term care services, Medicaid also administers a prescription drug program. One of the biggest drivers of annual growth in Medicaid spending is the rising costs of prescription drugs, an issue that ranks among the biggest concerns for most Americans. Taxpayers have a large stake in the effort to curb skyrocketing prices that in recent years seem to have no end in sight.
As a lawmaker with decades of congressional service, I’ve been nosing around the ledgers long enough to know that the federal treasury is too often considered a cash cow. Once the spigot is turned on, it’s nearly impossible to turn it off, and it takes robust vigilance to watch where the dollars flow. As chairman of the Senate Finance Committee, which has primary legislative and oversight jurisdiction of Medicaid, it’s my responsibility to help ensure the program works as effectively and efficiently as possible and the program isn’t milked dry by its spending on prescription drugs.
In fiscal year 2017, Medicaid spent a net $29 billion on prescription drugs. What’s more, the projected use of high-cost specialty drugs will put Medicaid on a fiscally reckless path going forward. Since the beginning of the 116th Congress, I have worked with my colleagues in the Senate to forge a bipartisan agreement to help drive up value and drive down the soaring cost of prescription medicine so Medicaid can continue to serve Americans for generations to come.
My goal has always been to protect taxpayers and lower the lid on spending without hampering access to innovative, lifesaving medicines. The way things are going, rising prescription drug costs are defying gravitational market forces that help rein in costs to keep them affordable for consumers and taxpayers, which puts even more strain on states since they must have balanced budgets. This tells me the system needs stronger transparency and reporting tools to keep costs in check.
I recently introduced the Prescription Drug Pricing Reduction Act of 2019 with Ron Wyden (D-Ore.), a ranking member of the Senate Finance Committee. This bipartisan legislation will install better accountability measures and reform payment incentives to slow the spending curve in the Medicaid drug program.
As innovative cures and lifesaving treatments come to market, the upward pressure anticipated for high-cost treatments pose tremendous challenges for Medicaid. We can’t afford to ignore the pressure anticipated for first-in-class treatments and novel drugs coming to market. To keep treatments affordable and accessible, it’s important to lay the groundwork for fiscal sustainability and uphold the integrity of Medicaid.
A lot of attention has been given to the proposed redesign of Medicare Part D in the Prescription Drug Pricing Reduction Act, and for good reason. It will save approximately $85 billion over 10 years. However, the proposed reforms to Medicaid will also be substantial. They will apply to fee-for-service and managed care Medicaid programs. The act will also require clear conflict of interest policies for state boards that do not currently have such policies; stipulate accountability requirements for board membership; and strengthen safety and anti-fraud measures within each state’s Medicaid programs so the people making coverage decisions in states are putting beneficiaries first. According to a recent score provided by the Congressional Budget Office, the bill will also save taxpayers $15 billion on Medicaid.
When states decide which drugs will be covered and included on their preferred drug lists, taxpayers and Medicaid patients ought to have assurances the system is fair. Transparency is the best guardrail to ensure safety and effectiveness to deliver the best value for taxpayers and the best outcomes for Medicaid patients.
Chuck Grassley is the senior Republican senator from Iowa and chair of the Senate Finance Committee.