Alex Hendrie

Admin's Floated "Buy American" Mandate Could Create Pharmaceutical Shortages

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Posted by Alex Hendrie on Wednesday, March 18th, 2020, 4:14 PM PERMALINK

Recent reports indicate that the administration may propose a “Buy American” executive order that would impose domestic purchasing requirements on pharmaceuticals and medical supplies.

If implemented this Buy American mandate would disrupt existing supply chains at a time that medical care is needed now more than ever.

It would lead to higher costs, could prompt retaliatory actions from foreign countries, and could further harm economic growth. At the very least, this issue should be debated at a time when the country and the world is not in a global pandemic.

The supply chain for biopharmaceuticals is inherently global and diverse. It is complex and incorporates numerous inputs from across the globe including raw materials, active pharmaceutical ingredients, and high precision analytical tools. 

By design, it is also efficient and flexible in order to protect against emergencies including regional disruptions in manufacturing or shortages.

A Buy American mandate threatens this efficiency and flexibility. It would increase costs and make the industry less efficient. A best-case scenario would require significant and time-consuming changes to existing supply chains that would result in increased long and short-term costs. 

At worst, there would be significant disruptions to pharmaceuticals due to a lack of access to raw materials, labor force issues, and existing regulations hampering manufacturing.

The fact is, manufacturing is capital intensive and requires numerous inputs, regardless of whether it involves pharmaceuticals, machinery, or electronics. Recent policy proposals that restrict the supply chain such as tariffs have already crushed many types of manufacturing. It has also led to retaliatory measures from foreign trading partners that have further harmed American businesses.

A buy American mandate risks doing the same to the pharmaceutical industry.

If the administration wants to encourage American manufacturing, it should promote policies that encourage investment and allow businesses to grow and avoid new mandates.

Photo Credit: wp paarz


Congress Should Reject Efforts to Add Surprise Billing Proposals to Coronavirus Legislation

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Posted by Alex Hendrie on Wednesday, March 18th, 2020, 9:00 AM PERMALINK

According to recent media reports, members of the House and Senate are pushing to add unrelated price controls legislation to the phase three Coronavirus legislation. This would add contentious legislation dealing with surprise medical billing that has been opposed by conservatives on and off the hill to legislation that is being considered because of a national emergency. This should be rejected. 

Conservatives oppose price controls because they utilize government power to forcefully lower costs in a way that distorts the economically efficient behavior and natural incentives created by the free market.

Unfortunately, some lawmakers have proposed to implement price controls as a solution to surprise medical billing, which is when an individual receives an unexpectedly high medical bill as a result of being out of network or receiving emergency care.

While surprise billing should be addressed, some lawmakers have proposed solving this problem by using the heavy hand of government to set rates for any payments made to out-of-network providers. Under this proposal, the government would set a benchmark rate to resolve out-of-network payment disputes between insurers and providers. Benchmark rate-setting would replace private negotiations between insurers and providers with government-set prices, a blatant price control on the healthcare system. 

By giving government more control over the healthcare system, this rate setting proposal inches the healthcare system closer to socialized healthcare, which the left disingenuously calls “Medicare for All.”

Under Medicare for All, the government would set prices for all healthcare, an outcome that will lead to lower quality of care for patients and cut doctor compensation, which will reduce the amount of care supplied. 

Under this system, Americans would not have a choice of insurer or health benefits and the development of new treatments and technologies would be slowed. Under this system, Americans would not have a choice of insurer or health benefits and the development of new treatments and technologies would be slowed.

Unsurprisingly, there is significant opposition from conservatives to price setting and price controls. 75 conservative organizations recently released a letter urging Trump and Republican members of the House and Senate to oppose any price controls.

In addition, Congressman Andy Harris (R-Md.) released a letter signed by 39 conservatives in the House including new White House Chief of Staff Mark Meadows, House Freedom Caucus Chairman Andy Biggs (R-Ariz.), House Judiciary Committee Ranking Member Jim Jordan (R-Ohio), and Republican Study Committee Chairman Mike Johnson (R-La.).

Lawmakers need to take a serious, deliberative approach in addressing surprise billing instead of rushing to attach a flawed proposal that imposes price controls onto Coronavirus legislation. 

Photo Credit: Barnyz - Flickr


Democrats Are Playing Politics With Coronavirus Legislation

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Posted by Alex Hendrie on Wednesday, March 4th, 2020, 12:28 PM PERMALINK

Democrats are exploiting the Coronavirus epidemic in an effort to impose partisan, socialist price controls on lifesaving cures.

According to media reports, House Democratic leadership is proposing a Coronavirus emergency spending package legislation that includes price controls on any vaccine, therapeutic, or diagnostic developed to treat the disease.

Republicans in the House and Senate should reject this poison pill and ensure that medical innovation is protected in the supplemental legislation.

Manufacturers are acting swiftly to ensure the creation of Coronavirus cures. However, enacting price controls will suppress the research and development that is needed to create these cures. If this proposal is made into law, it will mean fewer cures and slower development. It could even lead to government rationing of Coronavirus cures, allowing the government to pick and choose who “deserves” a vaccine.

Price controls on Coronavirus cures will also set a precedent to put price controls on other lifesaving medicines, a long-held goal of the left. As recently as last year, Democrats passed a proposal to impose government prices on medicines under threat of a 95 percent excise tax on medicines.

This is the wrong approach to ensuring the development of Coronavirus cures and should be opposed by lawmakers.

Photo Credit: Steve Jurvetson


Senate Should Reject Legislation Undoing GILTI High-Tax Exemption

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Posted by Alex Hendrie on Monday, March 2nd, 2020, 2:27 PM PERMALINK

Senator Sherrod Brown (D-Ohio) and Finance Committee Ranking Member Ron Wyden (D-Ore.) have introduced legislation that would undo the existing high-tax exception (HTE) for the Global Intangible Low-Taxed Income (GILTI) provision. This will result in double taxation on American businesses operating overseas and undermine the Tax Cuts and Jobs Act (TCJA).

This legislation, S. 3280, the “Blocking New Corporate Tax Giveaways Act,” should be rejected by the Senate.

GILTI was created to prevent taxpayers from eroding the U.S. tax base by assigning income to low tax jurisdictions. However, the provision was designed based on the pre-TCJA tax system which required companies to allocate a portion of domestic expenses to foreign income calculations. This resulted in a post-TCJA tax code where American businesses faced additional foreign tax liability because GILTI inadvertently taxed high-tax foreign income that was previously exempt from U.S. taxation.

To resolve this problem, Treasury proposed rules that allow businesses to elect a high-tax exclusion for a Controlled Foreign Corporation’s (CFC) income if this income is subject to foreign taxes above 90 percent of the corporate rate (18.9 percent based on the 21 percent corporate rate). This HTE ensures the integrity of the new, territorial tax system in a way that protects the U.S. tax base without subjecting taxpayers to double taxation or creating perverse incentives for businesses to restructure.

This legislation is particularly egregious because Congress clearly intended to exclude high tax foreign income from GILTI, as the conference report to accompany the TCJA clearly stated: 

“The Committee believes that certain items of income earned by CFCs should be excluded from the GILTI, either because they should be exempt from U.S. tax – as they are generally not the type of income that is the source of base erosion concerns – or are already taxed currently by the United States. Items of income excluded from GILTI because they are exempt from U.S. tax under the bill include foreign oil and gas extraction income (which is generally immobile) and income subject to high levels of foreign tax.”

The existing high-tax exception should be preserved, not repealed as proposed by Senators Brown and Wyden. Repeal would increase taxes on businesses and undermine the integrity of the Tax Cuts and Jobs Act.

Photo Credit: New America - Flickr


ATR Releases Letter Opposing Importation Of Prescription Drugs From Canada

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Posted by Alex Hendrie on Monday, March 2nd, 2020, 11:00 AM PERMALINK

Americans for Tax Reform President Grover Norquist has released a letter to FDA Commissioner Stephen Hahn urging him to withdraw a proposal that would allow the U.S. to import prescription drugs from Canada. 

[Read the full letter here]

Importation proposals do not address the root cause of high prices, and it is unclear whether this proposal will result in any meaningful savings to consumers or increase access to medicines.

Canada does not have the scale to successfully import drugs to the U.S. As the letter notes: 

Canada is roughly one-tenth the size of the U.S. with a population of 37.5 million and an economy of $1.7 trillion. By comparison, the U.S. has a population of 327 million and an economy of $20.5 trillion. 

Given the disparity in size between the two countries, Canada does not have the scale to effectively import drugs to the U.S. In fact, this proposal may destabilize the Canadian supply chain, a concern raised publicly by Canadian officials.

Even if Canada had the scale to import prescription drugs to the U.S., many innovative medicines that are available to U.S. consumers could not be imported because they are not available in the Canadian market. As the letter notes: 

Of the 290 new medical substances were launched across the world between 2011 and 2018, the U.S. had access to 90 percent of these cures, far exceeding other markets. Canada has access to just 44 percent of cures, but it is far from an outlier. The United Kingdom had 60 percent of medicines, Japan had 50 percent, and Ireland had just 40 percent.

It is unclear whether or not there will be savings from importation. The non-partisan Congressional Budget Office (CBO) has previously estimated that importing drugs from Canada would have a “negligible reduction in drug spending.”

There are also long-standing concerns that importation will flood the U.S. market with unsafe, unvetted drugs. Every single FDA Commissioner and HHS Secretary over the past two decades have raise concerns about importation and declined to vouch for its safety. 

Current HHS Secretary Alex Azar is no exception –– in 2018, he called the proposal a “gimmick” and labeled importation as “open borders for unsafe drugs in search of savings that can’t be safely achieved.”

Finally, importing Canadian drugs is not a free trade measure –– it will import price controls. As the letter notes: 

Free trade means a level playing field where prices are set by the market with no tariffs, barriers, or price controls. Drug importation is the opposite of free trade because foreign countries frequently utilize a range of arbitrary and market-distorting policies to determine the cost of medicines – by definition such approaches are price controls.

Proposals to import Canadian medicines into the U.S. should be opposed. Canada does not have the scale to import drugs to the U.S., the Canadian drug market has far less access to medicine than the American market, the proposal would likely not generate consumer savings, and it would import foreign price controls into the U.S. 

Read the full letter here.

Photo Credit: Flickr- wp paarz


Dem Plan to Reimpose Obamacare Tax Will Hit Trump Districts Hard

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Posted by Alex Hendrie on Monday, February 24th, 2020, 2:06 PM PERMALINK

Democrats want to bring the Obamacare individual mandate tax back from the dead and impose it on taxpayers in every Congressional district.

There are 30 Congressional districts that President Trump won in 2016 that are currently represented by Democrats.

These Trump-district Democrats have repeatedly opposed tax cuts and regulatory reform pushed by Republicans, instead siding with House Speaker Nancy Pelosi in pushing for higher taxes and more regulations.

Before Republicans repealed it in 2017 as part of the Tax Cuts and Jobs Act, the individual mandate was one of the most regressive taxes in the code. The mandate forced individuals to purchase government approved health insurance or pay a tax totaling almost $700 for an individual and $2,000 for a family.

Repeal of the hated Obamacare tax has provided relief for low- and middle-income households:

  • In 2017, the Obamacare individual mandate tax hit 4,654,990 households.
  • 75 percent of those paying the mandate had annual income of less than $50,000 and 32 percent had annual income of less than $25,000. 

 

Americans for Tax Reform has run the numbers on what re-imposing the individual mandate tax in the 30 Trump districts would mean for these taxpayers. The results are consistent across the board: the tax disproportionately targets low- and middle-income families and individuals.


[View ATR's breakdown of the most recent IRS individual mandate tax penalty data for every Congressional district

Here is the breakdown for the 2016 Trump Districts that currently have Democrat Representatives: 

Tom O’Halleran’s district (AZ-01)

  • 7,660 households paid the Obamacare Individual Mandate Tax in 2017.
  • 2,480 of those households, or 32 percent, had annual income of less than $25,000.
  • 5,640 of those households, or 74 percent, had annual income of less than $50,000. 
  • In the 2016 election, 63 percent of the district voted for Trump.

 

Lucy McBath’s district (GA-06)

  • 9,070 households paid the Obamacare Individual Mandate Tax in 2017.
  • 2,380 of those households, or 26 percent, had annual income of less than $25,000.
  • 6,090 of those households, or 67 percent, had annual income of less than $50,000.
  • In the 2016 election, 48 percent of the district voted for Trump.

 

Lauren Underwood’s district (IL-14)

  • 7,610 households paid the Obamacare Individual Mandate Tax in 2017.
  • 2,200 of those households, or 28 percent, had annual income of less than $25,000.
  • 5,290 of those households, or 69 percent, had annual income of less than $50,000.
  • In the 2016 election, 49 percent of the district voted for Trump.

 

Cheri Bustos’ district (IL-17)

  • 8,830 households paid the Obamacare Individual Mandate Tax in 2017.
  • 3,490 of those households, or 40 percent, had annual income of less than $25,000.
  • 7,160 of those households, or 81 percent, had annual income of less than $50,000.
  • In the 2016 election, 47 percent of the district voted for Trump.

 

Abby Finkenauer’s district (IA-01)

  • 8,930 households paid the Obamacare Individual Mandate Tax in 2017.
  • 3,080 of those households, or 34 percent, had annual income of less than $25,000.
  • 7,070 of those households, or 79 percent, had annual income of less than $50,000.
  • In the 2016 election, 48 percent of the district voted for Trump.

 

Dave Loebsack’s district (IA-02)

  • 9,160 households paid the Obamacare Individual Mandate Tax in 2017.
  • 3,340 of those households, or 36 percent, had annual income of less than $25,000.
  • 7,350 of those households, or 80 percent, had annual income of less than $50,000.
  • In the 2016 election, 49 percent of the district voted for Trump.

 

Cindy Axne’s district (IA-03)

  • 10,370 households paid the Obamacare Individual Mandate Tax in 2017.
  • 3,340 of those households, or 32 percent, had annual income of less than $25,000.
  • 8,070 of those households, or 78 percent, had annual income of less than $50,000.
  • In the 2016 election, 48 percent of the district voted for Trump.

 

Jared Golden’s district (ME-02)

  • 12,780 households paid the Obamacare Individual Mandate Tax in 2017.
  • 3,820 of those households, or 30 percent, had annual income of less than $25,000.
  • 9,770 of those households, or 76 percent, had annual income of less than $50,000.
  • In the 2016 election, 51 percent of the district voted for Trump.

 

Elissa Slotkin’s district (MI-08)

  • 8,290 households paid the Obamacare Individual Mandate Tax in 2017.
  • 3,060 of those households, or 37 percent, had annual income of less than $25,000.
  • 6,400 of those households, or 77 percent, had annual income of less than $50,000.
  • In the 2016 election, 51 percent of the district voted for Trump.

 

Haley Stevens’ district (MI-011)

  • 8,260 households paid the Obamacare Individual Mandate Tax in 2017.
  • 2,710 of those households, or 33 percent, had annual income of less than $25,000.
  • 6,080 of those households, or 74 percent, had annual income of less than $50,000.
  • In the 2016 election, 49 percent of the district voted for Trump.

 

Angie Craig’s district (MN-02)

  • 7,810 households paid the Obamacare Individual Mandate Tax in 2017.
  • 2,130 of those households, or 27 percent, had annual income of less than $25,000.
  • 5,640 of those households, or 72 percent, had annual income of less than $50,000.
  • In the 2016 election, 46 percent of the district voted for Trump.

 

Collin C. Peterson’s district (MN-07)

  • 9,200 households paid the Obamacare Individual Mandate Tax in 2017.
  • 2,700 of those households, or 29 percent, had annual income of less than $25,000.
  • 6,940 of those households, or 75 percent, had annual income of less than $50,000.
  • In the 2016 election, 61 percent of the district voted for Trump.

 

Susie Lee’s district (NV-03)

  • 13,390 households paid the Obamacare Individual Mandate Tax in 2017.
  • 3,970 of those households, or 30 percent, had annual income of less than $25,000.
  • 9,340 of those households, or 70 percent, had annual income of less than $50,000.
  • In the 2016 election, 48 percent of the district voted for Trump.

 

Chris Pappas’ district (NH-01)

  • 12,150 households paid the Obamacare Individual Mandate Tax in 2017.
  • 3,670 of those households, or 30 percent, had annual income of less than $25,000.
  • 9,080 of those households, or 75 percent, had annual income of less than $50,000.
  • In the 2016 election, 48 percent of the district voted for Trump.

 

Josh Gottheimer’s district (NJ-05)

  • 9,220 households paid the Obamacare Individual Mandate Tax in 2017.
  • 2,590 of those households, or 28 percent, had annual income of less than $25,000.
  • 6,180 of those households, or 67 percent, had annual income of less than $50,000.
  • In the 2016 election, 49 percent of the district voted for Trump.

 

Mikie Sherill’s district (NJ-11)

  • 7,340 households paid the Obamacare Individual Mandate Tax in 2017.
  • 1,880 of those households, or 26 percent, had annual income of less than $25,000.
  • 4,730 of those households, or 64 percent, had annual income of less than $50,000.
  • In the 2016 election, 49 percent of the district voted for Trump.

 

Xochitl Torres Small’s district (NM-02)

  • 9,820 households paid the Obamacare Individual Mandate Tax in 2017.
  • 3,180 of those households, or 33 percent, had annual income of less than $25,000.
  • 4,090 of those households, or 42 percent, had annual income of less than $50,000.
  • In the 2016 election, 50 percent of the district voted for Trump.

 

Max Rose’s district (NY-11)

  • 9,640 households paid the Obamacare Individual Mandate Tax in 2017.
  • 2,900 of those households, or 30 percent, had annual income of less than $25,000.
  • 6,950 of those households, or 31 percent, had annual income of less than $50,000.
  • In the 2016 election, 53 percent of the district voted for Trump.

 

Sean Patrick Maloney’s district (NY-18)

  • 7,660 households paid the Obamacare Individual Mandate Tax in 2017.
  • 2,380 of those households, or 31 percent, had annual income of less than $25,000.
  • 5,570 of those households, or 73 percent, had annual income of less than $50,000.
  • In the 2016 election, 49 percent of the district voted for Trump.

 

Antonio Delgado’s district (NY-19)

  • 9,050 households paid the Obamacare Individual Mandate Tax in 2017.
  • 3,050 of those households, or 34 percent, had annual income of less than $25,000.
  • 7,040 of those households, or 78 percent, had annual income of less than $50,000.
  • In the 2016 election, 50 percent of the district voted for Trump.

 

Anthony Brindisi’s district (NY-22)

  • 7,940 households paid the Obamacare Individual Mandate Tax in 2017.
  • 3,190 of those households, or 40 percent, had annual income of less than $25,000.
  • 6,520 of those households, or 82 percent, had annual income of less than $50,000.
  • In the 2016 election, 54 percent of the district voted for Trump.

 

Kendra Horn’s district (OK-05)

  • 12,000 households paid the Obamacare Individual Mandate Tax in 2017.
  • 3,540 of those households, or 30 percent had annual income of less than $25,000.
  • 8,910 of those households, or 74 percent, had annual income of less than $50,000.
  • In the 2016 election, 53 percent of the district voted for Trump.

 

Matt Cartwright’s district (PA-08)

  • 7,860 households paid the Obamacare Individual Mandate Tax in 2017.
  • 2,410 of those households, or 31 percent, had annual income of less than $25,000.
  • 5,730 of those households, or 73 percent, had annual income of less than $50,000.
  • In the 2016 election, 53 percent of the district voted for Trump.

 

Conor Lamb’s district (PA-17)

  • 9,180 households paid the Obamacare Individual Mandate Tax in 2017.
  • 3,610 of those households, or 39 percent, had annual income of less than $25,000.
  • 7,430 of those households, or 81 percent, had annual income of less than $50,000.
  • In the 2016 election, 49 percent of the district voted for Trump.

 

Joe Cunningham’s district (SC-01)

  • 10,570 households paid the Obamacare Individual Mandate Tax in 2017.
  • 2,990 of those households, or 28 percent, had annual income of less than $25,000.
  • 7,650 of those households, or 72 percent, had annual income of less than $50,000.
  • In the 2016 election, 53 percent of the district voted for Trump.

 

Ben McAdams’ district (UT-04)

  • 14,100 households paid the Obamacare Individual Mandate Tax in 2017.
  • 3,760 of those households, or 27 percent, had annual income of less than $25,000.
  • 10,210 of those households, or 72 percent, had annual income of less than $50,000.
  • In the 2016 election, 39 percent of the district voted for Trump.

 

Elaine Luria’s district (VA-02)

  • 8,960 households paid the Obamacare Individual Mandate Tax in 2017.
  • 2,740 of those households, or 31 percent, had annual income of less than $25,000.
  • 6,780 of those households, or 76 percent, had annual income of less than $50,000.
  • In the 2016 election, 48 percent of the district voted for Trump.

 

Abigail Spanberger’s district (VA-07)

  • 10,110 households paid the Obamacare Individual Mandate Tax in 2017.
  • 2,980 of those households, or 29 percent, had annual income of less than $25,000.
  • 7,380 of those households, or 73 percent, had annual income of less than $50,000.
  • In the 2016 election, 50 percent of the district voted for Trump.

 

Don Beyer’s district (WA-08)

  • 11,120 households paid the Obamacare Individual Mandate Tax in 2017.
  • 2,630 of those households, or 24 percent, had annual income of less than $25,000.
  • 7,020 of those households, or 63 percent, had annual income of less than $50,000.
  • In the 2016 election, 45 percent of the district voted for Trump.

 

Ron Kind’s district (WI-03­­­­­­­­)

  • 10,780 households paid the Obamacare Individual Mandate Tax in 2017.
  • 3,440 of those households, or 32 percent, had annual income of less than $25,000.
  • 8,540 of those households, or 79 percent, had annual income of less than $50,000.
  • In the 2016 election, 49 percent of the district voted for Trump.

Photo Credit: Flickr - Matt Johnson


Dems Want To Reimpose Obamacare Individual Mandate Tax On Millions

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Posted by Alex Hendrie, Tom Hebert on Tuesday, February 18th, 2020, 12:30 PM PERMALINK

The Democrat effort to repeal the Trump tax cuts would re-impose the Obamacare individual mandate tax penalty on millions of households, hitting thousands of families in every state and Congressional district.

Americans for Tax Reform has broken down the most recent IRS data on the individual mandate tax penalty by Congressional district, which you can view here.

The individual mandate was one of the most regressive taxes in the code before it was repealed in 2017 by the Republican passed Tax Cuts and Jobs Act. Every single Democrat in the House and Senate voted against the repeal of the Obamacare individual mandate tax. 

Prior to repeal, the mandate forced households to purchase government approved health insurance or pay a $695 tax for an individual and $2,085 for a family.

Reinstatement of this tax will hit low and middle-income families hard.

In 2017, the tax hit 4,654,990 households according to IRS data. Nationwide, roughly 74 percent of those paying the mandate had annual income of less than $50,000 and roughly 32 percent had annual income of less than $25,000. 

Key swing states that President Trump won in 2016 would be hard-hit if the Democrats reimposed the individual mandate tax penalty. 

In Pennsylvania, the tax hit 153,140 households. 

  • 56,490 of those households, or 37 percent, had annual income of less than $25,000. 
  • 121,100 of those households, or 79 percent, had annual income of less than $50,000.


In Wisconsin, the tax hit 80,240 households. 

  • 24,550 of those households, or 31 percent, had annual income of less than $25,000. 
  • 62,440 of those households, or 78 percent, had annual income of less than $50,000. 


In Michigan, the tax hit 132,750 households. 

  • 50,920 of those households, or 38 percent, had annual income of less than $25,000. 
  • 106,910 of those households, or 81 percent, had annual income of less than $50,000. 
     

Here is the breakdown from some notable House members: 

In Ways and Means Ranking Member Rep. Kevin Brady's district (R-Texas), 13,880 households paid the Obamacare individual mandate tax penalty in 2017.

  • 3,270 of those households, or 24 percent, had annual income of less than $25,000.
  • 8,900 of those households, or 64 percent, had annual income of less than $50,000. 
     

In Ways and Means Chairman Rep. Richard Neal’s district (D-Mass.), 10,140 households paid the Obamacare individual mandate tax penalty in 2017.

  • 3,390 of those households, or 33 percent, had annual income of less than $25,000.
  • 8,060 of those households, or 79 percent, had annual income of less than $50,000. 
     

In House Speaker Rep. Nancy Pelosi’s district (D-Calif.), 9,700 households paid the Obamacare individual mandate tax penalty in 2017.

  • 2,280 of those households, or 24 percent, had annual income of less than $25,000.
  • 6,050 of those households, or 62 percent, had annual income of less than $50,000. 
     

In House Minority Leader Kevin McCarthy’s district (R-Calif.), 8,000 households paid the Obamacare individual mandate tax penalty in 2017.

  • 2,530 of those households, or 32 percent, had annual income of less than $25,000.
  • 5,870 of those households, or 73 percent, had annual income of less than $25,000. 
     

[View ATR's breakdown of the most recent IRS individual mandate tax penalty data by Congressional district

Photo Credit: Nancy Pelosi - Flickr


Rep. Harris Leads Letter Against Price Controls

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Posted by Alex Hendrie, Tom Hebert on Tuesday, February 18th, 2020, 10:15 AM PERMALINK

Congressman Andy Harris (R-Md.) recently led a letter opposed to price controls as a solution to surprise medical billing.

The letter was signed by 38 other members including House Freedom Caucus Chairman Andy Biggs (R-Ariz.), House Judiciary Committee Ranking Member Jim Jordan (R-Ohio), Republican Study Committee Chairman Mike Johnson (R-La.), and House Oversight Committee Ranking Member Mark Meadows (R-N.C.).

Rep. Harris and all signers should be commended for standing against price controls.

ATR has long opposed policies that directly or indirectly impose price controls on the US healthcare system. Price controls are bad policy because they utilize government power to forcefully lower costs in a way that distorts the economically efficient behavior and natural incentives created by the free market.

In the context of surprise billing, some lawmakers have proposed using rate-setting for any payments made to out-of-network providers. Under this system, the government would set a benchmark rate to resolve out-of-network payment disputes between insurers and providers. Benchmark rate-setting would replace private negotiations between insurers and providers with government-set prices, a blatant price control on the healthcare system. 

The signers explained the numerous problems with using rate-setting to address surprise billing, noting: 

“...we oppose price controls as a solution to the issue as a solution to the issue of surprise medical billing. By design, placing such price controls on purely private transactions, would reduce access to care, increase the power of the federal government, and result in negative unintended consequences.” 

Signers also acknowledged that while Congress should act on surprise billing, any legislation that includes price controls would be a nonstarter. As the letter states: 

“Congress should act on surprise medical billing, but it should avoid top-down price controls that would simply be trading one problem for another.” 

Conservative lawmakers have consistently expressed significant opposition to price fixing mechanisms within healthcare. For instance, 192 Republicans opposed H.R. 3, legislation that would impose price controls on pharmaceutical innovation under threat of a 95 percent excise tax.

Lawmakers need to take a serious, deliberative approach in addressing surprise billing instead of rushing to pass a flawed proposal that imposes price controls on our healthcare system. 

Thankfully, conservative lawmakers are standing firm in advocating against surprise billing proposals that rely on distortionary price fixing mechanisms. 

Photo Credit: Gage Skidmore


White House Report Highlights Foreign Freeloading of American Medical Innovation

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Posted by Alex Hendrie on Monday, February 17th, 2020, 4:32 PM PERMALINK

Foreign countries are freeloading off American medical innovation according to a recent report by the White House Council on Economic Advisers. 

Because of foreign price controls, the prices paid by other countries for pharmaceuticals is less than what is needed to incentivize the development of innovative new medicines. This harms foreign countries through lack of access to new medicines and harms the U.S. because prices are higher than they would otherwise be.

The U.S. healthcare system largely relies on free market forces that promote competition between various stakeholders. In comparison, most foreign developed countries utilize price controls to forcefully lower costs. In many cases, these countries are able to strong arm manufacturers into accepting lower prices, as the report notes: 

“In the U.S., private insurance plans compete and make decisions that reflect the value to pharmacy benefit managers or individuals selecting plans. In contrast, if a government-run monopoly plan’s employees decide not to cover a drug, there is no risk of losing a customer because the customers cannot leave. Moreover, drug companies would often rather sell drugs at prices below the value of their products than not sell at all.”

However, this does not come without costs. By relying on price controls, these developed countries have far fewer innovative cures than the U.S. In some cases, there is a wide disparity in terms of available treatments, as the report notes:

“[M]any of the 200 top-selling drugs examined here show no quantities sold in the countries of comparison, suggesting that those drugs are not available for sale in that country. For example, in Australia, only 97 of the 200 drugs show evidence of significant sales. Similarly, Canada has only 120 of the drugs, France 109, and Germany 133.”

Where prices are artificially lower in other countries, this indirectly harms American patients and taxpayers, who shoulder a greater share of the cost of innovative medicines than they are consuming. As the report notes, this problem is increasing:

“[F]or the past 15 years, stringent government underpricing in foreign countries has substantially increased foreign free-riding on the United States. Our main finding is that prices are much lower in other developed nations than would have been predicted by income differences alone and that this discrepancy is substantially widening.”

The fact is, developing new medicines is a complex, time consuming process. A manufacturer must invest a substantial amount in research and development. In addition, the clinical development and approval times average 90.3 months for a pharmaceutical drug and 97.3 months for a biologic. Given this extensive process, there is a clear linkage between the ability of manufacturers to recoup their investment and their willingness to innovate, as the report notes:

“The gains from global sales of innovative products drive incentives for research and development, which means that the challenge of financing global biopharmaceutical R&D poses a public-goods problem.”

Some proposals, like Speaker Nancy Pelosi’s plan to impose a 95 percent excise tax on manufacturers that don’t accept government price setting, or the International Pricing Index to tie U.S. prices to prices in foreign countries, would lead to the U.S. adopting the same pricing schemes that underpay for innovation.

Not only will this harm American patients in the form of fewer treatments and worse health outcomes, it will also harm the economy because of a decline in American R&D.

Manufacturers invest over $100 billion in the U.S. economy every year, directly supporting over 800,000 jobs. When indirect jobs are included, this innovation supports 4 million jobs and $1.1 trillion in total economic impact. Pharmaceutical jobs are also high paying – the average compensation is over $126,000 – more than double the $60,000 average compensation in the U.S.

If the U.S. implements the same price controls as those utilized in other countries, these jobs will be threatened. Medical innovation will be curtailed, reducing access to medicines in the U.S. and abroad. 

Rather than adopting these proposals, lawmakers should prioritize proposals that protect the free market and medical innovation and ensure that foreign countries pay their fair share.

Photo Credit: Jim Grey


ATR Supports The “Strengthening Innovation In Medicare and Medicaid Act”

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Posted by Alex Hendrie on Thursday, February 13th, 2020, 12:00 PM PERMALINK

Congresswoman Terri Sewell (D-Ala.) and Congressman Adrian Smith (R-NE) recently introduced important legislation to rein in the Center for Medicare and Medicaid Innovation (CMMI). This legislation, H.R. 5741, the “Strengthening Innovation in Medicare and Medicaid Act,” is cosponsored by Reps. Tony Cardenas (D-CA), John Shimkus (R-Ill.), Kurt Schrader (D-Ore), and Brad Wenstrup (R-Ohio).

These members should be applauded for introducing this legislation. Additionally, all members of Congress should support and co-sponsor this legislation.

CMMI was created under Obamacare with the goal of increasing efficiency of healthcare programs. The agency was tasked with conducting demonstrations over new health care delivery and payment models in Medicare, Medicaid, and the Children’s Health Insurance Program with the intent of reducing healthcare costs.

However, in its relatively short history, CMMI has pushed demonstrations with little evidence they would result in savings, while strong-arming healthcare providers and patients into participating.

The agency is also not under the normal appropriations process – Obamacare gave CMMI $10 billion every decade in perpetuity. As a result, Congress is limited in its ability to conduct routine, necessary oversight.

H.R. 5741 would help bring much needed oversight to CMMI through the imposition of several guardrails. For instance, the legislation would:

  • Require a public notice and comment process for any new demonstration. There are currently no requirements for public input.
  • Create a privileged process for Congress to block the implementation of a demonstration within 45 days of a proposed expansion from Phase 1 to Phase 2. 
  • Set limitations on any demonstration including requiring a test to be no longer than five years and only as many participants as necessary to obtain a statistically valid sample.
  • Allow providers and suppliers to opt-out a demonstration if it would cause undue economic hardship. 
  • Require monitoring of the impact any demonstration is having on beneficiaries and health disparities.
     

These reforms are a good first step towards reining in CMMI by providing much needed transparency, congressional oversight and stakeholder engagement. 

Photo Credit: Kevin Simmons


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