Lower Health Care Costs Act likely to be passed by end of the year

July 17, 2019

The Lower Health Care Costs Act (S. 1895), introduced in June, contains many provisions intended to lower the cost of healthcare to individuals and to the federal government, and it extends funding for several federal healthcare programs, according to a Congressional Budget Office cost estimate.

CBO and the staff of the Joint Committee on Taxation (JCT) estimate that several of the bill’s provisions would reduce the cost of health insurance subsidized by the federal government - through Medicare, Medicaid, the health insurance marketplaces established under the Affordable Care Act, or employment-based plans.

CBO assumes the bill will be enacted near the end of fiscal year 2019 and that the authorized amounts will be appropriated each year.

The bill would:

·   Protect patients from surprise medical billing and reduce payments to some healthcare providers working in facilities where surprise bills are likely

·   Allow some generic or biosimilar drugs to enter the market earlier, on average, than under current law

·   Impose new rules for insurers’ contracts with pharmacy benefit managers and healthcare providers

·   Extend funding for community health centers and certain other federal healthcare programs

·   Increase access to health, cost, and quality information among patients, providers, and insurers, which would create new administrative responsibilities that increase costs for insurers and pharmacy benefit managers

·   Impose intergovernmental and private-sector mandates by prohibiting certain medical billing practices, limiting other commercial activities, and prohibiting the sale of tobacco products to anyone under the age of 21, among many other duties

Estimated budgetary effects would primarily stem from:

·   Reduced federal subsidies for healthcare and health insurance

·   Increased direct spending for community health centers and other federal health programs

Areas of significant uncertainty include:

·   Accurately anticipating the nature and effects of provider and insurer responses to the bill’s provisions

·   Accurately projecting how federal and state agencies would implement the law

·   Estimating quantities, sales, and market effects of introductions of new pharmaceutical products

·   Determining how increased transparency would affect prices and private insurance premiums