Health officials scrambling to produce Trump's ‘last-minute’ drug cards by Election Day
• Oct 08, 2020
Caught by surprise by President Donald Trump’s promise to deliver drug-discount cards to seniors, health officials are scrambling to get the nearly $8 billion plan done by Election Day, according to five officials and draft documents obtained by POLITICO.
The taxpayer-funded plan, which was only announced two weeks ago and is being justified inside the White House and the health department as a test of the Medicare program, is being driven by Centers for Medicare and Medicaid Services Administrator Seema Verma and White House chief of staff Mark Meadows, the officials said. The administration is seeking to finalize the plan as soon as Friday and send letters to 39 million Medicare beneficiaries next week, informing seniors of Trump's new effort to lower their drug costs, although many seniors would not receive the actual cards until after the election.
The $200 cards — which would resemble credit cards, would need to be used at pharmacies and could be branded with a reference to Trump himself — would be paid for by tapping Medicare's trust fund.
“The goal is to begin the test by distributing cards starting in October 2020,” according to a draft proposal circulated within the White House last week and obtained by POLITICO.
Career civil servants have raised concerns about the hasty plan and whether it is politically motivated, particularly after Verma pushed Medicare officials to finalize the plan before the Nov. 3 election, said two officials.
The plan to lower seniors' drug costs comes as administration officials grapple with Trump's falling support among older Americans, a significant threat to his reelection. Trump is currently lagging challenger Joe Biden by as much as 27 points in recent polls among Americans ages 65 and older, a major reversal from the 2016 campaign, with seniors now voicing concerns about Trump's handling of the coronavirus pandemic and his chaotic leadership style.
"This has nothing to do with politics. It’s good policy and demonstrates the president is continuing to deliver on his promises to our nation’s seniors," said Judd Deere, a White House spokesperson. The White House did not make Meadows available for an interview.
CMS did not make Verma available for interviews and declined comment.
Democrats have dismissed the cards as a “gimmick” that will do little to achieve Trump’s 2016 campaign pledge of lowering drug prices.
“It’s a shameless stunt that steals billions from Medicare in order to fund a legally dubious scheme that’s clearly intended to benefit President Trump’s campaign right before Election Day,” said Rep. Frank Pallone (D-N.J.), the chair of the House Energy and Commerce Committee.
The administration previously ordered that Trump’s name appear on millions of stimulus checks sent out by the IRS this spring, which Democrats have alleged was an effort for the president to take credit for a congressional relief package.
Trump abruptly announced the drug-discount cards on Sept. 24, a last-minute decision that surprised even some of his own health officials, and after the administration's separate efforts to convince the pharmaceutical industry to pay for drug-discount cards collapsed.
"Nobody has seen this before. These cards are incredible," Trump said in his Sept. 24 address on what he billed as the "America First Healthcare Plan," promising that the cards "will be mailed out in coming weeks."
But inside the administration, four officials said that Trump and his advisers were searching for proposals to tout as health care accomplishments and latched onto the drug-discount cards just hours before the president’s scheduled address, leaving the health department scrambling to justify the idea.
"We basically didn't know until the public found out too," said one health official who's been consulted on trying to turn Trump's proclamation into policy.
"It's turning into this last-minute, thrown-together thing," said another HHS official involved in the effort.
The taxpayer-funded plan would cost $7.9 billion, including about $51 million to create and distribute the cards, and it would allow seniors to use the cards to help cover a portion of their out-of-pocket expenses for up to two years. The government would also spend $19 million sending letters to seniors this month that tout the plan, according to the draft proposal. Officials are still discussing whether that letter will come from Trump himself, said two officials.
The administration has since portrayed the taxpayer-funded drug-discount card plan as a "test" of whether the cards encourage Medicare beneficiaries to more regularly take their medicine while lowering their costs, using what is known as Section 402 authority. The plan has some parallels to a similar proposal that Meadows and other officials, including Medicare innovation chief Brad Smith, negotiated with the pharmaceutical industry this summer. The drug industry ultimately backed away from that plan, worried about the perception of politically aiding Trump’s reelection, The New York Times first reported.
Verma, the Medicare chief and a close ally of Vice President Mike Pence, has worked with Meadows to rush the plan across the past two weeks, said five officials. Verma also has embraced the plan despite its stated goal to dip into Medicare’s trust fund to cover any additional costs, which two officials said was a reversal of Verma’s yearslong position that the fund should remain untouched. Verma has repeatedly warned that the fund — which is largely paid for by taxes and Medicare premiums, comprises two smaller funds and is used to cover seniors’ health care — is at risk and insisted that it should be protected from political priorities like Democrats’ push for universal health care.
“The Medicare Trustees report projects the Medicare trust fund will run out by 2026,” Verma said in a speech last year, invoking actuaries' warning about the fund's dwindling resources to pay for hospital care. “Medicare for All advocates say they want free health care, but in the end, someone’s always picking up the tab. In this case, it’s American taxpayers.”
Lawmakers have previously warned that the fund is facing new economic and political pressures. "Prior to the COVID-19 pandemic, the Medicare trust funds were already on an unsustainable path," the Senate Republican Policy Committee warned last month, pointing to rapidly growing costs that Republicans said would burden taxpayers.
"The Medicare Trust Funds are not the Administration’s personal piggybank — they are taxpayer funds that are to be used for a specific purpose," senior Democrats wrote to Verma and Health and Human Services Secretary Alex Azar last month, citing a separate Trump administration effort to dip into the funds.
Meanwhile, career civil servants have raised questions about the Trump administration project's goals and the drug-discount plan's structure, concerns that have been echoed by outside experts.
"There are a lot of things that seem problematic," said Stacie Dusetzina, a Vanderbilt professor who's studied Medicare's drug program and reviewed the draft proposal obtained by POLITICO.
"It's an incredibly large amount of money to be spending [and] it's not really solving any systemic problem," Dusetzina said, adding that the planned cards are a "poorly designed experiment" that she believes will likely fail to reveal new insights.
For instance, Dusetzina said that a true test would involve sending the cards to a randomly selected group of Medicare beneficiaries and then comparing their behavior versus a "control" group of beneficiaries who do not receive the cards.
Instead, the Trump administration plans to send the cards to all Medicare drug plan enrollees who are not already receiving assistance as low-income patients, according to the draft guidance, complicating efforts to compare the effect.
Rachel Sachs, a professor at the Washington University School of Law who studies the drug program, said that the plan to tap the Medicare trust fund to pay for Medicare beneficiaries’ drug-discount cards could end up “returning patients’ premium payments to them, in effect.”
The Trump administration has also portrayed the cards as an effort to make progress on Trump's pledge to lower drug costs, a 2016 campaign promise that's flagged amid legal challenges and the president’s own abandoned proposals. But three health officials told POLITICO that they view it as a politically driven attempt to shore up the president's flagging poll numbers with seniors before next month's election.
“This is a solution in search of a problem and a bald play for votes in the form of money in pockets,” said an HHS official who’s reviewed the draft guidance.
Some Republicans have said that there is a precedent for invoking Medicare's waiver authority to craft sweeping reforms to the program, noting that the Obama administration used the same authority to issue billions of dollars in bonus payments for Medicare's private plans in 2012. But those Obama-era efforts prompted a probe from congressional Republicans who claimed that Democrats were attempting to blunt the effects of the Affordable Care Act's cuts to Medicare ahead of the 2012 midterms. The Government Accountability Office also recommended in 2012 that the Obama administration cancel the project, which it did not do.
Meanwhile, White House officials have pressed the health department this week on aspects of the planned cards, such as the design, which could include some reference to Trump’s name, said three officials. A White House official said that there was no plan to have the president's name on the cards.
Some of the president's advisers have grown attached to the idea of a drug policy that Trump could physically tout, one current and one former official said.
"This idea was kicking around for months," said a former HHS official, who recalled discussions of the so-called "Trump cards" in summer 2019. "It was kind of a joke among pharma lobbyists for a long time."
You can read the full article by Dan Diamond here.