Medicare Drug Price Negotiation Included in Manchin, Schumer Deal

Although the climate change, deficit reduction and tax provisions garnered most of the attention, healthcare figures prominently in the agreement between Sens. Joe Manchin (D-West Virginia) and Chuck Schumer (D-New York) that was announced this afternoon.

The proposed legislation, which has been named the Inflation Reduction Act of 2022, would empower Medicare to negotiate drug prices for the first time and would cap Part D out-of-pocket costs at $2,000 per year.

Manchin and Schumer also agreed to extend to extend the expiring enhanced Affordable Care Act subsidies included in the 2021 American Rescue Plan Act for three more years 2025.

A one-page summary of the bill says that prescription drug pricing reform will yield $288 billion in savings over 10 years, or almost 40% of the $739 billion in revenues the package is designed to produce.

On the spending side, the summary says that the extension of the ACA subsidies through 2025 will cost $64 billion, which is dwarfed by the $369 billion for energy security and climate change and $300 billion for deficit reduction.

Manchin’s opposition to the $1.8 billion Build Back Better bill last year effectively killed that legislation. Attention then shifted to the possibility of a “skinny” version of the legislation that would include the politically popular healthcare provisions. But the prospects of even that pared down legislation seem to dim to extinction a couple of week ago when Manchin said he wouldn’t support climate change legislation.

The narrative of much of the coverage today was that Manchin reversed course.

The New York Times headline said, “Manchin, in Reversal, Agrees to Quick Action on Climate and Tax Plan.”

“Manchin surprisingly announces spending deal with Schumer -- including health care, climate,” was the ABC News headline. And the Guardian headline was “U-turn as Manchin agrees deal with Democrats on major tax and climate bill.”

Fox Newspivoted to reaction to the deal: “Lawmakers react after Manchin, Schumer agree to reconciliation deal: 'Build Back Broke'” was headline on the main story this evening.

Schumer, the Senate majority leader, now must shepherd the bill through the Senate in a legislative process called reconciliation, which requires only a majority for approval. For the bill to become law, it would also have to pass in the House, where the Democrats have only a slim, nine-vote majority.

In a statement posted on his Senate office website, Manchin mentioned the healthcare provisions of the bill only in passing. Instead, it dwells on inflation, tax fairness and energy policies.

“The Inflation Reduction Act of 2022 invests in the technologies needed for all fuel types – from hydrogen, nuclear, renewables, fossil fuels and energy storage – to be produced and used in the cleanest way possible. It is truly all of the above, which means this bill does not arbitrarily shut off our abundant fossil fuels,” says statement from West Virginia Democrat.