On March 22, Secretary of Health and Human Services (HHS) Xavier Becerra testified before the Senate Finance Committee on the department’s fiscal year (FY) 2024 budget request. As lawmakers prepare to negotiate terms for a debt limit increase, the budget proposes to extend Medicare solvency by increasing taxes on high-income individuals, directing revenue raised through the net investment income tax to the Hospital Insurance trust fund, and expanding the HHS secretary’s authority to negotiate the price of certain high-cost drugs under the Medicare Drug Price Negotiation Program [refer to Washington Highlights, March 10]. The hearing preceded Becerra’s testimony before the House Appropriations Labor, Health and Human Services, Education, and Related Agencies Subcommittee [refer to related story].
In their respective opening statements, Chair Ron Wyden (D-Ore.) and Ranking Member Mike Crapo (R-Idaho) expressed disagreement regarding the president’s plan to reduce the deficit and ensure Medicare’s longevity. Wyden praised the president’s budget for demonstrating that “helping working families and the middle class get ahead and reducing the deficit are not mutually exclusive.” Wyden reiterated his commitment to securing Medicare’s solvency without cutting benefits, observing that Republicans’ proposals to balance the budget while sparing Medicare and Social Security “don’t add up.”
Crapo replied, “I want to make it clear, we are not talking about trying to reduce benefits in Medicare or Social Security for our seniors. What we are talking about is reasonable reforms that can help us get to some kind of fiscal restraint on our spiraling debt.” Crapo expressed concerns that certain provisions of the president’s budget request, including the administration’s proposed expansion of the drug negotiation program, would “risk harming health care access and affordability, for both current and future patients.” He also noted his objection to the president’s proposal to extend the life of the Medicare Hospital Insurance trust fund by raising certain taxes, stressing, “This unbalanced approach does nothing to address Medicare’s cost drivers. It would also punish the small business job creators and entrepreneurs who drive our economy.”
Sen. Bob Menendez (D-N.J.) expressed concerns about ongoing health care workforce shortages, underscoring his continued support for the AAMC-championed Resident Physician Shortage Reduction Act of 2021. He criticized the Centers for Medicare & Medicare Services (CMS) for their approach to distributing the 1,000 additional Medicare-supported graduate medical education slots provided by the Consolidated Appropriations Act, 2021 [refer to Washington Highlights, Dec. 23, 2020]. Menendez observed that Congress outlined “specific eligibility criteria for distributing these slots” and that the agency’s use of additional location-specific criteria “unfairly disadvantages states who have few geographic or population [Health Professional Shortage Areas],” such as New Jersey [refer to Washington Highlights, Jan. 13]. Menendez expressed his frustration with the agency, urging Becerra to work with him to ensure that the CMS abides by congressional intent when distributing future slots.
Several senators asked Becerra about the budget’s proposal to significantly expand Medicare’s ability to negotiate prices for certain high-expenditure drugs. Established under the Inflation Reduction Act of 2022 (IRA, P.L. 117-169), the drug negotiation program authorizes the HHS secretary to negotiate with pharmaceutical manufacturers prices for a limited number of high-expenditure drugs covered under Medicare Parts B and D [refer to Washington Highlights, Aug. 15, 2022]. The budget would authorize the secretary to negotiate pricing for a greater number of drugs and subject drugs to negotiation sooner after their initial launch date.
Sen. Thom Tillis (R-N.C.) expressed concerns that the legislation is already disincentivizing pharmaceutical companies from investing in research and development. Sen. Marsha Blackburn (R-Tenn.) concurred with his observation, arguing that the budget would, “prevent new drugs and therapies from coming to market.” Others spoke in support of the program, citing its potential to reduce prescription drug prices and improve access to care. Sen. Catherine Cortez Masto (D-Nev.) indicated her intention to introduce legislation that would extend the IRA’s inflation penalties to the commercial market.
Becerra is next scheduled to testify before several House committees during the week of March 27.