WASHINGTON ― The Senate is expected to kick off a marathon session of votes on Democrats’ major climate and health care legislation on Saturday, a grueling process required to pass the bill under a simple majority.
The bill ― which Democrats are calling the Inflation Reduction Act ― would give President Joe Biden and his party another major legislative victory ahead of November’s midterm elections. It would make historic investments in clean energy, significantly reducing the nation’s output of greenhouse gases, while taking several steps to make medical care more affordable, especially when it comes to the prices of prescription drugs.
Democrats received mostly favorable news overnight from the Senate parliamentarian, the chamber’s rules arbiter, on what provisions can remain in the bill under the so-called reconciliation process.
The parliamentarian, Elizabeth MacDonough, OK’d the clean energy investments and most of the key health care reforms in the bill. But she issued a mixed verdict on proposed “inflation caps” that would penalize drugmakers for raising prices of medications more quickly than the prices of other goods, according to Senate Democratic leaders.
Democrats have wanted to apply the caps to drugs purchased by private insurance as well as Medicare. But the parliamentarian said the private caps would violate requirements that policy changes must directly and significantly affect the federal budget.
There’s no problem with applying the inflation caps to Medicare, the parliamentarian ruled.
The clearest impact of losing the private caps would be on the bill’s math. The Congressional Budget Office expected the private caps to generate $38 billion in revenue over 10 years, because private insurance rates would come down, leading to higher wages that would generate higher taxes. That’s not a huge amount in the context of a bill with expenditures in the hundreds of billions of dollars, but every dollar matters given the delicate budget math and vote counts Democratic leaders have to manage.
Making sure the bill reduces the deficit is a key priority for Sen. Joe Manchin (D-W.Va.), who largely wrote the bill. It’s unclear whether the parliamentarian ruling threatens his support.
The precise impact on drug prices that affect insurers, employers and individuals with private coverage is less clear, in part because market dynamics are so complex. But employers in particular stood to gain because of the effects on their employee health plans.
“It means less revenue and no control over prices outside of Medicare,” Larry Levitt, executive vice president at the Henry J. Kaiser Family Foundation, told HuffPost on Saturday. “This will weaken support for the plan from employers, jettisoning a component that would have meant a precedent-setting role for the federal government in restraining health care prices outside of public programs.”
At the same time, the best-known and most hotly debated piece of the Democratic prescription drug agenda — giving the federal government power to negotiate prices of some drugs in Medicare — survived the parliamentarian review. Another major reform, a limit on out-of-pocket expenses for Medicare beneficiaries, also won parliamentarian approval, Senate Finance Committee spokesperson Taylor Harvey told HuffPost.
The inflation cap may not be the only casualty of parliamentarian review. Limits on what people with private insurance pay for insulin also got a thumbs-down, according to a report in STAT News.
Parliamentarian recommendations are technically advisory opinions and aren’t binding. Democrats could overrule the parliamentarian by forcing a simple majority vote, but that would likely require the support of all 50 Democrats and Vice President Kamala Harris as the tie-breaker.
Senate aides on Saturday said Democrats might try that at least on the insulin cap, though prevailing would ultimately require Democrats holding together on a vote to disregard the parliamentarian recommendation.
In her statement announcing her support for the bill with certain changes, Sen. Kyrsten Sinema (D-Ariz.) said she would move forward “subject to the Parliamentarian’s review.” That could mean she won’t support overruling the parliamentarian to include an insulin price cap in the bill.
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