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Cost of Prescription Drugs: Price vs. Progress

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Listen to “Cost of Prescription Drugs: Price vs. Progress” on Spreaker.

Democrats in Congress are pushing legislation to force pharmaceuticals to lower the cost of prescription drugs.  The goal is to ensure that all Americans can afford the medicines they need to preserve their health.

Pharmaceutical companies are pushing back, stressing that researching and developing successful new medicines costs billions of dollars, and the unsuccessful efforts cost a lot of money too.  They say prescription drug prices cannot be artificially lowered or else efforts to bring new and better treatments to market will be derailed.

How exactly would the legislation from Democrats work?  Why are prescription drug prices so much lower in other countries than they are in the U.S.?  What can be done to help patients afford the drugs they need right now without stalling progress on future treatments?

We tackle all of these questions and more with Chris Jacobs, CEO of the Juniper Research Group and author of “The Case Against Single-Payer.”

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Why Warren’s Math Won’t Work

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Listen to “Why Warren’s Math Won’t Work” on Spreaker.

After taking heat from her Democratic rivals for months, Sen. Elizabeth Warren released her plan for covering the cost of government-sponsored health care for all Americans.

Warren says the price tag is roughly $52 trillion over ten years, yet insists she can pay for it by taxing billionaires, cracking down on tax cheats, and streamlining administrative costs of the program.

Chris Jacobs is CEO of the Juniper Research Group and author of “The Case Against Single Payer.” He tells me why all three of Warren’s ideas fall far short of meeting the expected costs, why two of her three ideas are contradictions of one another, and why the math is laughably wrong on the tax enforcement plan. He will also explain what kind of tax increases will really be needed to pay for Warren’s health plans and why he suspects she won’t admit that she’ll have to tax everyone.

Listen to the full podcast with Chris Jacobs.

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GOP Health Care Battle Heads to the Wire

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President Trump and GOP leaders are furiously trying to find the votes necessary to pass the American Health Care Act, and while some news ‘yes’ votes are trickling in, the conservative pushback is also intensifying.

By most vote counts, Republicans are still a handful of votes away from being able to send the AHCA on to the Senate.  With all Democrats expected to oppose the bill, GOP leaders can only afford to lose 21 members on the final tally.  Unofficial whip counts in recent hours show 25-26 Republicans as firm or likely ‘no’ votes.  Sen. Rand Paul expects at least 35 Republicans to oppose it and predicts leaders will scratch the vote.

But Trump and GOP leaders have been able to sway a few more Republican votes to the ‘yes’ column, including Rep. Tom McClintock, R-Calif.

“We have to ask ourselves, if that’s all we get, does that give us a better system than the one we have right now?” said McClintock.  “It’s far, far from perfect, but it does move us in the right direction.  I am satisfied that, overall, it does give us a better system than the one we’ve got right now.”

McClintock believes Republican leaders made a mistake in insisting on moving a bill that does not address all needed solutions through the reconciliation process.

“The biggest problem is they’re using this convoluted process called reconciliation that doesn’t allow them to repeal the entire act, doesn’t allow them to replace the entire act and requires a lot of additional administrative regulations, which are going to be restricted by what the most liberal court in the country allows them to do, and by follow-up legislation whose future in the Senate is highly dubious,” said McClintock.

McClintock says Republicans and Democrats are responsible for the “convoluted” approach.

“Leadership chose that path precisely because of Democratic obstruction in the Senate.  The reconciliation process allows us to bypass that 60-vote cloture threshold and pass the bill with a simple 51 votes,” said McClintock.

However, he believes that a full repeal with all the market based reforms could pass the House and Senate if GOP leaders were willing to play hardball.

“I think the pressure on those eight Democratic holdouts would have been irresistible, particularly if (Senate Majority Leader) Mitch McConnell said, ‘If you want to filibuster this one, you’re going to have to actually go down there and filibuster it.  You’re going to have to stand by your desks and talk until you drop.  The record is 58 days.  Good luck breaking that.  When you’re done, we’re all going to vote,'” said McClintock.

However, McClintock says that option is off the table and he’s comfortable voting for the current bill.

“Those were arguments I made months ago and lost months ago.  We now have this bill in front of us and I think it more than merits an ‘aye’ vote,” he said.

McClintock wishes there were provisions in the bill allowing purchase of health insurance across state lines and that yanked out the Obamacare insurance regulations that are considered key drivers of premium and deductible increases.

But he says there is a lot to like in the bill as well.

“It ends the individual mandate that forces people to buy products they don’t want.  It ens the employer mandate that’s trapped a lot of low-income workers in part-time jobs.  It begins to restore consumers’ freedom of choice, which I think is the best guarantee of quality and value in any market,” said McClintock.

“It allows people to meet more of their health care needs with pre-tax dollars.  It relieves the premium base of the enormous cost of pre-existing conditions by moving those expenses to a block-granted assigned risk pool,” he added.

But while there are some notable improvements in the AHCA, for conservatives who have pushed “repeal and replace” since Obamacare became law seven years ago, the House bill simply fails to deliver on that promise.

“It’s good entitlement reforms in terms of some of the Medicaid reforms that are in the bill,” said Chris Jacobs, a former aide to Mike Pence and former Louisiana Gov. Bobby Jindal, who is now senior health policy analyst at the Texas Public Policy Foundation and CEO of the Juniper Research Group.

“But I think it’s far short of a full repeal.  It leaves Obamacare’s architecture in place when it comes to all the mandates and the insurance regulations that are driving up premiums.  We need to repeal those mandates and go back to respecting state sovereignty and the states’ role in regulating health care and health insurance,” said Jacobs.

GOP leaders have characterized the AHCA as a binary choice for their colleagues: either support the bill or support the existing health care system by default.  Jacobs is not buying that argument.

“That’s a false choice, the idea that we must do something, that this is something therefore we must do this has a flaw in that logic,” said Jacobs.

Sponsors of the AHCA say getting rid of the insurance regulations or “Obamacare architecture” is outside the bounds of what can be moved through reconciliation.  Jacobs says the handling of this very bill proves that is not true.

“I understand the limitations of the reconciliation process, but you have to at least try to repeal the major insurance regulations that are in there.  The bill amends some of them, repeals some of them and leaves others in place.  It’s an ideologically inconsistent position,” said Jacobs.

“If your position is we can’t do any of this because of Senate procedures, then why are we repealing some of them and modifying some of them.  If you can modify them, you can repeal them,” he said.

McClintock finally got on board with the AHCA after successfully sponsoring an amendment in the House Budget Committee that would provide an additional $75 billion  to help people afford health insurance as they transition from Obamacare subsidies to tax credits if the new bill becomes law.  He is also confident that within a few years, Americans will start to see noticeable price decreases in health coverage.

But that same manager’s amendment that satisfied McClintock also contains language that could threaten benefits for up to seven million veterans.  Jacobs says the technical glitch in the language shows the need to slow down the rush to pass the legislation and avoid ugly surprises after it becomes law, similar to what occurred with Obamacare.

As the furious battle for votes plays out, Jacobs hopes leaders pull back and rework the bill to honor the original campaign promises.

“There are folks negotiating now as we speak in the Freedom Caucus to repeal some of the insurance regulations and the mandates.  Hopefully that succeeds and we get to a better bill that conservatives can support,” said Jacobs.

McClintock says Republicans should not let the perfect be the enemy of the good.

“When you pull together a group of people to benefit from their combined wisdom, unfortunately you’re also going to get their combined follies, prejudices and misjudgments.  You can never get a perfect product out of this process.  What you can get is the product that is the most acceptable and moves us forward,” said McClintock.

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‘Let’s Do What We Said, Let’s Repeal Obamacare’

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Republican leaders are hoping to pass their health care replacement plan on Thursday, but the conservative sponsor of legislation to fully repeal the Affordable Care Act says the current GOP preserves far too much of the current system and must be rejected.

Rep. Jim Jordan, R-Ohio, is also a co-founder and former chairman of the House Freedom Caucus and has introduced legislation to fully repeal the Affordable Care Act, also known as the ACA or Obamacare.  Jordan is vigorously opposed to the current version of American Health Care Act, arguing this is not what Republicans promised voters since 2010.

“We’re not repealing Obamacare.  Even people who are for it, like Charles Krauthammer, has said it’s Obamacare-lite.  It keeps the Obamacare structure and that’s not what we told the voters.  If you don’t repeal Obamacare, you’re never going to bring down the cost of insurance for middle class and working class families,” said Jordan.

“So it is really that basic.  Let’s do what we said.  That’s what they sent us here to do.  Let’s actually repeal Obamacare.  A clean and complete repeal is what we’re after.  This doesn’t do it,” said Jordan.

The American Health Care Act, or AHCA, is vigorously endorsed by President Trump and House Speaker Paul Ryan, R-Wisc.  Ryan argues the plan does fulfill the promise to repeal and replace Obamacare.

Jordan laid out several areas he insists are key differences between a complete repeal and what the GOP plan does.

“We didn’t tell voters we were going to repeal Obamacare but we were going to keep some of the taxes in place, which the speaker’s plan does.  We didn’t say we were going to repeal Obamacare but take the Medicaid expansion and extend it for several years, which the speaker’s plan does,” said Jordan.

“We certainly didn’t say we’re going to repeal Obamacare and start this new program of refundable tax credits and repeal Obamacare and get rid of the mandate but keep this 30 percent surcharge that we tell insurance companies you have to levy on people who don’t maintain continuous coverage,” said Jordan.

The most disturbing issue for Jordan is Republicans getting ready to own a massive health care reform that he believes will not lower the cost of health insurance.

“This is just Obamacare in a different format, and because of that it will not bring down the cost of insurance.  It will not bring down premiums.  Therefore, middle class families are still going to see the ridiculous high levels they’ve seen over the last several years,” said Jordan.

Jordan and several other members of the House Freedom Caucus are demanding a full repeal of Obamacare, just as the GOP-controlled Congress did in 2015 before the legislation was vetoed by President Obama.

“The one thing we know about our plan is it’s passed before,” said Jordan.

So why won’t leaders bring up that same bill?

“They’re saying some people may not vote for that, which is amazing to me.  During election time you can do one thing, but once you get in office and it actually counts you can’t?  That’s what drives voters crazy,” said Jordan.

Jordan also doesn’t buy the GOP leadership’s three-step approach to reform, which includes this bill, letting Health and Human Services Secretary Tom Price roll back many of the regulations in the current law and then passing market-based reforms in a separate bill that will likely require 60 votes to clear the Senate.

“That’s a joke,” said Jordan.

“We know phase two is going to get tied up in court.  You saw what the courts have done on President Trump’s executive order on the travel ban.  You’ve seen how he reworked it and came back with something we know is consistent with the law.  And where is that right now?  It’s tied up in court.  So to think the left is not going to take Obamacare and tie it up in court is just ridiculous,” said Jordan.

As frustrating as it has been for full repeal proponents to plead their case with leadership, Jordan says the difference between conservatives and Democrats on the issue is like night and day.

“They view success as signing people up for government, Medicaid or Obamacare.  We define success as let’s put in place the policies that make insurance affordable so that people can pick the plan that meets their needs.  That’s what we’re trying to get accomplished,” said Jordan.

While Trump is vociferously supporting the GOP plan, Jordan is hopeful the president will be able to broker changes to the legislation that will rid the law of crippling insurance regulations dictating what has to be in all policies, allow for market based reforms that will drive competition and lower costs and repeal other burdensome regulations by statute.

Jordan, who met with Trump along with other Freedom Caucus members, says the White House has been far more accommodating than Republican leaders in Congress.

“We appreciate the outreach the White House did being willing to work with us.  Our leadership initially talked about this binary choice, take-it-or-leave-it approach, which I don’t think is helpful.  Since then I think they’ve been more open to talk with us, probably driven by the fact they don’t have the votes,” said Jordan.

With a vote planned for Thursday, Jordan suspects a scramble is underway to find more support for the AHCA.

“One thing I learned a long time ago is when leadership is out there saying they have the votes, that means they probably don’t have the votes.  Based on what I know from our members of the Freedom Caucus and some other people, I believe they do not have the votes, so we’ll see how negotiations go this week,” said Jordan.

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Lower Health Costs or Pay the Price

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The House Republican health care bill cleared another hurdle on Thursday, but one of the most fiscally conservative GOP lawmakers says the bill will never pass unless it acts to immediately reduce the cost of coverage and includes repeal of Obamacare’s burdensome regulations.

The House Budget Committee approved the American Health Care Act, 19-17.  Three Republicans voted against it, including Rep. Dave Brat, R-Va.

“The budget committee went forward with it, but some of the guys are getting promises that we’re going to have some fixes and some fairly significant fixes going forward,” said Brat, who believes the Republicans are heading toward disaster on their present course, largely because they don’t address health care costs effectively.

“Both conservative and liberal think tanks and health experts agreed that the current House bill maintains the current structure of Obamacare,” said Brat.  “You keep the individual exchanges. You keep the individual market and you keep the insurance regulations, so I don’t know how anyone expects the price of health care to go down.”

And without lower costs, Brat says Republicans are walking into a political buzz saw with no upside.

“That’s the big thing we have to fix and we all want Trump to be successful.  For him to be successful, we have to make those changes or in a few years we’ll be in another death spiral,” said Brat.  “It’s fairly simple.  Either you lower the price of this thing so people can afford it or else you’re going to pay the price politically.”

He says the key to driving costs down is to address insurance regulations, a priority President Trump has been pushing for months.

“Our leadership bill has prices going down 10 percent after three years.  So we’ve got price increases coming.  We’ve got to make sure that does not happen.  The biggest way you can prevent that is to get at the insurance regulations,” said Brat.

There’s also the issue of choosing what’s in a plan.  For example, Brat notes that because of the many requirements Obamacare mandates in every approved health plan, it’s impossible for young, healthy people to buy low-cost, high-deductible catastrophic plans.

GOP leaders currently argue that market-based reforms would be included in separate legislation from the first bill which deals mainly with taxation and mandates.  That’s the third phase of replacing Obamacare.  They also say regulatory repeal is not in the bill because Health and Human Services Secretary Tom Price can roll those back unilaterally.  That is phase two.

Brat is not impressed.

“The problem there is it’s not permanent.  We’ll have this kind of bumper pool every four years, when you switch administrations you’ll change health care for the whole country.  We want that that bucket number two, that Price is going to take care of, to be put into the bill itself,” said Brat.

He says allowing greater competition for coverage and including regulatory reform in the bill could salvage the legislation for many conservatives.

“I think if leadership goes forward with that and pushes it over to the Senate, that’ll get a lot of people to ‘yes.’  That could be the sweet spot,” said Brat.

How will this play out in the coming weeks?  Brat says Trump is the key.

“I don’t think we’re even close to having the votes, so Trump will come in and negotiate and put his foot down on a system that he wants.  He wants to increase competition across state lines and to reduce the costs for everybody so it’s affordable.  If we can get it done in a month or two, it can be signed, sealed and delivered if we can zap these insurance regulations,” said Brat.

He says those components would also allow Republicans, who ran on repealing and replacing Obamacare, to make good on their promises to the American people.

“We can put [a bill] together brick by brick but the key is you’ve got to start out with the glue.  Repeal, that was the promise.  Then move forward from that and build a scaffolding up from there,” said Brat.

“You want to start with free markets and then add a safety net.  You don’t want to start with socialism and then promise free markets later.  That never happens,” said Brat.

So why haven’t these ideas been in the bill from the start?  Brat suspects quite a few GOP senators are looking to dodge controversial votes.

“The Senate has become kind of a high noon tea society over there.  They’re not taking tough votes.  They don’t want this bill to come over in the first place.  I think they’re using that as a way to duck.  Even our side uses that as a way to duck from pushing through what we have to get through,” said Brat.

Brat also rejects the leadership’s argument that market reforms and regulatory repeal can’t be included in a reconciliation process.  He says that’s just not true.  He says the Senate can simply vote to determine if a provision is tax or budget-related.

He says getting this major overhaul done and done right is a matter of political will, and adds that not is the time to demonstrate that will.

“Let’s roll the TV cameras in there.  Let’s put that live in front of the American people so they can see the process of their own government at work for them, and I think we’ll have a big win,” said Brat.

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Battling the Bureaucratic Leviathan

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Galen Institute President Grace-Marie Turner explains how government and private sector bureaucracy teamed up to drive the price of health care out of reach for tens of millions of Americans and why the Affordable Care Act only made things far worse.  Turner also discusses why she believes the new Republican plan will succeed in bringing costs down and removing Washington from the doctor-patient relationship.  Finally, she explains the factors that must be addressed to lower the cost of prescription drugs.

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