The Truth About Trump’s New Drug Price Proposal

Plus, digger a deeper deficit hole By Yuval Rosenberg Federal Deficit Jumps to $779 Billion Despite a strong economy and robust job market, the federal budget deficit swelled to $779 billion in fiscal 2018, up $113 billion from 2017, according to [final numbers]( released Monday by the Treasury Department. The 17 percent increase from 2017 brought the deficit to the highest level in six years. As a share of the economy, the deficit was 3.9 percent, up from 3.5 percent the year before. The deficit grew as tax revenues failed to keep pace with rising government spending. Revenues were roughly flat, up 0.4 percent over 2017, while spending increased by 3.2 percent, driven by higher spending on the military (up $32 billion, or 5.6 percent), Social Security (up $39 billion, or 3.9 percent), Medicaid (up $14.5 billion, up 3.9 percent) and disaster relief (up $12.4 billion, or 140 percent). Interest on the debt rose to $325 billion, up $62 billion over 2017. Corporate income tax revenues fell from $297 billion to $205 billion. Individual income tax receipts, meanwhile, grew from $1.59 trillion to $1.68 trillion. As a share of the economy, both revenues and spending were lower in 2018 than in 2017, but [revenues fell more sharply]( leading to the deficit increase. Trump administration officials have argued that the tax cuts passed last year will unleash faster economic growth, which would help offset the costs of the tax cuts and reduce the deficit over time. They’ve also sought to [lay the blame]( for the rising deficit on higher government spending, even as critics argue that the deficit [would have fallen]( in 2018 if not for the Republican tax cuts. "The president is very much aware of the realities presented by our national debt," Mick Mulvaney, director of the White House Office of Management and Budget, said in a statement Monday. "America's booming economy will create increased government revenues — an important step toward long-term fiscal sustainability. But this fiscal picture is a blunt warning to Congress of the dire consequences of irresponsible and unnecessary spending." The bottom line: It’s unusual to see deficit soaring in a briskly growing economy. “What’s going on is revenues are not rising when they otherwise would be,” Marc Goldwein of the Committee for a Responsible Federal Budget told [The Washington Post](. “The economy is growing by 5 to 6 percent, and revenue is basically flat.” While Trump administration officials and Republicans have argued that their tax cuts would pay for themselves, that isn’t happening thus far. The deficit is projected to keep growing, potentially reaching $1 trillion as soon as fiscal 2019 — and staying above that level barring some action by lawmakers. “Over the course of the next year, new spending priorities will dig the hole deeper,” said G. William Hoagland, senior vice president at the Bipartisan Policy Center. “Damage from unforeseen natural disasters such as hurricanes will also require federal assistance and add to the growing deficit.” Trump Administration Seeks to Force Drugmakers to Post Prices in Ads. Will It Work? The Trump administration is pushing ahead with its plan to require drugmakers to disclose their list prices for medications in consumer advertising, much as they warn about possible side effects. The move, part of the administration’s [blueprint]( to lower drug prices, was [announced]( Monday by Health and Human Services Secretary Alex Azar. “Patients deserve to know what a given drug could cost when they’re being told about the benefits and risks it may have. They deserve to know if the drug company has pushed their prices to abusive levels. And they deserve to know this every time they see a drug advertised on TV,” Azar [tweeted](. Experts question whether the new rule would be effective and warn that it “could even confuse patients, considering the complexities of drug pricing,” [say]( Politico’s Dan Diamond and Sarah Karlin-Smith, who were first to report news of this week’s proposed regulations. The pharmaceutical industry on Monday tried to preemptively push back on the proposed regulation. "We believe just including list prices is not sufficient and would be misleading for several reasons," Stephen Ubl, CEO of PhRMA, the industry’s main lobbying arm, said on a press call, according to [Politico](. The actual out-of-pocket prices patients pay can vary significantly from drugs’ list prices as a result of insurance plan coverage and negotiated discounts provided to pharmacy benefit managers. Ubl warned that posting list prices could discourage patients from seeking medical care. PhRMA said that its member companies will, as of April 15, begin using television ads to direct consumers to information about drug costs. Azar said that didn’t go far enough. “The drug industry remains resistant to providing real transparency around their prices, including the sky-high list prices that many patients pay,” he said in a statement. “So while the pharmaceutical industry’s action today is a small step in the right direction, we will go further and continue to implement the President’s blueprint to deliver new transparency and put American patients first.” The issue could wind up in court, as PhRMA indicated it will likely challenge the administration’s plan on First Amendment grounds. Trump’s New Medicaid Chief Is a Medicaid Critic The Trump administration has reportedly named [Mary Mayhew]( a former Maine health commissioner, as deputy administrator and director of Medicaid and the Children’s Health Insurance Program (CHIP). From the [Portland Press Herald]( “Mayhew, like [Maine Gov. Paul] LePage, was an ardent opponent of expanding Medicaid, which was made allowable at the state level under the Affordable Care Act. Maine voters approved expansion through referendum but that expansion still hasn’t been funded and has been mired in legal challenges by LePage. … Mayhew also played a major role in eliminating certain adults from the state’s Medicaid program and also fought several efforts to expand it by Democratic lawmakers.” New York magazine’s [Intelligencer]( used this headline for news of the appointment: “Fox lands job guarding henhouse.” GOP Scrambles to Send a Pre-Election Message on Pre-Existing Conditions [From The Hill’s Jessie Hellmann]( “Thirty-two of the 49 GOP incumbents in races deemed competitive by the nonpartisan Cook Political Report have backed congressional measures on pre-existing conditions in the past six weeks, according to an analysis by The Hill. … Of the 23 Republican incumbents who are considered to be most in danger of losing their seat, according to Cook Political Report, 18 co-sponsored at least one of the resolutions or bills since September.” The Republican scramble to support such patient protection legislation — even though the resolutions and bills in question reportedly aren’t expected to advance — represents “a course reversal for members of a party that for years railed against ObamaCare, also known as the Affordable Care Act (ACA), and called for its repeal.” A recent poll by the Kaiser Family Foundation found that [72 percent]( of Americans said it is “very important” that protections for patients with pre-existing conditions remain law, and 60 percent said that they or someone in their household suffers from such a condition. Chart of the Day Enrollment in Medicare Advantage, the government-funded private health plans that serve as an alternative to traditional Medicare, has doubled since 2010, writes Phil Galewitz at [Kaiser Health News](. More than a third of Medicare beneficiaries now have an Advantage plan, contrary to predictions by experts that the Affordable Care Act would lower enrollment as a result of reduced federal payments to the plans. The Centers for Medicare & Medicaid Services now expects enrollment in Medicare Advantage plans to jump to 23 million next year. “Seniors have long been attracted to Advantage plans because they often include benefits not available with government-run Medicare, such as vision and dental coverage,” Galewitz writes. “Many private plans save seniors money because their premiums, deductibles and other patient cost sharing are lower than what beneficiaries pay with original Medicare. But there is a trade-off: The private plans usually require seniors to use a restricted network of doctors and hospitals.” Another key stat from Galewitz: “For-profit Medicare Advantage insurers made a [5 percent profit margin]( in 2016 — twice the average of Medicare plans overall, according to the Medicare Payment Advisory Commission, which reports to Congress. That’s slightly better than the health insurance industry’s overall 4 percent margin reported by Standard & Poor’s.” Related: [Medicare Advantage Plans Found to Improperly Deny Many Claims]( – New York Times Photo of the Day This artwork, a piece called “The Republican Club” by Andy Thomas, is [hanging in the White House](. The Washington Post [interviewed]( the artist. 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Judis, New York Times - [The Idea That Action Against Climate Change Will ‘Destroy the Economy’ Couldn’t Be More Wrong]( – Jared Bernstein, Washington Post - [Why College Costs Soared as More Students Enrolled]( – John Thelin, Washington Post Copyright © 2018 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com, or through Facebook. Our mailing address is: The Fiscal Times 712 Fifth AvenueNew York, NY 10019 [Add us to your address book]( If someone has forwarded this email to you, consider signing up for The Fiscal Times emails on our [website](. Want to change how you receive these emails? You can [update your preferences]( or [unsubscribe from this list](