WASHINGTON — A month ago, President Donald Trump surprised much of his own government when he announced in North Carolina that he would soon send $200 discount cards to more than 30 million older Americans to offset the cost of prescription drugs.
The promise set off a scramble among health and budget officials unaware that such a policy was being considered. At first, they rushed to figure out whether such a legally and logistically complicated plan could be delivered in October, as Mark Meadows, the White House chief of staff, had vowed in an interview the day of the speech. When many questioned its prudence before an election, they then tried to hand off the president’s $8 billion hot potato.
Now, less than two weeks before the election, officials acknowledge that Medicare recipients will not be getting their $200 cards this month.
“This whole thing looks like a real stretch to me, and is probably going to collapse soon as questions about it escalate,” said James C. Capretta, a resident fellow at the American Enterprise Institute, and a top budget official during the George W. Bush administration.
The drug card promise was presented as a centerpiece of Trump’s health care agenda, what he called “another historic provision to benefit our great seniors.” Such boasts are becoming routine. Since the 2016 campaign, the president has repeatedly promised that a comprehensive overhaul of the health care system was imminent, that some measure was coming to protect people with preexisting medical conditions, regardless of his push to repeal the Affordable Care Act and its protections, and that prescription drug prices were coming down substantially.
When Lesley Stahl of the CBS News program “60 Minutes” sat down with the president this week, the White House presented her with a thick book supposedly full of health care successes. But Trump’s policies have largely failed to materialize.
In this case, the proposal that came out of Trump’s mouth so alarmed administration officials that they have spent the intervening weeks handing the policy back and forth, hoping to avoid affirming anything before the election that could subject them to congressional and legal scrutiny.
The plan was hastily devised in the weeks after the collapse of an agreement between the White House and pharmaceutical industry to lower Medicare drug costs. In negotiations, Mark Meadows, the White House chief of staff, had insisted that drugmakers pay for $100 discount cards that would be mailed to seniors before November, which some in the industry referred to as “Trump cards.”
Days later, Meadows approached White House officials who work on health policy, steering his new idea of a government-funded discount card to the Centers for Medicare and Medicaid Services, which is run by Seema Verma, a close White House ally. Administration lawyers and officials in the White House budget office began to assess the plan, and are still doing so.
Many of the officials assigned to enact the policy view it as legally dubious. Generally, major changes in Medicare policy require Congress to pass legislation. And numerous officials balked at the election-eve timing of the plan, fearing liability if they delivered what the White House wanted. Meadows acknowledged that pushback on Wednesday.
“I think that was a concern that there might have been a look that this was done for a political motivation,” he said. “That’s not the case.”
Under the Hatch Act, government officials are prohibited from using government resources to engage in partisan political activity, and from commanding other government employees to do so. Paul Seamus Ryan, a vice president at the government watchdog group Common Cause, said that if explicit communications surfaced linking the discount cards to the president’s reelection, health officials could face punishment.
“It is likely these are people who could face criminal and civil legal liability if they go through with this scheme and it is for a political purpose,” he said.
In recent weeks, Bob Charrow, the top lawyer at the Department of Health and Human Services, became concerned by the timing of the move, warning colleagues that the policy could run afoul of election laws, according to senior administration officials with direct knowledge of a memo Charrow circulated. Department lawyers asked administration officials to consult with the Justice Department, where the public integrity division prosecutes election crimes by public officials. Charrow’s concerns were reported earlier by Politico.
White House officials have still vowed to push ahead. Meadows told reporters Wednesday morning that plans would be finalized within 48 hours, but that the cards would not be sent until after Election Day.
Senior officials familiar with the policy said it was unclear what Meadows was referring to, and were uncertain whether it would in fact be finalized this week.
The proposal has already been stalled by multiple levels of review. The Centers for Medicare and Medicaid Services is the primary agency responsible for it, since the drug cards are being justified as a “demonstration project” under Medicare. But officials there believe that the staff of the health and human services secretary, Alex Azar, should have to approve the plan as well, because of a recent memo the secretary wrote emphasizing his authority over new policy from health agencies.
Members of Azar’s staff have said such Medicare demonstration programs do not fall under the purview of that memo and do not require the secretary’s approval, according to a senior administration official.
“Secretary Azar has always been supportive of ideas to lower American seniors’ out-of-pocket drug costs — including the president’s copay card proposal and the plan to deliver discounts directly to seniors at the pharmacy counter,” Caitlin B. Oakley, a Department of Health and Human Services spokeswoman, said in a statement.
The project must also be cleared by officials at the White House Office of Management and Budget, which has traditionally required that such projects do not add to the deficit. The Treasury Department is involved in procuring the cards, according to officials familiar with the plan.
Health officials are trying to set up the program as a kind of experiment allowed in Medicare to test policy ideas that would improve health care and save the program money. The drug cards, which would be funded through a Medicare trust fund used to pay doctors, would help Medicare evaluate whether lowering drug copayments could increase seniors’ use of needed drugs and lower their medical spending on doctor’s visits and hospitalizations.
Researchers who study the Medicare drug benefit say the proposal has little value. Numerous studies have established that lowering the costs of certain drugs can improve patients’ use of medicines and reduce health spending. But the design of the proposed program, with a relatively small discount, no randomized control group and no targeting of the discounts toward particular populations or categories of drugs, is unlikely to teach Medicare much or save the program any money. The timing of the program, during a pandemic that has altered the normal patterns of medical use, could also confound any results.The drug discount card would go to the 39 million Medicare beneficiaries who do not quality for a low-income subsidy, according to a draft document published by Politico and confirmed by senior officials working on the policy. The document says officials would use seniors who received the cards but failed to activate them as a control group.
“If I submitted a grant application to do this, I would be laughed out of the room,” said Stacie Dusetzina, an associate professor of health policy at Vanderbilt University, who studies prescription drug policy. “It’s very frustrating to think that so many dollars will go into making this look like a legitimate effort.”
There is some precedent for using the Medicare demonstration program in politically expedient ways. After the passage of the Affordable Care Act, the Obama administration used the same legal authority to set up an $8 billion program to test the effects of financial bonuses to private Medicare plans that offered high-quality care. The Government Accountability Office and the Medicare Payment Advisory Commission said the program, which lasted two years, was not a real policy experiment.
Brian Blase, a former Trump White House health care official, saw several parallels between the Obama administration program and the drug discount plan. “I do think it’s fair to ask questions of what’s being demonstrated here,” he said, adding, “The executive branch just can’t willy-nilly spend money.”
Democrats in Congress began requesting an investigation even before the program’s details were announced. Reps. Frank Pallone Jr. of New Jersey and Richard E. Neal of Massachusetts and Sen. Ron Wyden of Oregon, the top Democrats on the committees that oversee Medicare, called on the Government Accountability Office to scrutinize the plan, and have asked Azar for copies of Charrow’s memo and a draft of letters that could be used to announce the program. Another group of Democratic lawmakers has already asked for the program to be terminated.
Some Republicans are also concerned, including Sen. Chuck Grassley of Iowa, the Finance Committee chairperson, who has spent years attempting to pass legislation lowering prescription drug costs.
Priscilla VanderVeer, vice president of public affairs for the Pharmaceutical Research and Manufacturers of America, the main trade group for the industry, said, “One-time savings cards will neither provide lasting help, nor advance the fundamental reforms necessary to help seniors better afford their medicines.”Discussions continue about whether letters can be sent to Medicare beneficiaries notifying them that the cards are coming. White House officials at one point suggested that Trump could sign them, an idea that some in the health department argued would be deeply inappropriate.
But even the letters, which the draft proposal estimates will cost $19 million to produce and send, are now on hold until after the election, according to two senior administration officials, who said they could be styled as notices without signatures on them.