- 21st Century Cures Act (Cures Act)
Working / Not Working:
- The biggest benefit of the ACA is that it slows the rise of health care costs. It does this by providing insurance for millions and making preventive care free. This means people receive treatment before they need expensive emergency room services. In 2016, the cost of health care services increased 1.2 percent for the year. That’s much less than the price increase of 4 percent in 2004.
- It requires all insurance plans to cover 10 essential health benefits. These include treatment for mental health, addiction, and chronic diseases. Without these services, many patients wind up in the emergency room. Those costs are passed onto Medicaid and therefore the taxpayer.
- Insurance companies can no longer deny anyone coverage for pre-existing conditions. They can’t drop them or raise premiums if beneficiaries get sick.
- It eliminates lifetime and annual coverage limits. Insurance companies used this to contain costs to $1 million per year. Beneficiaries who exceeded that limit had to pay 100 percent of costs.
- Children can stay on their parents’ health insurance plans up to age 26. As of 2012, more than 3 million previously uninsured young people were added. This increased profit for insurance companies. They receive more premiums from these healthy individuals.
- States must set up insurance exchanges or use the federal government’s exchange. Either method makes it easier to shop for plans.
- The middle class (earning up to 400 percent of the poverty level) receive tax credits on their premiums. It expands Medicaid to 138 percent of the federal poverty level. It provides this coverage to adults without children for the first time.
- It eliminates the Medicare “doughnut hole” gap in coverage by 2020.
- Businesses with more than 50 employees must offer health insurance. They receive tax credits to help with the costs.
- It lowers the budget deficit by $143 billion by 2022 according to the Congressional Budget Office. It does this in three ways. First, it reduces the government’s health care costs. Second, it raises taxes on some businesses and higher income families. Third, it shifts cost burdens to health care providers and pharmaceutical companies.
- Three million to 5 million people lost their employment-based health insurance. Many businesses found it more cost-effective to pay the penalty and let their employees purchase insurance plans on the exchanges. Other small businesses find they can get better plans through the state-run exchanges.
- Thirty million people never had company plans and relied on private health insurance. Insurance companies canceled many of their plans because their policies didn’t cover the ACA’s 10 essential benefits. For those who lost those cut-rate plans, the costs of replacing them are high. The ACA requires services that many people don’t need, like maternity care.
- Increased coverage raised overall health care costs in the short term. That’s because many people received preventive care and testing for the first time. It was expensive to treat illnesses that had been ignored for decades.
- The ACA taxed those who didn’t purchase insurance. But many avoided the tax through an ever-expanding list of exemptions.
- Four million people chose to pay the tax rather than pay for coverage. The Congressional Budget Office estimated they paid $54 billion.
- In 2013, the ACA raised the income tax rate for 1 million individuals with incomes above $200,000. It also raised taxes for 4 million couples filing joint returns on incomes exceeding $250,000. The rate increased from 1.45 percent to 2.35 percent on income above the threshold. They also pay an additional 3.8 percent Medicare tax. That applies to the lesser of income from dividends, capital gains, rent and royalties or income above the threshold.
- Starting in 2013, medical device manufacturers and importers paid a 2.3 percent excise tax. Note: This tax was suspended for 2016-2018. Indoor tanning services paid a 10 percent excise tax. This might discourage those businesses from hiring new employees.
- Starting in 2013, families could deduct medical expenses that exceeded 10 percent of income. Before, they could deduct any expenses that exceeded 7.5 percent of income. The Tax Cut and Jobs Act restored the deduction to the 7.5 percent limit for 2018 and 2019.
- Pharmaceutical companies pay an extra $84.8 billion in fees between 2013 and 2023. That pays for closing the “doughnut hole” in Medicare Part D. Drug costs could rise if the companies pass this onto consumers.
- In 2022, insurance companies will be assessed a 40 percent excise tax on “Cadillac” health plans. These are plans with annual premiums exceeding $10,200 for individuals or $27,500 for families. Many of these plans are for people in high-risk pools, such as older workers or those with dangerous jobs. Most of the tax will be passed onto the companies and employees, raising premiums and deductibles. (Sources: “Federal Budget Bill to Delay ACA’s Cadillac Tax & Suspend Two Other Taxes,” Kistler Tiffany Benefits, December 21, 2015. “Cadillac Tax Explained,” Kaiser Health News, March 18, 2010. “What Obamacare Means for Taxes,” Smart Money, June 28, 2012.)
Working / Not Working:
21st Century Cures Act (Cures Act)
Provides about $6.3 billion in funding, mostly for the National Institutes of Health (NIH), the major supplier of research funding for American universities and research institutions. Although the NIH faces very little political opposition, the agency had been deprived of adequate funding for at least a decade.
Provides funding for mental health care. It endorses parity in payment in most private and some federal health insurance plans for physical health and mental health services and strengthened suicide prevention programs. It also provides much-needed funding to confront the opioid epidemic.
In several key ways—including notably the use of surrogate markers instead of better forms of evidence to show the drug benefits—the Act threatens public health by lowering U.S. Food and Drug Administration (FDA) standards for new drugs and medical devices.
The Act was originated and promoted by the major pharmaceutical companies who employed over 1,300 lobbyists to promote the bill. The companies were concerned that FDA used strict methodological standards to evaluate the efficacy and safety of new pharmaceutical products. The companies argued that zealous concern for efficacy and safety deprived patients of new cures, and they succeeded in adding provisions to the Act that allow FDA to become less rigid.
Opponents were concerned that the Act deemphasized methodologies that have long been used to evaluate the safety and efficacy of new drugs. Indeed, supporters of the Act hoped to reduce reliance on the double-blind randomized clinical trial, the gold standard for establishing that medicines cause improvements in health outcome. Pharmaceutical companies regarded these methods as outdated and suggested that new drug licensing should depend on preclinical studies, including animal studies, case histories, and in some cases just the clinical experience of doctors.
Diana Zuckerman and her colleagues at the National Center for Health Research recently studied the approval of new cancer drugs by FDA between 2008 and 2012. Among 54 new drug approvals, 36 had been evaluated on the basis of surrogate markers. In cancer studies, the surrogate measure is often tumor shrinkage. We might assume that a drug that shrinks tumors—the surrogate measure—should help people live longer higher-quality lives—the outcome. Yet, Zuckerman and her colleagues found that, for 18 of the 36 drugs, there was no evidence of improved life expectancy. The manufacturers never reported data on survival for another 13 of the drugs. It can be assumed that the companies would have reported improved survival data if such evidence existed. So, for 31 of the 36 of newly-approved cancer drugs, there was apparently no evidence that the treatment increased life expectancy.
The strategy to get more drugs approved by loosening standards is working—but not necessarily for patients’ benefit. In 2016, the same year Congress passed the 21st Century Cures Act, FDA approved only 22 new drugs and averaged 33 new approvals per year between 2009 and 2017. In 2018, the first full year after passage of the Cures Act, the agency approved a record 59 new drugs.
Our Policy Proposal (s):
Cost & Funding: