Changes Make Cures Bill More Responsible

To ameliorate some concerns with the original bill, a revised version of H.R. 6, or the 21st Century Cures Act, was recently released, aiming to accelerate the development of medical cures by, among other things, increasing funding to the National Institutes of Health and creating a Cures Innovation Fund. The House of Represenatatives is likely to take up the revised version of the legislation later this week.

Last month, we discussed the prior iteration of the bill, detailing how the anticipated $12 billion gross cost was offset by several changes, including some real health savings, the selling of 64 million barrels of oil from the Strategic Petroleum Reserve (SPR), and a timing shift involving Medicare's prescription drug benefit -- Part D. However, there were a few concerns with the bill that have caused it be revised.

The first concern was technical: the Congressional Budget Office's (CBO) score of the bill scored the $10.55 billion designated for the NIH and Cures Innovation Funds as appropriations subject to the discretionary spending limits, contrary to lawmakers' intent. This meant that the additional money would simply crowd out other spending under the cap and that many of the offsets designated for the bill were unnecessary (it already reduced deficits by $12 billion), since they are only needed to offset mandatory spending.

The new bill lessens this new funding by $1.25 billion and clarifies that it should be classified as mandatory appropriations, thus adding $9.2 billion of costs to the bill on paper (although this is really a $1.25 billion reduction in costs from their original intent).

The second concern, which we expressed in our previous discussion about the original bill, was over the Part D timing shift that affected reinsurance payments made to insurance companies to cover expenses for high-cost beneficiaries, pushing some payments that would have been in Fiscal Year (FY) 2025 into FY 2026, and thus outside CBO's 10-year budget window. Some members of Congress also objected to the timing shift, which pushed these payments to later in the month or the following month, because it would disrupt the normal functioning of Part D.

In line with our recommendations, the new bill replaces this $5 billion timing shift with real health care savings and an increase in SPR sales, making the bill fully comply with the intent of pay-as-you-go rules.

The new health care policies change the calculation of the Medicaid drug rebate (described here) and would set payment rates for drugs furnished through durable medical equipment to the rate for other Part B drugs, saving less than $1 billion combined over ten years. The SPR sales would also increase to 80 million barrels and shifted more towards later years when oil prices are projected to be higher. The new SPR policy saves $1.7 billion more than previously estimated.

Overall, the bill reduces ten-year deficits by $518 million and serves as a strong example of how to fund priorities in a fiscally-responsible manner, without resorting to gimmicks.

Budgetary Effect of Updated H.R. 6, 21st Century Cures Act
  Budgetary Cost/Savings (-)
Establish NIH and Cures Innovation Funds $9.2 billion
Enact Other Changes $1.2 billion
Total Cost $10.4 billion
Limit Medicaid DME to Medicare Rates -$2.5 billion
Sell Oil From Strategic Petroleum Reserve -$7.1 billion
Change Calculation of Medicaid Drug Rebates -$0.2 billion
Reduce Payments for Drugs Furnished Through DME -$0.6 billion
Reduce Payments for Film X-Rays -$0.3 billion
Make Other Medicare Changes -$0.3 billion
Total Savings -$10.9 billion
Net Savings -$0.5 billion

Source: CBO

In short, H.R. 6 now better reflects the intent of the Energy and Commerce Committee to make the new appropriations mandatory and should be commended for fully abiding by pay-as-you-go rules.