• Thu. Mar 4th, 2021

Trump’s Proposed Drug-Discount Cards Will Be Funded by a Medicare Trust Fund – The Wall Street Journal

President Trump said his administration plans to send $200 discount cards to people on Medicare.

Photo: tom brenner/Reuters

A plan President Trump announced Thursday to send millions of prescription-drug discount cards to 33 million seniors will be funded by a Medicare trust fund, an administration official said, using money rarely spent on such pilot programs.

Medicare is funded by two trust funds held by the U.S. Treasury. The trusts pay for hospital care and administering the federal health-insurance program for seniors and the disabled. They are funded through payroll taxes, income taxes paid on Social Security benefits and other sources.

The Medicare trust fund that pays for hospital care is expected to become insolvent by fiscal 2024, according to the Congressional Budget Office, two years earlier than projections done before the coronavirus pandemic. The other fund is on more solid financial footing.

Trust fund money is rarely spent on matters unrelated to the direct receipt of health care by seniors and people who are disabled. The plan to use the funds for a pilot program also comes as the pandemic has added pressure on the hospital-care trust.

Mr. Trump at a rally Thursday in Charlotte, N.C., pledged to send $200 discount cards to people on Medicare, without offering details on how the federal government would implement such a plan. “I will always take care of our wonderful senior citizens,” the president said.

He said the Medicare beneficiaries will soon receive a card in the mail that can be used to help pay for up to $200 in prescription drug cost, a plan that is expected to be valued at more than $6 billion. A White House official said the cards will be mailed out in the coming weeks and could be used to pay for the cost of prescription-drug copays.

The announcement came just weeks ahead of the presidential election, prompting some critics to say the discounts are an attempt by Mr. Trump to appeal to senior voters and wouldn’t solve broader problems with drug pricing.

“It is not at all clear if this is legal or how the president will pay for his scheme,” said David Mitchell, the founder of Patients For Affordable Drugs Now, a bipartisan Washington-based nonprofit that aims to lower drug prices. “Americans need systemic, enduring reforms to our rigged drug-pricing system, not election-year gimmicks.”

The administration official said the money would be disbursed as prescription discounts from a Medicare trust fund, under a program that lets officials waive Medicare’s laws or standards to test new initiatives. These waiver programs have generally been required to show they won’t increase federal spending beyond what would have occurred without the test.

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The waiver programs are also supposed to test the efficiency and economy of changes to Medicare, such as testing new ways to pay hospitals for care. The discount-card plan may be designed to test whether it helps beneficiaries stick with their prescribed medication schedules, the official said.

These Medicare waiver programs are fairly uncommon and small-scale—for example, tests of new payment methods or new hospital services.

“It’s just unprecedented,” said Larry Levitt, an executive vice president for health policy at the Kaiser Family Foundation.

The discount cards were proposed by White House chief of staff Mark Meadows, the administration official said. The White House declined to comment.


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Little information has been provided about how the discount-card program would be funded. Mr. Trump didn’t provide specifics about how the program would be funded or the legal authority allowing the federal government to send out the cards to seniors, prompting questions from health-policy experts. A spokesman at the Centers for Medicare and Medicaid Services, which oversees Medicare, on Thursday referred questions to the White House.

Health and Human Services officials on a call Friday declined to answer questions about how the drug-discount cards would be paid for and said more information would be released soon by the White House.

A White House official had said Thursday that the cost of the cards would be offset by savings from the waiver program and a federal plan to reduce drug prices in Medicare. That proposed drug-pricing program, known as most-favored-nation pricing, would ensure that the U.S. doesn’t pay more for drugs in Medicare than other countries pay. That program hasn’t been launched yet.

But the cost of the cards won’t be offset by the favored-nation plan, the administration official said. The White House declined to comment.

The announcement comes after the Trump administration sought to negotiate a similar discount-card program with drug companies, but the drug industry’s main trade group, PhRMA, walked away from the discussions. “One-time savings cards will neither provide lasting help nor advance the fundamental reforms necessary to help seniors better afford their medicines,” an official at PhRMA said last week.

Write to Stephanie Armour at stephanie.armour@wsj.com

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Appeared in the September 26, 2020, print edition as ‘Medicare Fund Would Pay for Drug Cards.’