Blog Post

The Senate just passed a bipartisan infrastructure bill—and health care is footing the bill

By Heather Bell

August 12, 2021

    If you've been following the news, you know that the Senate this week passed two big-ticket items on infrastructure. But what you may not know is both bills have implications for the health care industry.

    Before we dive in, I want to offer a bit of background. Senate Democrats have laid out a plan to pass key parts of President Biden's American Jobs Plan, also known as physical infrastructure, and Biden's American Families Plan, also known as human infrastructure. To do so, Senate Democrats worked with their Republican colleagues to craft a $550 billion physical infrastructure bill that could overcome the Senate's 60-vote threshold to end a filibuster. At the same time, Democrats have been working on a separate $3.5 trillion human infrastructure bill that they plan to pass along party lines using the budget reconciliation process.

    This week, the Senate took steps to advance both measures—though they still face obstacles to becoming law. Let's take a closer look.

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    Physical infrastructure package

    The Senate on Tuesday voted 69-30 to pass the bipartisan infrastructure package, called the Invest in America Act (HR 3684).The package funds physical infrastructure projects that have indirect impacts on health care, including clean water, broadband expansion, and domestic production of equipment. And while the legislation does not contain any new spending or policies for traditional health care, the health care industry is footing nearly half of the bill's $550 billion in new spending.

    The biggest allotment of money comes from repurposing $205 billion in unspent Covid-19 relief funds. Notably, that funding does not dip into the Provider Relief Fund, which depending on what you read has anywhere from $4.4 billion to $24 billion remaining. Instead, money will be drawn from funds to support aviation workers, the education stabilization fund, and other funds that support businesses, such as the business loans program.

    An estimated $49 billion would come from further delaying the Medicare pharmacy benefit manager Part D rebate rule for three years. The math here gets a little wonky, but those savings largely come from government savings rather than industry costs. But the pharmaceutical industry would be on the hook for another $3 billion under a provision that enables Medicare to recoup money spent on discarded medications from large, single-use drug vials.

    Of note for Medicare providers: The package extends the mandatory sequester for an additional year to 2031, generating an estimated $8.7 billion in savings. The package shifts the impact to the first half of the year by increasing the percentage sequestered in 2031 from 2% to 4% and zeroing out the percentage for the remainder of the year. The 2% Medicare sequester cuts, which have been in place since 2011, have been suspended during the Covid-19 pandemic but are set to resume in 2022 unless Congress acts to prevent them.

    Human infrastructure package

    The Senate early Wednesday also passed a $3.5 trillion budget blueprint. As expected, the vote fell along party lines, 50-49. It is the first step in a long budget reconciliation process that Democrats hope to use to pass a human infrastructure package that will contain key Democratic health policy priorities.

    A memo released with the budget resolution shows Senate Democrats are setting their health care aims high. A few of the most-watched items include investing in home- and community-based care; making permanent the American Rescue Plan's exchange plan subsidy expansion; closing the Medicaid coverage gap; lowering the Medicare eligibility age; and expanding Medicare benefits to include dental, vision, and hearing.

    It's important to remember that the budget resolution is a starting point, and none of the policies listed in the memo are guaranteed to make it into the final bill. In fact, some of the policies may be harder sells than others because of the cost. Democrats can afford to lose a few votes in the House, but in the Senate they need every member of their party to vote in favor of the bill for this to pass—and a few members have raised concerns about the price tag and ensuring the costs are covered.

    That means provisions like lowering Medicare eligibility to age 60, which a Harvard analysis estimated could cost up to $100 billion per year, could be a hard sell. But not all the proposals are unrealistic: There appears to be a lot of support for permanent subsidy expansion, Medicare benefits expansion, and other policies. But again, lawmakers are not working with unchecked funds. The most recent data still suggests that the Medicare Trust Fund is nearing insolvency, so it's unlikely everything will make it in the final budget.

    What's next

    Now that the Senate has finished initial work on the two measures, senators will adjourn for a summer recess. The House is currently scheduled to be on recess until September 20, but they could return at the end of this month to vote on the budget resolution.

    But the clock is ticking. Congressional committees face a soft deadline of September 15 to craft their portions of the budget reconciliation, and House Speaker Nancy Pelosi has indicated she's unlikely to bring the bipartisan bill for a vote until the budget reconciliation package passes the Senate. So, expect negotiations to continue into the fall as lawmakers work to nail down the final details of the budget reconciliation bill.

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