Infrastructure Deal in Sight After Medicare Agreement

Sen. Joe Manchin meets with the press
“The pay-fors are pretty much lined up," says Sen. Joe Manchin. (Al Drago/Bloomberg News)

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A bipartisan group of senators is closing in on a $579 billion infrastructure deal after agreeing to pay for it in part by delaying a Trump-era Medicare regulation, a key Democratic senator said July 22.

The Medicare rule, promulgated by President Donald Trump, eliminates rebates that drug companies give benefit managers in Medicare Part D and was aimed at reducing out-of-pocket costs.

But the Congressional Budget Office estimated the rule would increase federal Medicare spending by about $177 billion from 2020 through 2029.

“We had an agreement on 99% when we walked out yesterday afternoon,” Sen. Joe Manchin (D-W.Va.), one of 22 senators negotiating the infrastructure deal, said in an interview. “The pay-fors are pretty much lined up.”

Drug companies, which could lose revenue if the rule is set aside, have lobbied against its inclusion in the deal.

“Despite railing against high drug costs on the campaign trail, lawmakers are threatening to gut a rule that would provide patients meaningful relief at the pharmacy,” said Debra DeShong, executive vice president of public affairs at PhRMA. “If it is included in the infrastructure package, this proposal will provide health insurers and drug middlemen a windfall and turn Medicare into a piggy bank to fund projects that have nothing to do with lowering out-of-pocket costs for medicines.”

Negotiators are still working on exactly how much money to funnel to transit systems, Manchin said. Some Republicans have argued that given the large boost in the bill for transit, future highway trust fund disbursement for transit should be reduced from 20% to 18%. Democrats say the traditional 20% share of the trust fund, which is primarily funded by the gas tax, that is set aside for transit should be maintained.

The senators have said they hope to have final bill text and an official budget score by July 26 to allow the Senate to vote then to begin debate. Republicans on July 21 blocked an attempt by Senate Majority Leader Chuck Schumer (D-N.Y.) to start debate, arguing they needed to see a deal first.

“If it’s not ready for Monday vote, we’re going to lose a couple of weeks on our August recess,” said Sen. Jon Tester (D-Mont.), another member of the negotiating group. “So it’s got to be ready.”

Schumer indicated on the Senate floor July 22 he is prepared to keep the Senate in session past its Aug. 9 recess date to finish work on the infrastructure bill and a multitrillion-dollar budget bill carrying much of President Joe Biden’s economic agenda.

“My colleagues on both sides should be assured: As majority leader, I have every intention of passing both major infrastructure packages — the bipartisan infrastructure framework and a budget resolution with reconciliation instructions — before we leave for the August recess,” Schumer said. “I laid out that precise schedule both publicly and privately and I intend to stick with it.”

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