Moneybox

Donald Trump’s Scheme to Bribe Seniors With $200 Gift Cards Is Not Obviously Legal

US President Donald Trump gestures speaks during a "Latinos for Trump Roundtable" event in Doral, Florida, on September 25, 2020. (Photo by Brendan Smialowski / AFP) (Photo by BRENDAN SMIALOWSKI/AFP via Getty Images)
He’s literally sending out gift cards now. BRENDAN SMIALOWSKI/Getty Images

During a rally to unveil his new, predictably thin and gimmicky health care agenda on Thursday, Donald Trump made the surprise announcement that his administration would send $200 gift cards in “in coming weeks” to 33 million senior citizens that they could use to pay for prescription drugs. “Nobody has seen this before,” the president said, accurately. That Trump was publicly declaring his intent to bribe elderly voters just before an election using public money was lost on nobody. Less clear is how the president actually intends to execute this latest scheme, or if it’s even the tiniest bit legal.

The $200 coupons appear to be a fallback plan, hatched after a deal between the administration and the pharmaceutical industry to lower prescription medicine prices collapsed earlier this month. The agreement, in which companies would have spent $150 billion to bring down out-of-pocket costs for consumers, fell apart after White House Chief of Staff Mark Meadows demanded that drugmakers pay for $100 drug discount cards that the administration would then mail to voters before the election, as the New York Times reported. The companies balked for the understandable reason that participating in an obvious campaign ploy might create bad “optics“—i.e. piss off the Democrats who could control Washington a few months from now.

So instead, the White House is taking unilateral action. Administration officials say they have legal authority to send out the gift cards under a statute that lets the Department of Health and Human Services run demonstration projects designed to test policy changes that might make Medicare more efficient and cost-effective without compromising anybody’s health. But these pilot programs tend to be tiny, usually involve technical tinkering with things like payment structures for providers, and aren’t supposed to launch before qualified experts weigh in on whether the goals and design of the experiment make a lick of sense. In this case, it seems like the administration is just going to backfill a justification for sending voters an October bonus. An official told the Wall Street Journal that “the discount-card plan may be designed to test whether it helps beneficiaries stick with their prescribed medication schedules.“ Note the may, which suggests they haven’t actually come up with a firm, official rationale for the thing.

“It’s not obviously legal,” Juliette Cubanski, the deputy director of the Kaiser Family Foundation Program on Medicare Policy, told me. “Because if you read the statute, it doesn’t automatically lend itself to where you send a $200 payment to Medicare beneficiaries. It’s intended to be used by the secretary of HHS for testing changes to provider payments. Not sending money to Medicare beneficiaries themselves.”

It’s also not clear where, exactly, the money to pay for this whole plan will come from. The cards are expected to cost $6.6 billion. But Medicare demonstration projects are typically supposed to be budget-neutral for the federal government. It’s not explicit in the main statute, and there do seem to have been cases where they’ve tested out entirely new benefits. But the general rule is stated in plain language right on the application that organizations like hospitals that want to participate in these pilot initiatives are required to fill out: “Medicare-waiver-only demonstrations must be budget neutral. Budget neutrality means that the expected costs under the demonstration cannot be more than the expected costs were the demonstration not to occur.”

So far, the White House is being wishy-washy on this point. On Thursday, the administration suggested it would offset the cost of its gift cards using savings from its recently announced “most favored nation” plan, which is meant to lower drug costs by requiring drug companies to charge Medicare the same low prices they offer in other countries. But that proposal hasn’t actually been implemented yet, which meant the administration was essentially saying it would borrow against theoretical future savings that might not materialize. Now, it’s telling reporters that the cost won’t actually be covered by the most favored nation proposal, and that it is just planning to spend out of Medicare’s rapidly depleting trust fund (which could result in higher premiums for seniors down the line to cover the shortfall).

Finally, there’s the question of when seniors will actually get these cards, if ever. Trump initially suggested that they would go out to 33 million individuals fairly soon. But Inside Health Policy editor John Wilkerson suggests that might not be the case for everyone: “White House officials now say that only some seniors will receive the $200 Medicare Part D gift cards before the election,” he tweeted Friday. “The cards will be sent over a period of months.”

The jokes write themselves:

Obviously, this is not the first time Trump has played fast and loose with federal regulations and Congress’ power over the purse for the sake of his political goals. He’s redirected money from the Pentagon to pay for his border wall. He used FEMA’s spare disaster relief funds to pay for unemployment benefits. And now, discount cards. Back in the good old days of the Obama era, Republicans tended to get up in arms about this sort of thing. Most notably, they attempted to bring Obamacare crashing down by refusing to appropriate money for some of its crucial subsidies, then sued to stop the administration when it attempted fund them using money earmarked for other parts of the law. (After years in court, it turned out the Obama White House was basically vindicated). But now that their guy is getting legally creative so he can treat the federal budget as election-season walking-around money, it’s crickets.