After months of stalled conversation, the behind-the-scenes negotiations surrounding the Build Back Better Act reconciliation package have been revitalized. The Build Back Better Act has undergone numerous transformations over the last several months as the moderate and progressive wings of the Democratic Party fight over which provisions to include and how much money to spend on it.  This week, Senate Majority Leader Chuck Schumer (D-NY) met with Senator Joe Manchin (D-WV) to revisit the package and try to reach a compromise.

The Democrat-majority House passed the Build Back Better Act six months ago; that version of the reconciliation package totaled $1.75 trillion and included several healthcare provisions. One of the primary healthcare provisions is an extension of ACA premium tax credits – which were included in last year’s American Rescue Plan Act – through 2025. According to the White House, this subsidy extension could reduce premiums for more than 9 million Americans who buy insurance through the ACA exchange an average of $600 per person per year, and the administration also claims that these extensions could assist over 3 million uninsured individuals in getting covered. The package passed by the House also expands the Medicare program to cover hearing benefits, in addition to a $35 monthly cap on the cost of insulin, a $2,000 cap on out-of-pocket Part D prescription drug spending, and a provision granting the secretary of HHS the ability to negotiate drug prices.

In the Senate, the months-long ideological battle between certain Democrats and the most moderate voices of the party, Senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ), has kept many of the provisions in the House version from moving forward. Because of this, several other legislative priorities have taken precedent over the reconciliation package in the past few months. However, this week, new details have been released about the reconciliation bill that the Senate may potentially pass before the midterm elections in November.

The iteration of Build Back Better that is now being considered is expected to total $1.3 trillion, a decrease from the $1.75 trillion that the House passed. The reconciliation bill is now projected to focus on three core areas: prescription drug prices, climate change and green energy tax credits, and a reversal of Trump-era tax cuts on higher income brackets.

There are a few healthcare provisions that could still be included but are not currently, such as $200 billion to permanently extend the ACA premium tax credits, an expanded child tax credit (also established by the American Rescue Plan) and closing the Medicaid coverage gap by providing ACA marketplace coverage to people in states that did not expand Medicaid. Repealing the Trump-era regulations on Medicare drug rebates is also on the table, a provision that would save the federal government an estimated $142 billion.

The ability for the secretary of HHS to negotiate drug prices is also still on the table, though it may differ from the provision included in the House bill. In the House version of the Build Back Better Act, the secretary (on an annual basis) would identify the 100 brand-name drugs that “lack price competition.” From that list, the secretary would negotiate up to 10 drugs in 2025, 15 drugs in 2026 and 2027, and 20 drugs thereafter. A drug selected for negotiation would continue to be included in the program until competition enters the market. Certain orphan drugs and drugs with Medicare Parts B and D expenditures that are less than $200 million are exempted from negotiation. Certain small biotech drugs are exempted from negotiation for initial price applicability years 2025, 2026 and 2027. Medicare Part D prescription drug plans will be required to cover selected drugs on the formulary. Small-molecule drugs only qualify to be negotiated if nine years has elapsed since the drug was first marketed; that number increases to 12 years for biologicals. The language also includes mandatory inflation rebates for specific drugs available under Medicare Part B. Under this provision, the secretary of HHS would calculate a rebate amount based on the total number of units with respect to a Part B drug, including for the Medicare program and the commercial market, and determine the inflation-adjusted penalty based on the percentage by which the price surpassed the inflation benchmark. If the manufacturer does not pay the mandated rebate, the manufacturer shall be subject to a penalty equal to or at least 125 percent of the rebate amount for the calendar quarter.

It is likely that the Senate version of this drug price negotiation provision will not apply to the commercial market, and instead apply solely to Medicare. Senator Manchin is reportedly looking for approximately $300 billion in Medicare drug savings as part of this package and allowing negotiations within the Medicare space, along with the repeal of the aforementioned Medicare rebate rule, could achieve this.

One major problem Democrats may face with such a package is the budget reconciliation process itself. When utilizing the reconciliation process to push legislation forward, only policies that change spending or revenues can be included. Early drafts of the American Rescue Plan Act, the first reconciliation package that Democrats passed in March 2021, included an increase in minimum wage; this provision was stricken after the Senate parliamentarian ruled that a minimum-wage increase cannot be included in a reconciliation bill. There is concern that the prescription drug provisions will also suffer a similar fate.

Another problem Democrats face is how to handle the package ahead of midterm elections. Historically, the party that most recently won the White House loses seats in the following midterm election – as of now, the Cook Political Report projects that Republicans will take back the majority in the House and Senate. Additionally, during May’s primary elections, GOP turnout increased by 38 percent. Many voices within the Democratic Party believe that several provisions included in the Build Back Better Act would increase favorability among voters ahead of November, particularly the permanent extension of ACA tax credits. On the other hand, with inflation impacting many Americans, Republicans will likely use the $1.3 trillion price tag of the package to accuse Democrats of worsening already-rapid inflation rates.