Inside Health Policy’s Rachana Dixit reports that Sen. Orrin Hatch (R-UT) — weary of being challenged on his record of opposing affordable health care coverage — has penned a letter to Treasury Secretary Timothy Geithner and IRS Commissioner Douglas Shulman questioning their interpretation of a provision in the Affordable Care Act that would allow individuals enrolled in a federal health exchange to receive premium and cost sharing subsidies when purchasing health insurance.

Democrats and the administration insist that Congress had intended to provide federal assistance to everyone buying insurance through the new regulated marketplaces, even if “the law says that the exchange subsidies… are available for those purchasing health insurance through a state exchange but makes no mention of their availability through exchanges operated by the federal government.” But a group of House Republicans had questioned this interpretation last month and Hatch is now joining their ranks in arguing that Americans enrolled in federal exchanges should be denied access to more affordable health coverage:

“Simply put, under current statutory law, there is no premium assistance amount…to the extent that an exchange is a federally-facilitated exchange. But contrary to the clear wording of the statute, your proposed regulations suggest otherwise, extending the availability of premium credits to those participating in federal exchanges,” Hatch writes in a Dec. 1 letter to Treasury Secretary Timothy Geithner and IRS Commissioner Douglas Shulman.

Hatch says he is concerned that the rules as proposed, if finalized, would exceed the IRS’ regulatory authority, and if a change needs to be made in the law then Congress needs to be the one to pursue it. Hatch goes on to say that, “This excessive use of regulatory authority is only the continuation of a trend by the Treasury Department and IRS of violating the constitutional principle of separation of powers by usurping Congress’ exclusive role in law-making.”

Hatch hasn’t always stood in the way of more affordable coverage. This is coming from the same man who not only worked with Sen. Ted Kennedy (D-MA) to extend health care coverage to lower income children as part of the Children’s Health Insurance Program (CHIP) in 1997, but also supported subsidizing health care coverage for lower income Americans in 1993 when he co-sponsored Sen. John Chafee’s (R-RI) Health Equity and Access Reform Today Act of 1993 as an alternative to Hillarycare.

In October, the health insurance industry released a report alleging that the Affordable Care Act’s taxes on health insurance plans will force companies to shift costs to consumers, adding up to “at least $73 billion in fees through 2019 and increase premiums between 2.8 and 3.7 percent in 2023.” Weeks later, Republican Sens. John Barrasso (WY) and Orrin Hatch (UT) publish an op-ed in Politico echoing this very same warning:

This is how it works: Starting in 2014, health insurance companies will be whacked with a tax based on their net premiums written in the fully insured market. Eighty-seven percent of small businesses purchase insurance in this fully insured market. It is also the place that the self-employed and uninsured go to purchase insurance.

So who will pay this tax? Ultimately, small businesses and their employees. It will most likely get passed through to employees — who will pay for it in lower wages or higher premium contributions. The average employee with a family plan will see take-home pay reduced by $5,000 over the next decade because of this tax, according to one study.

Set aside the hypocrisy of Republicans complaining about policies that pay for spending legislation — remember how they demanded that health care reform be fully paid for? — and what you have are two senators who are gulping down the industry’s kool-aid on premium increases. Both men count the insurers among their top campaign contributors, so it’s certainly no accident that they’re asking Congress to repeal taxes on an industry that’s earning record profits and is about to benefit from tens of millions of new customers as a result of the Affordable Care Act (ACA).

Of course, the appropriate response isn’t to roll back the taxes — which are necessary to finance reform and ensure that coverage expansion is fully paid for — but to strengthen provisions that help lower costs and mitigate the cost-shift. The ACA already requires insurers to spend 80 to 85 percent of their premium dollars on health care rather than administrative expenses and forces companies to justify proposed premium increases. And if the industry is now arguing that it doesn’t have the tools to control premium increases, then perhaps Barrasso and Hatch should bring back some of the cost control measures they helped defeat during the health reform debate. I’m looking at you, public option.

On Tuesday, Sen. Orrin Hatch (R-UT) told Inside Health Policy’s Sahil Kapur that the Democratically-backed idea of extending Medicaid drug rebates to beneficiaries in Medicare Part D was “a very important area,” and said he “expect[s] it to be under consideration” in the deficit reduction talks. “We’re going to have to try and go through it line by line, every part of that, and see what we can do with it on a bipartisan basis,” Hatch told Kapur.

But the morning after, drug lobbyists — who are the senator’s top campaign contributors — “were frantic,” Kapur’s sources claim, and, “Hatch’s office sent an email to IHP emphasizing the lawmaker’s opposition to Part D rebates and seeking a clarification in the article.” The senator’s staff even released a memo to journalists and lobbyists “saying the reporting of his comments ‘completely mischaracterizes’ the lawmaker’s position on the issue”:

In the meantime, industry sources said, Hatch’s office went into damage control efforts with the drug industry, which loathes the rebate proposal. In one email to the industry’s top lobbying group, the Pharmaceutical Research and Manufacturers of America (PhRMA), obtained by IHP, Hatch’s office insisted the notion that he supports changes to rebates “of course is false.” He promised them he is not asking the super committee to take up the policy and declared that the Part D program is “working so well.” PhRMA excerpted from the email in a note to its members. [...]

In an email exchange with IHP Wednesday (Oct. 12) morning, Hatch spokeswoman Julia Lawless said the lawmaker meant that he would go through the proposal on a line-by-line basis to see how to prevent government price controls. “This can be done on a bipartisan basis, given that some Democrats are against government price controls as well,” is what Hatch intended to say, according to Lawless.

Indeed, extending Medicaid drug rebates to Medicare patients has long been a Democratic priority that is typically opposed by Republicans. Back in 2003, the GOP-backed Medicare Part D legislation moved the 6 million Americans who were eligible for both Medicare and Medicaid into the Medicare Part D program, creating a windfall for the industry. Whereas Medicaid delivered an average discount of about 34 percent from pharmaceutical companies that participated in the Medicaid program, “the average discount obtained by the Part D plans was 14 percent,” according to a report issued by Rep. Henry Waxman (D-CA). As he put it, “The drug companies are making the same drugs. They are being used by the same beneficiaries. Yet because the drugs are being bought through Medicare Part D instead of Medicaid, the prices paid by the taxpayers have ballooned by billions of dollars.” CBO estimates that if drug manufacturers provided the Medicare Part D program with the same prices that Medicaid receives, the government could save $112 billion over 10 years.

According to Open Secrets, pharmaceuticals is Hatch’s top career contributor, funneling some $1,705,597 to the senator since 1989.