Health Policy Report

The Week in Review

While the Graham-Cassidy ‘repeal and replace’ bill was once expected to headline the week on Capitol Hill, the bill’s swift demise ultimately set the stage for other legislative business —  as well as the resignation of Health and Human Services (HHS) Secretary Tom Price. The embattled cabinet official had already lost favor with President Donald Trump over his failed leadership on health care reform, and ultimately succumb to a wave of criticism over his decision to travel via expensive private flights. Meanwhile, Republicans' latest failure to repeal the Affordable Care Act (ACA) all but ensures that congressional Republicans — who for seven years have vowed to repeal Obamacare — will fail to make good on their promise to voters during President Donald Trump's first year in office.

After moving on from ‘repeal and replace,’ lawmakers in both chambers voted on a bill (H.R. 3823) to extend federal aviation programs and provide tax relief for people affected by recent hurricanes. The six-month reauthorization of the Federal Aviation Administration (FAA) also includes provisions to extend a few expiring public health care programs, including short-term extensions of the Teaching Health Center Graduate Medical Education (THCGME) program and the Special Diabetes Program for Indians, as well as a three-year extension a of Medicare demonstration allowing patients with weakened immune systems to receive in-home care.

Notably, the bill did not include an extension of the Children’s Health Insurance Program (CHIP), community health center funding, or a slate of Medicare “extenders” that technically expire on Saturday (although many can be funded retroactively). Instead, as House Rules Committee Chairman Pete Sessions (R-TX) said during a House floor debate that GOP leaders believe the Sept. 30 expirations of funding are not “dire or urgent” because states have enough money to get through the end of the year.

Off the floor, President Trump and congressional leaders rolled out their most detailed look yet at the party’s plan to overhaul the nation's tax code. The proposal calls for slashing the corporate rate from 35 percent to 20 percent and lowering the top individual tax rate from 39.6 percent to 35 percent. The tax plan is now expected to head to the committees of jurisdiction to be crafted into formal legislation. The pressure to pass a package will be particularly acute this fall as lawmakers begin to plan their campaigns for the 2018 midterm elections.

In political news, former Alabama Supreme Court Chief Justice Roy Moore beat Sen. Luther Strange (R-Ala.) 54.6 percent to 45.4 percent in a special primary runoff, dealing a blow to Senate Majority Leader Mitch McConnell (R-KY) and the Republican establishment. The election is being held to fill the seat vacated by Attorney General Jeff Sessions. On Dec. 12, Moore will face Democratic nominee Doug Jones, whose backers acknowledged a tough road ahead in the long-time Republican stronghold.

The Week Ahead

The tax reform debate will begin in earnest next week, as both the House and Senate will be working on Fiscal Year (FY) 2018 budget resolutions that will include reconciliation instructions designed to avoid a Senate filibuster. The Senate Budget Committee has released their FY 2018 budget resolution ahead of hearings this week, allowing for $1.5 trillion in tax cuts over the next decade. Meanwhile, the House is expected to vote on its own budget resolution on the House floor. While it’s unclear how the chambers ultimately plan to reconcile their respective budgets, the result is likely to set the stage for Republicans to pass their tax overhaul with a simple majority in the Senate.

President Trump is scheduled to visit Puerto Rico on Tuesday as the U.S. territory grapples with the damage from Hurricane Maria. The administration has been criticized for its handling of recovery efforts in the wake of the storm.

HHS Secretary Tom Price Resigns

Ostensibly at the request of President Donald Trump, HHS Secretary Tom Price resigned Friday following revelations that he had spent more than $1 million of taxpayer dollars on chartered jets. Before tendering his resignation, Price had tried to quell the controversy by offering to repay the government for a portion of those costs which he attributed to his seat on the flights in question.

The White House announced that Don Wright, currently the Deputy Assistant Secretary for Health, will become the acting HHS secretary. Wright, a longtime HHS staffer, doctor and public health expert, was first appointed by President George W. Bush to serve as the alternate U.S. delegate to the WHO Executive Board and served as HHS principal deputy assistant secretary for health during the Bush administration. Before working in government, Wright had a private medical practice in Texas for 15 years.

Discussions have already turned to Price’s successor, with Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma seen as a top candidate for his replacement. Other potential candidates may include Florida Governor Rick Scott (R), Former Louisiana Gov. Bobby Jindal (R), VA Secretary David Shulkin, and Food and Drug Administration (FDA) Commissioner Scott Gottlieb.

Graham-Cassidy Plan Scrapped as Leader McConnell Indicates Move to Tax Reform

Last Tuesday, Sens. Lindsey Graham (R-SC) and Bill Cassidy (R-LA) announced that there would be no vote on their proposal to repeal and replace the Affordable Care Act (ACA) ahead of the FY 2017 reconciliation deadline. Sen. Graham expressed optimism at the level of support his proposal garnered within the caucus, saying they have “50 votes for the content, but not 50 votes for the process.” He said with confidence that the state block grants system proposed under the Graham-Cassidy bill will ultimately replace the ACA, saying “it’s not ‘if,’ it’s only a matter of when.” Specifically, Sen. Graham indicated that the party will be “coming back to this after taxes,” and that he and Sen. Cassidy are committed to explaining their concept through a better legislative process.

Senate Majority Leader Mitch McConnell (R-KY) added, “We haven’t given up on changing the American healthcare system,” but that they would not be able to do so last week. “Where we go from here,” he said, “is tax reform,” which he referred to as a “twin priority” with healthcare. Looking forward, Leader McConnell said that Sens. Bob Corker (R-TN) and Pat Toomey (R-PA) had reached agreement on the parameters of a budget resolution, and that the Senate Budget Committee will be marking it up this week. There was discussion among some Republicans on pushing both tax reform and health care under the budget reconciliation process for fiscal year (FY) 2018, but others were concerned that trying to tackle both priorities would make it impossible to garner 50 votes in the Senate, not to mention the fear that another ACA repeal effort could derail a tax reform package. 

For the minority party’s part, Senate Minority Leader Chuck Schumer (D-NY) and Sen. Patty Murray (D-WA) followed the announcement with their own remarks, expressing their hope to return to the bipartisan negotiations that began last month in the Senate Health Education, Labor, and Pensions (HELP) Committee. Sen. Murray — Ranking Member on the HELP Committee — said that she and Chairman Lamar Alexander (R-TN) had been making great progress toward a stabilization package, and that after two weeks of “partisanship and dysfunction” they must now pick up where they left off.

Sens. Alexander and Murray Resume Bipartisan Talks, Close to Stabilization Deal

Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) have resumed bipartisan talks in an attempt to reach a deal that would stabilize the ACA’s insurance markets, and are reportedly close to an agreement. Republican leaders continued to stress it is not guaranteed that the House and Senate will be able to pass a bipartisan bill, although Senate Minority Leader Charles Schumer (D-NY) backed the possible deal in a floor speech last Thursday. He asked that Senate Majority Leader Mitch McConnell (R-KY) do the same.

Sen. Alexander was equally cautious about the deal, and said he and Murray still face the challenge of whipping enough support from Republicans and Democrats before passing it to both parties’ leadership. He reported that they were taking it “one step at a time.” Sen. John Thune (R-SD) said he expected to keep the timetable for moving the package brief and acknowledged the continuing uncertainty around continuation of the Affordable Care Act's cost-sharing reduction payments. Senate Majority Whip John Cornyn (R-TX) stated he was “intrigued and pleased with some of the conversations” he had with Alexander. Support for the package may already be growing, as the more than 40-strong bipartisan Problem Solvers Caucus has been rallying for the Alexander-Murray effort.

House E&C Announces Markup on CHIP, Health Centers as Committee Negotiations Continue

The House Energy and Commerce Committee has announced it will mark up a bill this week to reauthorize the Children’s Health Insurance Program (CHIP), as well as extended funding for community health centers, the Special Diabetes Programs, the National Service Corps, Teaching Health Center Graduate Medical Education (THCGME), and “other important public health priorities.” The full Committee markup will occur on October 4, just days after CHIP’s funding expired. Chairman Greg Walden (R-OR) noted in a press release that it was “imperative” that Congress reauthorize the critical programs quickly so as not to disrupt the communities that rely on them.

According to individuals close to the discussions, the final details of the package are still being negotiated. Republicans have reportedly been pushing to phase out the Affordable Care Act’s (ACA) enhanced match over two years and extend CHIP for 4 years — both shorter windows than the Senate’s version of the bill. We’ve also understand that Democratic members are “not on board” with the markup, and that the ACA’s maintenance-of-effort provisions remain a subject for discussions.  

Paying for the bill’s cost remains the most challenging aspect of the bipartisan negotiations. In the upper chamber, a bipartisan CHIP reauthorization bill (S. 1827) from the Senate Finance Committee would extend federal funding for five years without addressing other issues like health center funding. In the Senate bill, the Affordable Care Act’s 23% boost in the federal match rate to states would be preserved in 2018 and 2019 before being incrementally phased out over the next three years. That bill would also make minor changes to the ACA’s maintenance-of-effort provision.

The announcement of this week’s hearing came as lawmakers were expected to miss their formal deadline to extend CHIP, community health center funding, or a slate of Medicare “extenders” that technically expired at the end of FY 2018. A few of those “extenders” passed as riders to the FAA extension that went through Congress last week, including short-term extensions of the Teaching Health Center Graduate Medical Education (THCGME) program and the Special Diabetes Program, as well as a three-year extension a of Medicare demonstration allowing patients with weakened immune systems to receive in-home care.

Senate Unanimously Passes CHRONIC Care Act

Last Tuesday, the Senate unanimously passed the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017 (S. 870). The bill comprises a wide range of policies including expansion of telehealth services in Medicare as well as policies to promote care coordination for individuals with multiple chronic conditions. The legislation was passed at the Committee level in May 2017. A series of parallel bills have been introduced in the House, including bills that would address Medicare Advantage special needs plans and extend an in-home demonstration program

The CHRONIC Care Act would extend a demonstration program for home visits by caregivers for Medicare beneficiaries with multiple chronic conditions.  The program, which was established by the Affordable Care Act, is set to expire at the end of this fiscal year but would be extended until the end of fiscal 2019. It would also raise the number of participating beneficiaries from 10,000 to 15,000. Additionally, a Medicare Advantage program currently being tested by the Centers for Medicare and Medicaid Innovation would be expanded and offer private Medicare plans more flexibility in caring for chronic illnesses. Also, the bill would allow for patients undergoing in-home dialysis treatment to remotely check-in with their physicians using telehealth services. The bill would allow the government to pay for more telehealth services in multiple areas by taking advantage of Accountable Care Organizations, including services for patients with stroke symptoms.

The Congressional Budget Office (CBO) reported that the bill’s $370 million price tag would be paid for out of the Medicaid and Medicare improvement funds, which were created in 2008. Expanding telemedicine for stroke diagnosis would be the costliest provision in the bill, running up $180 million over 10 years, and different changes to the Medicare Advantage program would add up to more than $200 million. However, other telehealth provisions in the bill, and improved coordination by accountable care organizations, would likely result in about $130 million in savings, according to the CBO.

Senate Released Budget Resolution Would Facilitate Tax Reform

The Senate Budget Committee has released the text of a fiscal year (FY) 2018 budget resolution (summary; tables) which would pave the way for a tax overhaul without Democratic votes. The Senate’s budget release preceded a two-day markup the Committee will undertake this week. Senate GOP leaders are currently planning to bring the resolution to the floor the week of October 16.

The 89-page draft resolution would allow the Senate Finance and House Ways and Means Committees to increase the deficit by $1.5 trillion during the next decade in order to advance a tax reform bill, and sends instructions to the Senate Energy and Natural Resources and House Natural Resources Committees to reduce the deficit by $1 billion during the 10-year budget window.

With respect to health care, the resolution does not include reconciliation instructions for the Senate Health, Education, Labor and Pensions (HELP) Committee or the House Energy and Commerce Committee, both of which have jurisdiction over health insurance. While it is possible that Congress could still pursue a narrow attack on the Affordable Care Act — including policies such as repeal of the individual mandate — the Senate budget resolution signals that ‘repeal and replace’ via reconciliation is unlikely in 2018.