Health Policy Report

The Week in Review

The tax reform debate in the Senate consumed nearly all of the political oxygen in Washington last week, ultimately culminating in a 51-49 passage of the proposal in the wee hours of Saturday morning. Despite many Republican senators expressing reservations, the only “no” vote from the majority came from Sen. Bob Corker (R-TN), who has been adamant that he would not vote for a tax bill that adds to the deficit without measures that could boost revenues in the future. The Senate’s approval marks a significant step forward in the tax reform effort and prospects for its enactment look good barring a serious reversal of fortunes.

Meanwhile, House lawmakers passed a series of relatively nonconsequential bills while attention was focused on the Senate. Those measures included a bill (H.R. 3017) that would reform the government’s treatment of brownfields, a bill (H.R. 1699) related to manufactured housing policies, and a highly partisan bill (H.R. 3905) that would reopen areas in northern Minnesota to copper and nickel mining. In response to recent scandals, the House also approved a resolution mandating sexual harassment training for all Members and employees.

The Administration scored a victory last week when a federal judge appointed to the bench recently by President Trump ruled in their favor by refusing to block Office of Management and Budget Director Mick Mulvaney from taking charge of the Consumer Financial Protection Bureau (CFPB). Leandra English, the CFPB's deputy director, had requested an emergency restraining order, arguing that she should be acting director since then-Director Richard Cordray appointed her as his successor before he resigned. The ruling is likely to be appealed.

Finally, on Friday, former National Security Adviser and Trump campaign official Michael Flynn pleaded guilty to lying to federal investigators as part of Robert Mueller’s ongoing probe of the Trump White House’s connections to Russia. Flynn has said that he is cooperating with Mueller’s investigation.

The Week Ahead

Even after the Senate’s approval of tax reform legislation last week, the issue will remain in the headlines. The House returns ahead of schedule today to consider a motion to go to conference on the tax reform bill, allowing for lawmakers to reconcile the differences between the two versions of the legislation. Republicans hope that the conference process will last about a week, giving lawmakers time to get a bill to the president’s desk before the Christmas holiday.

The major legislative work this week will focus on government funding as the continuing resolution (CR) currently funding the government is due to expire on Friday. The most likely outcome is that both chambers will approve a new short-term CR this week that will last until Dec. 22, providing a short window for lawmakers to work out a longer-term agreement. However, Democratic votes will be needed to approve the funding bill, and the increasing hostility between the minority party and the White House has increased the odds of a government shutdown. Assuming that the two-week CR is passed, however, an even bigger showdown could be coming before Congress takes their holiday break.

Other floor action includes a trio of bills to be considered by the House pursuant to a rule. Two bills reported from the House Financial Services Committee would broaden the registration exemption for merger and acquisition brokers (H.R. 477) and aim to provide regulatory relief on escrow requirements for community financial institutions (H.R. 3971). The House will also consider a controversial bill (H.R. 38) that would loosen rules on the ability for individuals to carry concealed firearms.

Congress Plans to Waive PAYGO Sequester, Extend Current Medicare Sequestration

If the GOP’s tax reform bill is enacted, the measure would trigger $136 billion in automatic sequester cuts from mandatory spending in 2018 unless Congress votes to waive the rule and avoid the cuts. That’s because Congressional “pay-as-you-go” rules, called PAYGO, require that the Office of Management and Budget (OMB) automatically cut mandatory spending if legislation increases the deficit beyond a certain point (and the tax bill would add roughly $1.5 trillion to the deficit over a decade). With the exception of Social Security, the post office, and means-tested entitlement programs, most mandatory spending programs are subject to PAYGO.  However, Medicare provider payments and other costs not associated with beneficiaries are subject to cuts.

While the Republican tax bill would be the trigger for the PAYGO cuts, neither party would like to see these across-the-board cuts actually go into effect. Various reports detail the scope of the potential cuts for 2018, including $25 billion from Medicare, $6 billion in ACA risk adjustment payments, and $1.7 billion in Social Services block grants. Those cuts would increase on an annual basis without congressional intervention.

If tax reform were to pass, Congress would be compelled to act before the end of the year to waive the PAYGO rules and stop the sequester. Currently, the conventional wisdom is that both chambers will override the four percent cut to Medicare provider-pay rates, but will separately extend the existing two percent Medicare sequester to pay for funding the Children’s Health Insurance Program and other healthcare extenders.

ACA Stabilization Efforts Make Revival as GOP Tax Bill Would Repeal Individual Mandate

After a series of failed attempts to repeal the Affordable Care Act (ACA), concerned lawmakers on both sides of the aisle have put forth solutions to stabilize the ACA marketplace until further reform can take place. Most notably, a bill released earlier in the fall by Senate HELP Committee leaders Lamar Alexander (R-TN) and Patty Murray (D-WA) would reinstate funding for the cost-sharing reduction (CSR) payments to insurers and make other changes to the ACA. Additionally, a bill introduced by Sens. Susan Collins (R-ME) and Bill Nelson (D-FL) would provide $4.5 billion in federal reinsurance funding over 2018 and 2019 to help lower insurance premiums by compensating insurers for their costliest patients.

The toxic politics of the ACA have prevented Republican leaders from embracing legislation that would buttress the future of the ACA marketplace. However, as part of a deal to repeal the individual mandate as part of tax reform, GOP leaders have promised votes on each bill. Still, the Congressional Budget Office (CBO) estimates that neither measure would significantly mitigate the negative impact on the individual insurance market caused by the tax package’s repeal of the individual mandate. Further, both bills will require support from Democrats to pass the Senate, and Democratic leaders have warned that they won’t back market stabilization measures if the individual mandate is repealed.

President Trump met with Senate Republicans last week and said he would sign both stabilization bills into law if passed. However, it remains to be seen if either bill can garner enough support in either chamber to pass.  A group of House conservatives signaled their opposition on Thursday to either bill and support from any Democrats for the bill is uncertain given the tax bill’s inclusion of the individual mandate.

Alex Azar, Trump’s Pick for HHS Secretary, Faces First Confirmation Hearing

Last Wednesday, the Senate Health, Education, Labor, & Pensions (HELP) Committee held a nomination hearing for Alex Azar, President Trump’s pick to lead the Department of Health and Human Services (HHS). The hearing was considered a courtesy hearing, and no formal vote was held. The Senate Finance Committee will hold a second nomination hearing for Mr. Azar — which has yet to be announced — and will vote on advancing Mr. Azar for a final confirmation vote on the Senate floor.

During the hearing, Mr. Azar touted his experience within HHS during the Bush Administration, as well as expertise gained during his time in the private sector with pharmaceutical company Eli Lilly. While Republicans generally expressed that his experience “uniquely qualified” him to serve as HHS Secretary, several Democrats suggested that his ties to the pharmaceutical industry call into question his willingness to combat prescription drug prices and anti-competitive industry practices. Sen. Rand Paul (R-KY) may be the only Republican to vote against Mr. Azar’s confirmation, and the senator aggressively questioned the nominee on his drug importation policies at Wednesday’s hearing.

Additionally, several Democrats on the panel expressed alarm that Mr. Azar would not properly continue to implement the Affordable Care Act (ACA) or protect women’s rights to free contraception and abortions. Mr. Azar stated that he would continue to implement the ACA as long as it was law, and adhered to his belief that the administration was not attempting to sabotage the healthcare law. The nominee suggested he supported President Trump’s decision to roll back birth control requirements, and said he would follow existing laws but try to “balance the conscience obligations of organizations and individuals.”

Justice Department Lays Out Plan to Combat Opioid Epidemic

Attorney General Jeff Sessions announced Wednesday that the Justice Department would award $12 million in grants to assist law enforcement agencies in combatting the opioid epidemic. The announcement also includes plans to open a new office, located in Louisville, KY, to target illicit drug trafficking in the hard-hit Appalachian region.  The Attorney General asked that all U.S. attorneys’ offices designate an official opioid coordinator to assist prosecutors and all levels of law enforcement coordinate drug-related prosecutions. The grant funding will be available to directly combat illegal manufacturing and distribution of methamphetamine, heroin, and prescription opioids, but $7.19 million in grants will be reserved for law enforcement agencies in states with high per capita levels of primary treatment admissions for heroin and other opioids. The remaining $5.03 million will be used to combat methamphetamine in states that have demonstrated numerous seizures of chemicals and laboratories.