Health Policy Report

The Week in Review

Lawmakers enjoyed a week away from Washington in honor of the President’s Day holiday. Many Republicans, including Reps. Jason Chaffetz (R-UT), Dave Brat (R-VA) and Sen. Tom Cotton (R-AR), encountered raucous crowds at town hall events as constituents voiced their opposition to the repeal of the Affordable Care Act (ACA) and some of President Trump’s more controversial executive actions since taking office. Liberal activists are trying to replicate the successful protests – and wave midterm election – that conservatives were able to create against the ACA when it was first considered early Barack Obama’s presidency. Late in the week, a leaked version of the anticipated Republican bill to repeal and replace the ACA was widely circulated by media outlets; full coverage of that development is in our roundup below.

The Week Ahead

Congress returns to Washington today for the longest uninterrupted work period scheduled for 2017, a six-week blitz that will include more Cabinet confirmation fights, the consideration of a Supreme Court nominee, and potentially the introduction of a bill to repeal and replace the Affordable Care Act. Further out, policymakers are already preparing for the next round of skirmishes over funding the government as a continuing resolution passed in December of last year expires on Apr. 28. President Trump may set the tone for those debates in a speech to a joint session of Congress on Tuesday where he is expected to provide more details on the legislative structure of his agenda ahead of the anticipated release of the White House’s budget proposal for the 2018 fiscal year on Mar. 13.

Wilbur Ross’ confirmation as Secretary of Commerce starts action in the Senate upon its return today, and given that a cloture vote for his nomination passed prior to this week’s recess, he is likely to be installed sometime this evening. Senate Majority Leader Mitch McConnell has already filed cloture for the three nominees to follow Ross, namely Rep. Ryan Zinke for Secretary of Interior, Ben Carson for Secretary of Housing and Urban Development – who passed by voice vote out of the Banking Committee – and Rick Perry for Secretary of Energy. Further out on the horizon, Senate Judiciary Committee Chairman Sen. Chuck Grassley (R-IA) has said he expects the hearings for President Trump’s pick for the Supreme Court, Neil Gorsuch, to begin on Mar. 20. At a town hall earlier this week, Leader McConnell said he is hoping to schedule an up-or-down vote on Gorsuch before the Easter break.

House lawmakers are also expected to pick up on the work they left unfinished prior to President’s Day by considering a trio of bills targeting federal agencies’ latitude in crafting regulations. The first (H.R. 998) would require federal agencies to repeal existing regulations in order to offset the cost of any newly finalized rules, as well as creating a new commission to recommend further regulatory repeals. Another (H.R. 1004) would prevent federal agencies from using social media and other communications methods in order to attract public support for agency actions. The measure stems from controversial publications put forth by the Environmental Protection Agency (EPA) last year for the now-repealed “Waters of the U.S.” rule that were deemed to be violating prohibitions on federal entities spending money on publicity or lobbying. Finally, House lawmakers will consider a bill (H.R. 1009) that would prevent federal agencies from issuing any significant new rules without receiving input – including cost-benefit analyses – from the White House’s Office of Information and Regulatory Affairs (OIRA).

Leaked ACA Repeal Bill Reveals Republican Plan 

A draft of a House Republican Affordable Care Act (ACA) repeal bill was leaked and widely circulated on Friday, revealing plans to revamp the healthcare law subsidiaries and scrap its Medicaid expansion. The legislation would roll back many of the key pillars of the ACA, including the unpopular individual mandate, subsidies based on people’s income, and all of the law’s taxes. Additionally, it would significantly reduce Medicaid spending and give states money to create high risk pools for some people with pre-existing conditions. Some elements would be effective right away; others not until 2020. The draft shows that Republicans are sticking closely to previous plans floated by Speaker Paul Ryan and HHS Secretary Tom Price in crafting their ACA repeal package.

The Republican plan would eliminate the ACA’s Medicaid expansion in 2020. States could still cover those beneficiaries if they chose but would receive significantly less federal funding to do so, and instead of the current open-ended federal entitlement, states would get capped payments to states based on the number of Medicaid enrollees. Another key piece of the Republican proposal: $100 billion in “state innovation grants” to help subsidize extremely expensive enrollees. That aims to address at least a portion of the “pre-existing condition” population, though without the same broad protections as in the Affordable Care Act. The proposal also includes penalties for individuals who fail to maintain coverage continuously, resulting in a 30 percent boost in premiums for a year if their coverage lapses.

The replacement would be paid for by limiting tax breaks on generous health plans people get at work – an idea that is similar to the “Cadillac tax” that Republicans have fought to repeal. Republicans are proposing to cap the tax exemption for employer sponsored insurance at the 90th percentile of current premiums. That means benefits above that level would be taxed. In place of the ACA’s subsidies, the House bill starting in 2020 would provide individuals tax credits – based on age instead of income. The credit would range from $2,000 annually for consumers under 30 years old, up to $4,000 for those over 60.

House GOP, Justice Department Request Delay of ACA Lawsuit

House Republicans and the Department of Justice (DOJ) issued a joint motion last Tuesday to request that more time be allowed in order for involved parties to decide whether to move forward in the House’s lawsuit over the ACA’s cost-sharing subsidies. The House filed the lawsuit in 2014, arguing that the cost-sharing reductions to insurers are illegal because Congress has not provided a specific appropriation for them. The program assists beneficiaries afford certain health care payments, such as their deductibles, copayments, or coinsurance. Republicans are now considering whether they will continue the payments to keep the Exchange markets from collapsing as they work toward repealing and replacing the ACA.

A federal judge sided with House Republicans last year, and the Obama administration appealed. An appeals judge stayed any decision until last Tuesday, but now lawyers for the House of Representatives and the Department of Justice want the case to remain on hold, meaning insurers would still receive payments in the meantime. Both sides proposed keeping the case on hold and giving status reports every three months, beginning May 22, 2017, according to the joint motion.

Sen. Lamar Alexander (R-TN), the chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, has suggested funding the payments may be necessary for Republicans to ensure a stable individual market during a transition period away from the ACA, as Republicans seek to overhaul the law. Even Rep. Mark Meadows (R-NC), the chairman of the conservative House Freedom Caucus, has said he’d be open to funding the payments in the short-term. Insurers have threatened to leave the Exchange markets if the payments are not continued, which could potentially leave millions without healthcare coverage options during the transition.

The Future of CMMI Under Secretary Tom Price

With Secretary Tom Price installed at the head of the Department of Health and Human Services (HHS), healthcare stakeholders have been watching closely to see how the Trump Administration will use the many regulatory levers at their disposal to shift the direction of U.S. healthcare policy. While much attention has been given to the Administration’s approach to stabilizing the insurance markets, there’s another area where Price will have broad authority to implement policy without the consent of Congress: the Centers for Medicare and Medicaid Innovation (CMMI) – widely known as the Innovation Center.

Early speculation after Donald Trump’s election and nomination of Secretary Price has left defenders of CMMI scrambling over what they view as its imminent unraveling. Secretary Price cemented his disapproval of the “test kitchen” for Medicare and Medicaid reform shortly before being selected for his current position, and the former Congressman, along with other GOP members, sent a letter to CMS officials in September demanding that CMMI “stop experimenting with Americans’ health, and cease all current and future planned mandatory initiatives.” But as Price has expressed tepid support for CMMI in recent months, a new line of thought has emerged: the GOP may keep CMMI intact in order to test controversial conservative reforms that might otherwise struggle to be enacted through traditional legislative pathway. Indeed, Price was quick to change his tune regarding the program during his confirmation hearings. While still critical of mandatory and large-scale demonstrations, he stated that “[T]hese authorities can be important ways to ensure there is flexibility in CMS programs and activities for the individual and varying needs of states.”

Although the future of CMMI is uncertain, many questions remain over the direction Price will take and the extent to which its power will be exploited. If it isn’t repealed, Secretary Price Could use CMMI to experiment with conservative reforms such as some form of premium support or ways in which to examine beneficiary accountability. While Republicans once criticized the Center for exercising its authority, CMMI is empowered to scale up pilots if they prove successful – meaning new models could eventually serve as the foundation for much larger health care reforms down the road. A more cautious approach would have CMMI continue new physician payment models, such as those incentivized by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). A saving grace for the Innovation Center is that value-based care is here to stay, and CMMI plays a large role in that transition.

Poll: ACA Popularity Rises as Republicans Move Towards Repeal

A new poll released by the Pew Research Center last Thursday showed 54 percent of American adults currently approve of the Affordable Care Act (ACA), while only 43 percent disapprove. The results found the ACA achieving majority approval for the first time amid a concerted GOP effort to repeal and replace the law. Of those who disapprove, 25 percent say Republicans should focus on modifying it, while 24 percent say they should scrap the law entirely. The research center stated Americans were more split in its last poll on the ACA in December, with 48 percent approving, 47 percent disapproving and five percent not knowing or having no opinion.