TRP Health Policy Report
January 12, 2015
Republicans took charge of both the House and Senate last week for the first time in eight years. Last November’s sweeping victories powered the GOP to full control, as the 114th Congress convened on Tuesday. Vice President Biden gaveled in a new Senate, with 54 Republicans to 44 Democrats, two independents and a new majority leader, Sen. Mitch McConnell (R-KY). Meanwhile, on the House side, Republican Speaker John Boehner (R-OH) won a third term in that post, but only after surviving a Tea Party attempt to unseat him. Twenty-five Republicans voted against Boehner, a record uprising for a sitting speaker. Boehner commands 246 Republicans to 188 Democrats, the biggest GOP majority in nearly 70 years. The new Congressional leadership will meet with President Obama at the White House early this week.
Despite conciliatory words from leaders in both parties, confrontation quickly surfaced over the Affordable Care Act (ACA) and the Keystone XL pipeline. Last Thursday, the House voted 252-172 (H.R. 30) to change the health law’s definition of the workweek to 40 hours from the current threshold of a minimum 30 hours. The move sets up one of the first partisan fights of the GOP-controlled Congress. The legislation faces a high bar to enactment. Senate Republicans have yet to line up the six Democratic votes needed to clear procedural hurdles and the White House has threatened a veto. On Friday, the House voted 266-153 for a bill (H.R. 3) to approve construction of the Keystone oil sands pipeline. The legislation now goes to the Senate, which is expected to take it up next week. The White House has warned that President Obama would veto the legislation. Elsewhere, Senators voted 93-4 last Thursday to extend the federal terrorism-insurance program (H.R. 26) through 2020. The vote sends the legislation to President Obama for his signature.
The Week Ahead
This week, House Republicans will focus on legislative language to block President Obama’s executive order on immigration. GOP leaders say the proposed changes will be attached to a spending bill to fund the Department of Homeland Security through Sept. 30, the end of the fiscal year. House members also plan to reconsider legislation (H.R. 37) to ease Dodd-Frank and other financial regulations. The House approved the bill last week 276-146, but it fell short of the two-thirds majority needed under suspension of the rules. Meanwhile, the Senate plans to hold a cloture vote Monday on the motion to proceed to legislation (S.1), which would force the approval of the Keystone XL Pipeline. Backers say the bill will get the 60 votes needed to advance.
House Approves Bill to Change ACA Full-Time Employee Definition
Last Thursday, the House voted 252-172 to approve legislation (H.R. 30) that would change the definition of full-time employees under the Affordable Care Act's employer mandate from those who work 30 hours per week to 40 hours per week. All Republican members and a dozen Democrats voted in favor of the bill. Currently, the employer mandate requires businesses with more than 50 full-time employees working 30 hours or more per week to provide affordable health coverage to workers or face fines. Republicans said the current statute gives employers an incentive to cut workers' hours to avoid paying fines as a result of the health law. But Democrats argued that increasing the ACA’s definition of a full-time workweek would result in more employees being forced to work more hours and still not be eligible for insurance.
On Wednesday, the nonpartisan Congressional Budget Office (CBO) reported the bill would increase the deficit by about $46 billion because it would lower the number of companies liable for penalties and therefore reduce government revenues. Multiple Republicans, including Majority Leader Mitch McConnell (R-KY), were quick to dismiss the budget office estimates. They argued businesses are cutting hours to their workers because of the requirement. ACA proponents, however, warned the GOP’s effort could backfire and instead cost jobs. The bill now goes to the Senate for consideration where Republicans need six Democrats to join them to overcome a filibuster. The White House has vowed to veto the bill.
Off the Hill, the White House announced that President Obama plans to release his fiscal year 2016 budget on February 2. The budget blueprint will outline the President’s federal spending priorities. Healthcare, energy and infrastructure are among the expected flashpoints with the Republican Congress. GOP leaders plan to use the 12 annual appropriations bills to square off with the White House on taxes and spending. Last year, the White House released a $3.9 trillion budget, but debate stalled for months in Congress before lawmakers passed the “CRominbus” spending package last month. Lawmakers must pass a separate appropriations bill for the Department of Homeland Security by Feb. 28.
Bill to Repeal Medical Device Tax Introduced
Last Wednesday, Reps. Erik Paulsen (R-MN) and Ron Kind (D-WI) introduced legislation to repeal the ACA’s medical device tax. The 2.3 percent excise tax went into effect in 2013 and was intended to raise billions to help pay for the healthcare overhaul. The device tax repeal bill has more than 250 sponsors from both parties in the House and support in the Senate, but there is no agreement yet on finding a way to offset the cost. At a news conference last week, Paulsen and Kind expressed optimism that House and Senate tax committees can negotiate an offset through savings in health care delivery. But Paulsen stopped short of guaranteeing that the funds to offset the cost would be in the bill if and when it reaches the House floor. The legislation would also allow device companies to seek refunds for taxes already paid under the law.
Repealing the medical device tax has long had bipartisan support, in part because several Democratic-leaning states have large device industries. The House passed a device tax repeal bill in 2012 that would have offset the costs by recovering subsidy overpayments from the healthcare reform law. In March 2013, the Senate approved a symbolic resolution calling for repeal of the tax, with more than 30 Democrats joining Republicans in support of the non-binding measure. In the past, President Obama has threatened to veto device tax repeal because it undermines the Affordable Care Act. But Paulsen believes the dynamics have changed. Device tax repeal was raised as one area of cooperation immediately after the 2014 election, Paulsen said. The White House is “going to look at anything that hits their desk,” he said. “I think they realize there are potentially veto-proof majorities on this bill. So they recognize they’re going to want to work on this issue.”
GOP Could Unveil ACA Replacement in 2015
An upcoming decision by the Supreme Court on whether subsidies to help U.S. residents purchase coverage through the federal exchange are legal is putting the pressure on Republicans to draft a plan to replace the Affordable Care Act. King v. Burwell is the most serious legal challenge to the health law since the justices upheld the individual mandate in 2012. If King prevails, subsidies could be cut off to millions of people in states relying on the federal health exchange. Last week, Sen. John Barrasso (R-WY) chairman of the Senate Republican Policy Committee said “…the [Supreme Court] case … gives us an opportunity and a reason to come to a consensus sooner so, when we get the ruling … we are then prepared to say, 'Here is what is better for the American people in terms of affordability, quality and choice.'“
According to Barrasso, various groups, including members of the Republican Policy Committee and two Senate committees, have begun discussing options to replace the ACA. GOP leaders have yet to coalesce around a plan, but are reportedly drawing on ideas they’ve discussed for years such as tax credits to buy insurance, high risk pools and allowing insurance to be sold across state lines. In addition, Sens. Richard Burr (R-N.C.) and Orrin Hatch (R-UT) are making changes to their own ACA replacement plan, which they unveiled last year. Burr said, “The onus is on us to present a logical solution prior to that case ever being heard,” adding, “Maybe the court will feel more confident making a decision if in fact there is a legislation solution [to the subsidy problem] that is realistic.”
Study: 9.6M Could Lose Coverage if Federal Exchange Subsidies End
According to a new RAND Corporation study, the number of U.S. residents with health insurance could drop by about 9.6 million if the Supreme Court deems illegal the subsidies to help individuals purchase coverage through the federal exchange. Researchers said such a ruling could cause “significant instability” and “threaten the viability of the individual health insurance market” in the 34 states where the federal government manages the exchange. Premiums on the individual market would also rise by 47 percent, or $1,610 annually, for a 40-year-old non-smoker with a silver plan, the study found. In December, the Supreme Court announced that it will hear oral arguments in King v. Burwell on March 4, meaning the court likely will release a decision on the case by the end of June.
A May 2012 IRS rule allows the subsidies to be used in an exchange administered either by a state or the federal government. But opponents argue that the IRS rule should be invalidated because it contradicts what Congress originally wrote in the ACA. The RAND researchers wrote that if the high court declares the subsidies illegal in the federal exchange, the number of U.S. residents with coverage purchased on the individual market would decline from 13.7 million to 4.1 million. The RAND study follows an Urban Institute Analysis last year that found a ruling to end the subsidies would cause 7.3 million low- and middle-income U.S. residents to miss out on $36 billion to help them purchase coverage in 2016.
FDA Advisory Committee Recommends Approval of First Biosimilar
Last Wednesday, an FDA advisory panel unanimously recommended the approval of the first U.S. biosimilar, filgrastim. If the FDA follows the recommendation, the drug would become the first biosimilar approved in the United States. The Oncologic Drugs Advisory Committee (ODAC) recommended approval for a Novartis AG copy of an Amgen Inc. cancer treatment, a development that could make generic versions of complex biologic therapies more readily accessible in the U.S. Generic versions of biologic drugs, known as biosimilars, aren’t widely available in the U.S., in part because regulators have only recently put together rules for assessing their safety and efficacy.
Novartis’s biosimilar would be among the first to make it to the U.S. market under a new regulatory pathway that came into effect in February 2012. The company was the first to seek approval for a biosimilar in the U.S. when its generics division, Sandoz, filed an application for its version of Neupogen last July. The drug is already sold in more than 40 countries outside of the U.S. under the brand name Zarzio. Biosimilar drugs are cheaper versions of expensive and complex medicines made from biological matter and are among the biggest-selling medicines in the world. A large number of biosimilars are available in Europe, where the products have been allowed since 2005.
The Week Ahead
This week, House Republicans will focus on legislative language to block President Obama’s executive order on immigration. GOP leaders say the proposed changes will be attached to a spending bill to fund the Department of Homeland Security through Sept. 30, the end of the fiscal year. House members also plan to reconsider legislation (H.R. 37) to ease Dodd-Frank and other financial regulations. The House approved the bill last week 276-146, but it fell short of the two-thirds majority needed under suspension of the rules. Meanwhile, the Senate plans to hold a cloture vote Monday on the motion to proceed to legislation (S.1), which would force the approval of the Keystone XL Pipeline. Backers say the bill will get the 60 votes needed to advance.
House Approves Bill to Change ACA Full-Time Employee Definition
Last Thursday, the House voted 252-172 to approve legislation (H.R. 30) that would change the definition of full-time employees under the Affordable Care Act's employer mandate from those who work 30 hours per week to 40 hours per week. All Republican members and a dozen Democrats voted in favor of the bill. Currently, the employer mandate requires businesses with more than 50 full-time employees working 30 hours or more per week to provide affordable health coverage to workers or face fines. Republicans said the current statute gives employers an incentive to cut workers' hours to avoid paying fines as a result of the health law. But Democrats argued that increasing the ACA’s definition of a full-time workweek would result in more employees being forced to work more hours and still not be eligible for insurance.
On Wednesday, the nonpartisan Congressional Budget Office (CBO) reported the bill would increase the deficit by about $46 billion because it would lower the number of companies liable for penalties and therefore reduce government revenues. Multiple Republicans, including Majority Leader Mitch McConnell (R-KY), were quick to dismiss the budget office estimates. They argued businesses are cutting hours to their workers because of the requirement. ACA proponents, however, warned the GOP’s effort could backfire and instead cost jobs. The bill now goes to the Senate for consideration where Republicans need six Democrats to join them to overcome a filibuster. The White House has vowed to veto the bill.
Off the Hill, the White House announced that President Obama plans to release his fiscal year 2016 budget on February 2. The budget blueprint will outline the President’s federal spending priorities. Healthcare, energy and infrastructure are among the expected flashpoints with the Republican Congress. GOP leaders plan to use the 12 annual appropriations bills to square off with the White House on taxes and spending. Last year, the White House released a $3.9 trillion budget, but debate stalled for months in Congress before lawmakers passed the “CRominbus” spending package last month. Lawmakers must pass a separate appropriations bill for the Department of Homeland Security by Feb. 28.
Bill to Repeal Medical Device Tax Introduced
Last Wednesday, Reps. Erik Paulsen (R-MN) and Ron Kind (D-WI) introduced legislation to repeal the ACA’s medical device tax. The 2.3 percent excise tax went into effect in 2013 and was intended to raise billions to help pay for the healthcare overhaul. The device tax repeal bill has more than 250 sponsors from both parties in the House and support in the Senate, but there is no agreement yet on finding a way to offset the cost. At a news conference last week, Paulsen and Kind expressed optimism that House and Senate tax committees can negotiate an offset through savings in health care delivery. But Paulsen stopped short of guaranteeing that the funds to offset the cost would be in the bill if and when it reaches the House floor. The legislation would also allow device companies to seek refunds for taxes already paid under the law.
Repealing the medical device tax has long had bipartisan support, in part because several Democratic-leaning states have large device industries. The House passed a device tax repeal bill in 2012 that would have offset the costs by recovering subsidy overpayments from the healthcare reform law. In March 2013, the Senate approved a symbolic resolution calling for repeal of the tax, with more than 30 Democrats joining Republicans in support of the non-binding measure. In the past, President Obama has threatened to veto device tax repeal because it undermines the Affordable Care Act. But Paulsen believes the dynamics have changed. Device tax repeal was raised as one area of cooperation immediately after the 2014 election, Paulsen said. The White House is “going to look at anything that hits their desk,” he said. “I think they realize there are potentially veto-proof majorities on this bill. So they recognize they’re going to want to work on this issue.”
GOP Could Unveil ACA Replacement in 2015
An upcoming decision by the Supreme Court on whether subsidies to help U.S. residents purchase coverage through the federal exchange are legal is putting the pressure on Republicans to draft a plan to replace the Affordable Care Act. King v. Burwell is the most serious legal challenge to the health law since the justices upheld the individual mandate in 2012. If King prevails, subsidies could be cut off to millions of people in states relying on the federal health exchange. Last week, Sen. John Barrasso (R-WY) chairman of the Senate Republican Policy Committee said “…the [Supreme Court] case … gives us an opportunity and a reason to come to a consensus sooner so, when we get the ruling … we are then prepared to say, 'Here is what is better for the American people in terms of affordability, quality and choice.'“
According to Barrasso, various groups, including members of the Republican Policy Committee and two Senate committees, have begun discussing options to replace the ACA. GOP leaders have yet to coalesce around a plan, but are reportedly drawing on ideas they’ve discussed for years such as tax credits to buy insurance, high risk pools and allowing insurance to be sold across state lines. In addition, Sens. Richard Burr (R-N.C.) and Orrin Hatch (R-UT) are making changes to their own ACA replacement plan, which they unveiled last year. Burr said, “The onus is on us to present a logical solution prior to that case ever being heard,” adding, “Maybe the court will feel more confident making a decision if in fact there is a legislation solution [to the subsidy problem] that is realistic.”
Study: 9.6M Could Lose Coverage if Federal Exchange Subsidies End
According to a new RAND Corporation study, the number of U.S. residents with health insurance could drop by about 9.6 million if the Supreme Court deems illegal the subsidies to help individuals purchase coverage through the federal exchange. Researchers said such a ruling could cause “significant instability” and “threaten the viability of the individual health insurance market” in the 34 states where the federal government manages the exchange. Premiums on the individual market would also rise by 47 percent, or $1,610 annually, for a 40-year-old non-smoker with a silver plan, the study found. In December, the Supreme Court announced that it will hear oral arguments in King v. Burwell on March 4, meaning the court likely will release a decision on the case by the end of June.
A May 2012 IRS rule allows the subsidies to be used in an exchange administered either by a state or the federal government. But opponents argue that the IRS rule should be invalidated because it contradicts what Congress originally wrote in the ACA. The RAND researchers wrote that if the high court declares the subsidies illegal in the federal exchange, the number of U.S. residents with coverage purchased on the individual market would decline from 13.7 million to 4.1 million. The RAND study follows an Urban Institute Analysis last year that found a ruling to end the subsidies would cause 7.3 million low- and middle-income U.S. residents to miss out on $36 billion to help them purchase coverage in 2016.
FDA Advisory Committee Recommends Approval of First Biosimilar
Last Wednesday, an FDA advisory panel unanimously recommended the approval of the first U.S. biosimilar, filgrastim. If the FDA follows the recommendation, the drug would become the first biosimilar approved in the United States. The Oncologic Drugs Advisory Committee (ODAC) recommended approval for a Novartis AG copy of an Amgen Inc. cancer treatment, a development that could make generic versions of complex biologic therapies more readily accessible in the U.S. Generic versions of biologic drugs, known as biosimilars, aren’t widely available in the U.S., in part because regulators have only recently put together rules for assessing their safety and efficacy.
Novartis’s biosimilar would be among the first to make it to the U.S. market under a new regulatory pathway that came into effect in February 2012. The company was the first to seek approval for a biosimilar in the U.S. when its generics division, Sandoz, filed an application for its version of Neupogen last July. The drug is already sold in more than 40 countries outside of the U.S. under the brand name Zarzio. Biosimilar drugs are cheaper versions of expensive and complex medicines made from biological matter and are among the biggest-selling medicines in the world. A large number of biosimilars are available in Europe, where the products have been allowed since 2005.