Financial Services Report

Our Take
From the ashes of the of the failure of the Obamacare repeal on Friday might still rise the Phoenix of President Trump.   It also clearly shows that Senator McConnell continues to be one of the shrewdest political minds in town.  
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Today on the Hill: FCC Rule Rollback in the House; Montenegro to Become 29th Member of NATO

The dust will continue to settle in Congress as lawmakers slide back into regular business following last week’s excitement. House lawmakers will consider a Senate-passed resolution (S.J. Res. 34) today that would undo privacy rules for internet service providers enacted under the Federal Communications Commission (FCC) last year. Specifically, the rules require providers to receive an “opt-in” commitment from consumers before sharing their information with other companies for marketing purposes. Internet rights advocates fear that the resolution would undermine consumer privacy and encourage the selling of their information, while proponents say that the rules would confuse internet users and limit a vital source of revenue for providers. The resolution was passed on a 50-48 party-line vote in the Senate, meaning that House passage today would send the resolution to the president’s desk for enactment.

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ICYMI: ‘Five Reasons The ACA Won’t Be Repealed’

Late in 2016 – right after President Donald Trump was elected president and Republicans gained full control of Congress – many beltway-watchers were quick write about the inevitable demise of the Affordable Care Act (ACA).  But as Thorn Run’s Billy Wynne wrote in a December 2016 article for Health Affairs Blog, “the repeal and replace ‘two step’ [was] fraught with difficulty, bolder than the ACA itself, and far from certain to succeed.”

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Health Policy Report

The Week in Review

At the start of last week, House Republicans were planning a floor vote on their health care package, the American Health Care Act (AHCA), and expecting to take a monumental step towards fulfilling their long-held goal of rolling back the Obama healthcare legacy. But by the end of the week, that goal appeared more elusive than ever. The bill was withdrawn from consideration indefinitely on Friday as intraparty differences on policy spoiled the first major legislative effort of the Trump era and left Republicans with a remarkable political defeat. What follows in our policy roundup is a summary of how the bill evolved in an attempt to placate both the moderate and conservative wings of the party, why that effort was ultimately unsuccessful, and with a considerable degree of uncertainty, our analysis on what will happen next in health policy.

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Financial Services Report

Looking Ahead
Near Term

  • It will be a busy week in the House and Senate – and that isn’t even including the House Floor vote on the health care bill, currently scheduled for Thursday.
  • Look for a slew of nomination hearings in the Senate.  On Monday, the Senate Judiciary Committee will start the nomination hearing for Supreme Court Nominee Neil Gorsuch.  Then, the Department of Labor Secretary Nominee Alexander Acosta will finally get his hearing on Wednesday, while on Thursday the Senate Banking Committee will hold a nomination hearing for Jay Clayton to be the Chairman of the Securities and Exchange Commission (SEC).  
  • The House Financial Services Committee has four hearings scheduled for next week, including one examining the Constitutionality of the CFPB and another reviewing the JOBS Act on the 5th Anniversary of the law.

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Health Policy Report

The Week in Review

The debate over healthcare reform intensified last week as the Congressional Budget Office (CBO) score on the effects of the American Health Care Act (AHCA) and Trump’s “skinny” budget for 2018 were released. Both supporters and detractors of the AHCA found favorable information in the CBO score; the CBO projects federal deficit savings of $337 billion over the next ten years, but at the cost of coverage losses for 24 million people in that same timeframe. The proposal’s effect on premium prices, the stability of the non-group market, and Medicaid spending were also detailed in the CBO’s analysis, a breakdown of which can be found below.

The budget document, dubbed “America First: A Budget Blueprint to Make America Great Again,” marks a radical departure from the priorities of President Trump’s predecessor and makes deep cuts to nearly all of the nation’s non-defense discretionary programs. Among the biggest losers are the State Department and Environmental Protection Agency, which are proposed to lose 29 and 30 percent of their budgets respectively, although the budget would also call for cuts of greater than 20 percent to the budgets of the Agriculture, Labor, and Health and Human Services (HHS) Departments. The benefactor of those cuts is the Pentagon, which would see a 10 percent boost to their budget, totaling $52.3 billion. Of course, the budget remains only a proposal and it remains unclear how closely Congress’s priorities match those of the White House; but the budget does make clear that President Trump envisions a significant reduction in the government’s role providing aid both domestically and internationally. 

Although temporarily derailed by the snowstorm barreling through the northeast, Republicans’ work on comprehensive health care reform pushed forward in the House. The House Budget Committee voted to report the AHCA to the House floor with a favorable recommendation by a vote of 19-17. The markup was the first true test for the viability of the bill, and faced defections of three conservative members who sided with Democrats in opposition of the bill. On the House floor, lawmakers wrapped up consideration of a veterans’ affairs measure (H.R. 1367) that would provide additional resources for the Veterans’ Affairs Department to attract, train, and retain qualified employees by establishing a healthcare and benefits fellowship program and creating a database of mission-critical vacant positions.

In the upper chamber, senators voted 55-43 to confirm the nomination Seema Verma, a health consulting executive, to head the Centers for Medicare and Medicaid Services (CMS). Verma is best known for her work in helping Republican governors design plans to expand their Medicaid programs, including in Indiana, where she worked with Vice President Mike Pence to design Medicaid expansion along conservative lines, including imposing a requirement that most beneficiaries pay modest premiums. With Verma’s confirmation and Tom Price installed as HHS secretary, President Donald Trump has two of the most senior HHS officials in place. Last Friday, the president nominated Dr. Scott Gottlieb to run the Food and Drug Administration (FDA). Nonetheless, many senior political appointee positions at HHS remain unfilled.

The Week Ahead

The item that has dominated Capitol Hill for the past few weeks, the Republican healthcare overhaul, has made it to the House Rules Committee after approval by the House Budget Committee last week. That vote saw three conservative defections from the Republican party-line, and Republican leadership will only be able to afford 21 total no votes on the House floor in order for the bill to pass. A manager’s amendment being considered for the bill is likely to be designed to attract more conservatives without further alienating moderates, but it remains to be seen whether House leadership can strike that delicate balance. Republican leadership has maintained the goal of advancing the bill to the president’s desk by the Easter recess, and Speaker Paul Ryan (R-WI) announced last Friday that the House will vote on the bill this Thursday – although that could slip if GOP leadership doesn’t think they have the votes for it to pass.

Additional health care items are also likely to be considered on the House floor. Unlike the primary American Health Care Act (AHCA) package, these bills will be considered through regular order rather than under the reconciliation process, meaning that they will need 60 votes in the Senate to pass. Specifically, the bills would revoke the antitrust exemption for health insurance companies (H.R. 372), narrow the regulations required of small businesses providing insurance through association health plans (AHPs) (H.R. 1101), overhaul the medical liability system for cases related to federally-subsidized health care (H.R. 1215), and exclude stop-loss insurance from the regulatory scheme for most insurance plans (H.R. 1304).

In the Senate, all eyes will be on the Senate Judiciary Committee where President Trump’s pick for the Supreme Court, Neil Gorsuch, will begin his confirmation hearing today. Senate Minority Leader Chuck Schumer (D-NY) has said that he will almost certainly oppose Gorsuch and encourage other Democrats to do so, although he will wait for a final decision until after the hearings. Thus far, Gorsuch’s meetings with senators have reportedly been positive and many observers are expecting him to garner the 60 votes necessary to be confirmed by the upper chamber. 

Floor action in the Senate will considerably quieter; the chamber is not scheduled to meet for legislative business until Tuesday, when it will consider a pair of nominations to the U.S. Sentencing Commission.

CBO Estimates 24 Million to Lose Insurance Under GOP Health Bill; Deficit Reduced by $337B

The Congressional Budget Office (CBO) estimated that over 10 years 24 million people would lose insurance coverage as a direct result of the American Health Care Act (AHCA) – the GOP-backed bill to repeal and replace key provisions of the Affordable Care Act (ACA). The CBO also projects that the AHCA would reduce deficits by $337 billion over the 2017-2026 period. Specifically, CBO predicts a $1.2 trillion reduction in outlays and a $0.9 trillion reduction in revenues over that period. A major source of the $1.2 trillion in reduced outlays will come from substantial cuts to the Medicaid program, where CBO estimates $880 billion in reduced spending.

Additionally, CBO conveyed that the plan functionally ends the ACA’s Medicaid expansion in 2020. Though the plan “grandfathers” expansion enrollees if they maintain continuous Medicaid coverage, CBO estimates that most of these enrollees would “cycle off the program.” The budget office “projects that fewer than one-third of those enrolled as of December 31, 2019, would have maintained continuous eligibility two years later.” By 2024, CBO projects that over 95 percent of Medicaid enrollees will face the lower financing rates that prevailed before the expansion. Furthermore, starting in 2020, federal financing for Medicaid will be fixed at the 2016 per-enrollee cost of the program (the “per capita cap”). This per-enrollee cost will grow at the rate of the consumer price index for medical care services (CPI-M).

The bill text of the AHCA was released last week, and has been approved at the House committee level despite criticism that lawmakers were moving ahead with legislation without a formal cost or budgetary impact. Immediately following the release, Republicans noted that the CBO projection is incomplete because it does not account for additional reforms that will be enacted in the future via regulation or additional legislation. For example, House Energy and Commerce Committee Chairman Greg Walden (R-OR) said in a statement that the score “reflects only a portion of the actions we will take to roll back red tape, free markets, and empower consumers.” Meanwhile, Democrats used the score to criticize the AHCA, with Sen. Ron Wyden (D-OR) calling it “an awful deal for the American people.”

In framing the analysis, CBO underscores that it is difficult to predict how federal agencies, states, insurers, employers, individuals, doctors, hospitals, and others will respond to proposed changes.  As a result, the estimates offered by the CBO are “in the middle of the distribution of potential outcomes.”

Trump’s Budget Proposes Deep Cuts to NIH, 

The White House has released President Donald Trump’s “America First” 2018 Budget Blueprint, titled “A Budget Blueprint to Make America Great Again.” The document released Thursday is considered a blueprint, and not a complete budget, which the White House plans to release in May. The President says at the outset of the document that the blueprint is meant to advance “the safety and security of the American people” and the budgetary proposals are part of an overall effort to “begin a new chapter of American greatness.” The blueprint would not increase federal debt in 2018, and would increase defense spending by $54 billion while proposing major cuts to domestic discretionary programs.

Notably, the blueprint proposes to make substantial cuts to healthcare-related federal spending initiatives, including a $5.8 billion cut from the National Institutes of Health (NIH). Specifically, the budget proposes a “major reorganization of NIH’s Institutes and Centers,” the consolidation of the Agency for Healthcare Research and Quality (AHRQ) within NIH, and the elimination of $4.2 billion in discretionary programs for low-income individuals. The budget would also cut more than $400 million in workforce training program funding. Additionally, the budget increases Food and Drug Administration (FDA) medical product user fees to over $2 billion in 2018, approximately $1 billion over the level, to “replace the need for new budget authority to cover pre-market review costs.”

In addition, the blueprint makes general statements about supporting services for Ryan White HIV/AIDS providers, investing in mental health activities, and supporting “efficient operations for Medicare, Medicaid, and the Children’s Health Insurance Program” without any mention of specific dollar amounts.

House Budget Panel Approves AHCA

Last Thursday, the House Budget Committee voted to report the American Health Care Act (AHCA) to the House of Representatives by a 19-17 vote. Three Republicans, Reps. Dave Brat (R-VA), Mark Sanford (R-SC) and Gary Palmer (R-AL) – all members of the House Freedom Caucus – joined Democrats to oppose advancing the repeal bill to the House floor. The vote preceded a discussion of non-binding motions to seek amendments to the AHCA, which will accompany the bill to the House Rules Committee. It was announced Friday that the House will vote on the bill this Thursday. The move shows that GOP leaders are confident they have the 216 votes needed to pass the bill, even as the far-right and centrist Republicans continue to press for changes.  The Committee adopted motions supporting:

  • having work requirements for able-bodied childless adults enrolled in Medicaid;
  • allowing states the option of a Medicaid block grant;
  • freezing Medicaid expansion enrollment prior to 2020; and
  • targeting tax credits to those who most need them, a policy that several Democrats supported.

The motions do not actually amend the AHCA; they provide instructions regarding the Committee’s support for amendments being offered in this regard. Rep. Gary Palmer (R-AL) filed the passed motion on requiring able-bodied childless adults to meet work requirements while enrolled in Medicaid. Also speaking in favor, Rep. Glenn Grothman (R-WI) said Medicaid benefits discourage work and work requirements would make it a “less seductive entitlement.” A group of conservative members in the House have expressed support for the policy, and HHS Secretary Tom Price and CMS administrator Seema Verma sent a letter last Tuesday to governors in which they appeared open to giving states waivers to make similar changes to their Medicaid programs (more on this below). Democrats strongly opposed the motion, and Rep. Barbara Lee (D-CA) called it a “baseless attack” on the working poor and a barrier to coverage for the elderly and people with disabilities.

Meanwhile, Governors John Kasich (R-OH), Rick Snyder (R-MI), Brian Sandoval (R-NV) and Asa Hutchinson (R-AK) wrote in a letter to House and Senate leadership Friday that the current GOP plan to end the Medicaid expansion in 2020 does not give states the resources or flexibility to make sure no one is left out.  They stated that the current version of the AHCA being debated in the House does not cover the objectives outlined by President Trump and HHS Secretary Price to reform Medicaid without impacting beneficiaries. The governors offered a health care proposal of their own that would preserve the expansion and make it available to other states that didn't expand it under the Affordable Care Act.

In Letter to States, Price and Verma Signal More Flexibility on Medicaid Waivers

Shortly after her swearing in ceremony on Tuesday, the Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma and HHS Secretary Tom Price sent a cosigned letter to state governors indicating that they will seek to facilitate expedited approval of Section 1115 demonstration waiver applications to reshape Medicaid. Specifically, they suggest that states may consider policies imposing work requirements for certain able-bodies adult beneficiaries, “Health Savings Account-like features,” and various cost-sharing policies common in commercial insurance, like premium payments and emergency room copayments. Additionally, they encourage the use of waiver authority to address the opioid epidemic and implementation of the Home and Community-Based Services (HCBS) rule.

On Wednesday, Senate Finance Committee Ranking Member Ron Wyden (D-OR) and House Energy & Commerce Committee Ranking Member Frank Pallone Jr. (D-NJ) sent a letter in response to Secretary Price stating that Medicaid waivers cannot be approved by the agency if they are not in line with the objectives of the program. They called the announcement from Price and Verma “an attempt to ration care for Americans.”

Financial Services Report

Looking Ahead

Near Term

  • All eyes will be on the CBO this week as the non-partisan agency is expected to release its analysis of the House Republican’s health care proposal.  
  • The White House is expected to release its FY18 Budget, possibly as soon as Wednesday.  Based on what has been shared to date, the budget is expected to propose significant decreases in domestic discretionary spending while providing massive increases for military spending.
  • The Banking Committees in both chambers continue their work on passing Flood Insurance Reform.   With a September 30th deadline, efforts to pass a long term replacement have overtaken the push for Dodd-Frank reform.  
  • The Fed is meeting this week and is widely expected to announce an interest rate increase.  

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Today on the Hill: Coats Cloture Vote in Senate; Suspension Bills in House

In a relatively quiet day on the chamber floors of Congress, the Senate moves back to confirming nominations from the White House by considering President Trump’s choice for Director of National Intelligence (DNI), former U.S. senator from Indiana, Dan Coats. The DNI position was created after the Sept. 11 attacks to coordinate the work of the various agencies that make up the Intelligence Community. A cloture vote on Coats’ nomination is expected today, setting up a final vote later this week.

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Today on the Hill: CBO Releases AHCA Analysis; House Enjoys Snow Day While Senate Overturns Labor Rule

The Congressional Budget Office released its highly-anticipated score of the American Health Care Act (AHCA) – the Republican plan to repeal and replace parts of the Obama-era Affordable Care Act (ACA). Both supporters and detractors of the AHCA will find favorable information in the score; the CBO projects federal deficit savings of $337 billion over the next ten years, but at the cost of coverage losses for 24 million people in that same timeframe. The proposal’s effect on premium prices, the stability of the non-group market, and Medicaid spending are also detailed in the CBO’s analysis.

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Today on the Hill: CBO Score and Trump Budget Headline Hill Action

The release of two separate documents – a Congressional Budget Office (CBO) score for the Republican health care plan and President Trump’s budget proposal for fiscal 2018 – will drive conversation in Congress this week far more than any of the measures on the chamber floors. The first document is sure to add a wrinkle to the debate over the Republican health care proposal after the House Committees with jurisdiction approved the bill last week before the non-partisan CBO could release its analysis. The House Budget Committee will meet midweek to help turn the proposal into a single bill that meets the requirements of budget reconciliation, with Republican leaders hoping to get the bill to the floor next week.

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