Health Policy Report

November 13, 2017

The Week in Review

A big political week both inside and out of Washington saw victories for both parties as Democrats notched electoral wins and Republicans moved a step closer to passing tax reform legislation.

On Tuesday, voters headed to the polls in several states for a series of off-year elections. In the most high-profile race, Ralph Northam defeated Ed Gillespie for the Virginia governorship by a nine-point margin, four points more than Hillary Clinton’s victory in the state last year. That fact has some political analysts viewing the results as an early indicator for next year’s midterm elections, particularly as exit polls suggest that voters viewed the Virginia and New Jersey races as a referendum on President Trump.

From a health policy perspective, Tuesday’s polls saw Maine vote for Medicaid expansion by referendum, although their Republican governor, Paul LePage, has vowed to resist implementation. Additionally, the Democratic sweep in Virginia may also lead to that state eventually deciding to expand Medicaid.

Following a contentious four-day markup, the House Ways and Means Committee advanced their version of tax reform legislation out of committee on Thursday on a 24-16 party line vote, setting up House floor consideration this week. The Senate followed up that development by introducing their own tax plan, which also focuses on cutting corporate and individual rates, but differs from the House version in significant ways.

The special election in Alabama took a significant turn last week after Republican nominee Roy Moore was accused of initiating a sexual encounter with a 14-year-old girl from when he was 32. President Trump, Senate Majority Leader Mitch McConnell (R-KY) and other GOP leaders called on the 70-year-old nominee, who denied the allegations that involved other teenagers between the ages of 16 and 18, to step aside if the accusations are true.

The Week Ahead

Tax reform will remain central to action in both chambers this week as Republican lawmakers hurry to finish a bill before the end of the calendar year. The House version of tax reform legislation is expected to hit the lower chamber’s floor this week after being approved by the House Ways and Means Committee on Thursday. While some Republican defections appear inevitable, the party’s leadership have been confident that the bill will pass before the end of the week. Meanwhile, the Senate Finance Committee is set to begin marking up its tax reform bill on today after releasing a summary document late last week. In addition to watching for Republican schisms, observers will be looking for any signals from moderate Democrats that they may be able to support a tax reform package if given some concessions.

While the House floor focuses on a tax reform vote, the Senate has teed up additional confirmation votes. Today, the chamber will vote to confirm Derek Kan as Under Secretary of Transportation and to invoke cloture on the nomination of Stephen Bradbury to be General Counsel at the Department of Transportation. Joseph Otting’s nomination to be Comptroller of the Currency is officially in the Senate queue after Majority Leader Mitch McConnell (R-KY) filed for cloture on the nomination on Friday.

CBO Issues Revised Estimate Regarding Repeal of Individual Mandate

Last Wednesday the Congressional Budget Office (CBO) issued an updated estimate regarding cost savings associated with repealing the Affordable Care Act’s (ACA) individual mandate and the penalty that those who do not purchase health insurance currently must pay. CBO projected that repealing the individual mandate, by itself, would reduce the federal deficit by approximately $338 billion over the ten-year period 2018-2017 and increase the number of uninsured by four million in 2019 and 13 million in 2027. CBO notes that the updated estimates reflect revised projections of enrollment, premiums and other factors. CBO also estimated that nongroup insurance markets would “continue to be stable in almost all areas of the country” and average premiums in the nongroup market would increase by approximately ten percent in most years during the ten-year period. 

CBO notes that the changes would occur mainly due to the fact that elimination of the mandate would result in: 1) healthier people being less likely to purchase health insurance, and 2) more Americans foregoing coverage due to higher projected premium increases. CBO states that the budgetary effects were measured relative to its summer 2017 baseline. In contrast, when the same policy was recently measured starting a year earlier and relative to CBO’s March 2016 baseline, CBO estimated that elimination of the individual mandate would reduce budget deficits by $416 billion between 2018 and 2026 and increase the number of uninsured by 16 million in 2026.  CBO notes that it is continuing to revise its analytical methods to estimate the effects of repealing the individual mandate and that “preliminary results of analysis using revised methods indicates that the estimated effects on the budget and health insurance coverage would probably be smaller than the numbers reported in this document.”  CBO concludes that even with uncertainty in the estimates, it is clear that “the federal deficit would be many billions of dollars lower than under current law, and the number of uninsured people would be millions higher.” Despite the considerable scored savings, it remains unlikely that Republican leadership in the House or Senate will include the mandate repeal in current tax reform legislation, although the possibility cannot be eliminated.

CMS Administrator Verma Unveils "New Direction" for Medicaid Program

Last Tuesday, at the 2017 Fall Conference of the National Association of Medicaid Directors (NAMD), Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma delivered a speech in which she unveiled a new vision for the Medicaid program, under which new policies will “encourage states to propose innovative Medicaid reforms, reduce federal regulatory burdens, increase efficiency, and promote transparency and accountability.”

Most notably, the CMS Administrator indicated that the agency intends to encourage and approve state requests to impose employment, education, or training requirements – what she called “community engagements” – on able-bodied, adult Medicaid beneficiaries. “Let me be clear to everyone in this room,” she announced, “We will approve proposals that promote community engagement activities.” Her carries imminent significance, given that at least six states currently have Section 1115 Medicaid waiver applications pending before the agency she heads that propose work requirements.

Approval of work requirements will represent a significant shift for the Medicaid program, as the Obama Administration and prior Administrations have refused to require Medicaid beneficiaries to work as a condition of eligibility. “Believing that community engagement requirements do not support the objectives of Medicaid is a tragic example of the soft bigotry of low expectations consistently espoused by the prior administration,” Verma said to the Medicaid Directors. She stated that every American deserves “the dignity and respect of high expectations,” and that meaningful work is essential to the health and well-being of Americans.

As outlined in the accompanying CMS press release, Administrator Verma discussed several new policies and initiatives to achieve the Administration’s goals of greater flexibility for states.  Administrator Verma pointed to revised content at intended to provide states with “a clearer indication of how their reform strategies might align with a core objective of the Medicaid program.” The new website content reflects a broader view of Section 1115 demonstrations, and is intended to signal the agency’s “willingness to work with state officials requesting flexibility.” Administrator Verma also announced that CMS is in the early stages of developing Medicaid and CHIP Scorecards, designed to promote greater transparency and accountability in the program by tracking and publishing state and federal Medicaid outcomes.

Lastly, Administrator Verma referenced new policies and guidance unveiled yesterday, on the review, approval process, and monitoring of 1115 Demonstrations and Medicaid and Children’s Health Insurance Program (CHIP) state plan amendments (SPA) and 1915 waivers, including: approval for certain 1115 demonstrations for up to 10 years; “fast track” federal review of waiver renewals; the reduction of certain 1115 reporting requirements; a streamlined “within 15-day” review call with CMS to expedite SPA and 1915 waiver efforts. Signups Surge in First Four Days

The Trump administration announced Thursday that more than 600,000 individuals had enrolled for healthcare via the federal government’s website during the first four days of open enrollment. This is “roughly double” the number of individuals who signed up last year, according to a HHS official. There were about 150,000 sign-ups per day on average for the first four days this year, compared to 84,000 sign-ups per day for the first 12 days last year. There is no data for just the first four days of last year. It is reported that 130,000 individuals were new customers this year, while 460,000 were returning customers. The open enrollment period will end December 15th, roughly half the length of the open enrollment period last year.

Experts are treating the surge in enrollment with caution, as they warn the influx of signups could be caused by an early rush to beat the new deadline. Still, many supporters of the Affordable Care Act (ACA) are energized by the large enrollment, as analysts had feared the lack of federal spending on outreach and marketing under the Trump administration would gravely disrupt the exchanges. Analysts at Standard & Poor's had projected that up to 1.6 million fewer Americans would sign up for coverage through this year, down from 12.2 million enrollments last year. Also of concern was the administration’s decision to end cost-sharing reduction (CSR) payments to insurers, causing uncertainty that lead to higher premiums for most. An analysis by Avalere Health revealed that more than 8 in 10 ACA Exchange customers qualify for premium assistance, which means they’re largely protected from the big rate hikes, and the administration’s CSR decision inadvertently led to the creation of essentially free plans (due to hard-wired increases in premium subsidies) for low-income customers in nearly every county in the country.