Health Policy Report

December 18, 2017

The Week in Review

The twin battles over government funding and tax reform both took steps forward last week. On the funding track, a proposed continuing resolution (CR) backed by House Republicans would provide defense spending for a year and domestic spending for five weeks — an approach viewed as a non-starter in the Senate, where Democrats have demanded “parity” in increases to defense and domestic spending. Lawmakers will likely be looking to strike a limited agreement this week that will kick the larger funding fight into January.

On tax reform, Republicans released their final conference report to the Tax Cuts and Jobs Act (TCJA) on Friday, reflecting reconciled provisions from the versions that passed the House and Senate in recent weeks. Many of the latest changes were designed to bring holdouts on board, most notably the expansion of the Child Tax Credit that was desired by Sens. Marco Rubio (R-FL) and Mike Lee (R-UT). With Republicans of all stripes satisfied by the changes, it appears that floor consideration will be relatively straightforward, despite the announcement last night that Sen. John McCain (R-AZ) would be missing the vote in order to return to Arizona for cancer treatment.

The Senate gained a new member last week, as Democrat Doug Jones pulled off an improbable victory Tuesday night in an Alabama special election. Jones bested controversial Republican Roy Moore by about 1.5 points in a race that received widespread national attention. Jones’ win brings the Republican advantage in the Senate down to a single seat, although with Vice President Mike Pence as the tie-breaking vote, Republicans will still be able to pass 50-vote threshold legislation with one defection from their own ranks. While that dynamic will likely be critical in 2018, Jones is not expected to be seated until after Congress completes its year-end work on tax reform and government funding.

Also of note, the Federal Communications Commission (FCC) voted to repeal Obama-era rules enforcing “net neutrality” last week despite significant public outcry. Proponents of the FCC’s decision say that the rules were unnecessarily burdensome and prevented investment in broadband technology, while consumer advocates have charged that the decision will give broadband companies the power to potentially block websites or charge for higher-quality service or content. In Congress, evaluation of the move has largely fallen along party lines, with Democrats calling for legislation that would reestablish the rules.

Finally, last week, the Trump administration reportedly banned Centers for Disease Controll (CDC) from using seven words including “diversity” and “fetus” in documents for the fiscal year 2019 budget, The Washington Post reported on December 15. However, on Sunday morning CDC Director Dr. Brenda Fitzgerald, disputed the ban. “You may be understandably concerned about recent media reports alleging that CDC is banned from using certain words in budget documents. I want to assure you that CDC remains committed to our public health mission as a science- and evidence-based institution,” Fitzgerald tweeted. Still, upon hearing of the report, many health leaders spoke out expressing their concern. “The words that we use ultimately describe what we care about and what we think are priorities,” Dr. Sandro Galea, dean of Boston University’s School of Public Health, told the Associated Press (AP). “If you are saying you cannot use words like ‘transgender’ and ‘diversity,’ it’s a clear statement that you cannot pay attention to these issues.”

The Week Ahead

Both chambers are reportedly planning to vote on the tax bill tomorrow, leaving the remainder of the week to hammer out a government funding agreement before breaking for the holidays. All expectations are that the tax bill will pass both chambers and that President Trump will be able to sign it into law as early as Wednesday.

The early week vote on tax reform is expected to be followed by action on government funding as the continuing resolution (CR) currently providing for government operations expires next Friday. While a shutdown or additional session days are certainly possible, pressure will be on lawmakers to reach an agreement that allows them to get home for the holidays and save some of the hard fights for next year. Once a bipartisan, bicameral agreement is hammered out behind the scenes, floor consideration will likely be rapid.

Despite the uncertainty on floor time for tax reform and a CR this week, both chambers have teed up other items for floor consideration. The House aims to consider a measure (H.R. 3312) that would revise the authorities of the Financial Stability Oversight Council (FSOC) in their designation of certain financial services firms as “systemically important” and therefore subject to additional government oversight. The bill is likely to draw some bipartisan support after being approved by the House Financial Services Committee 47-12 in October.

Senate lawmakers, meanwhile, are expected to hold two votes on Monday on relatively noncontroversial nominees. The nominations of Paul Compton to be General Counsel for the Department of Housing and Urban Development and Owen West to be an Assistant Secretary of Defense are both expected to have final up-or-down votes on Monday.

Entitlement Reform Gaining Steam with Republicans

Last Thursday, House Speaker Paul Ryan (R-WI) announced Republicans would pursue Affordable Care Act (ACA) and entitlement reform in the new year. He specified that the GOP will seek changes to entitlement programs to “smooth the path from welfare to work and pull people out of poverty” through the reconciliation process, but did not clarify whether Medicare, Medicaid, or Social Security would be subject to reform. The Speaker and House Deputy Majority Whip Tom Cole (R-OK) had previously said “entitlement reform” would include efforts to cut Medicare and Medicaid spending. The Speaker noted that Congress could no longer ignore the “collapsing and failing” of the ACA health system, but did not offer details on what legislation attached to next year’s reconciliation bill might look like.  Both entitlement reform and moving forward to fix the ACA, as well as “fixing” the regulatory state, were mentioned as Speaker Ryan’s main priorities for getting the economy to “reach its potential.”

Several other Republican congressmen have pledged to support taking on entitlement reform next year and cutting funding to Medicare, Medicaid, and Social Security, but President Trump has yet to explicitly say whether or not he would back the proposed legislation. Speaker Ryan suggested that the President is preparing an executive order on welfare that will spell out the administration’s priorities while encouraging Congress to act. During his presidential campaign, Trump repeatedly pledged not to reduce spending on Medicare, Medicaid, or Social Security.

CHIP Funding Included in House GOP Spending Bill As Democrats Push Back on Offsets

House Republicans confirmed last week that reauthorization of funding for the Children’s Health Insurance Program (CHIP) will be included in their version of a continuing resolution (CR) bill to extend the government until January 19. The Republicans’ CR will include language from the House-passed CHIP reauthorization bill, including funding for community health centers for two years and a handful of offsets that have been opposed by congressional Democrats.

Although Democrats support a renewal of CHIP funding, they oppose the Republican-proffered offsets that would make tweaks to Medicaid and Medicare as well as cut funding from the Prevention and Public Health Fund. While the bill could pass in the House without Democratic support, it needs Democratic votes in the Senate. Sen. Mazie Hirono (D-HI) reported that the bill would be dead-on-arrival in the Senate, as 44 senators have signed a letter opposing the offsets and the bill needs 60 votes to pass. As of this update’s publication, a bipartisan offset deal has yet to emerge.

Open Enrollment for ACA Marketplaces Closes, Some Fear Lower Numbers with Shorter Period

The Centers for Medicare and Medicaid Services (CMS) announced that cumulative plan selections in states reached nearly 4.7 million. Last Friday marked the deadline to enroll in a Marketplace plan for 2018 for the 39 states using the federal platform. During Week 6 of the open enrollment period, over 1 million individuals selected plans (between Dec. 3-Dec 9). Nearly 390,000 of these were new consumers, with over 680,000 renewing coverage.

There continue to be concern as to whether enrollment in the federal Marketplace will match last year’s figure of 9.2 million, in part due to this year’s more abbreviated open enrollment period and significantly reduced federal funding for enrollment outreach and assistance. Enrollment in Week 6 was slightly above — by about 6,000 people — the number of individuals who enrolled at the Week 6-mark last year, perhaps making it possible “that the enrollment tally by the of this week [Week 7] will beat last year’s total,” though many experts and advocates are skeptical that total enrollment will meet or exceed last year’s sign-ups in light of the aforementioned dynamics that have hampered Marketplace enrollment so far this year.  It was announced Friday by the Health and Human Services Department that people who were “in line” to sign up for insurance through by the end of the day Friday would be allowed to finish the process later.

Finally, CMS provided an update on effectuated Marketplace enrollment for the first half of 2017. These are the individuals that had an active policy for the first half of the year by selecting a plan and paying the premium. According to CMS, approximately 10.1 million individuals had effectuated their coverage through June 2017. “This is approximately 200,000 fewer effectuated individuals compared to the effectuated report for the first half of 2016 and about 2.1 million below the number of plan selections at the end of 2017 open enrollment,” the agency continued. CMS also noted that while the proportion of individuals qualifying for Marketplace financial assistance — i.e., via advance premium tax credits (APTC) or cost-sharing reductions (CSRs) — “has remained relatively stable,” the average amount of APTC per eligible individual is on the rise, however, by about 29 percent over last year’s figure.

HHS Nominee Confirmation Hearing and Vote Postponed

Last week, it was reported the Senate Finance Committee would postpone Department of Health and Human Services Secretary Nominee Alex Azar’s final confirmation hearing until January, after originally planning to hold it this week. It is believed that committee Republicans delayed the confirmation hearing in order to maintain their focus on achieving passage of the tax reform bill and government funding package. The Senate Finance Committee has yet to officially comment on the timing of the hearing.