Health Policy Report

The Week in Review
 
The House and Senate were in a week-long recess for the Columbus Day holiday last week. Senate Majority Leader Mitch McConnell (R-KY) has scheduled the Senate to return this afternoon at 4:00 PM and the House is set to return tomorrow morning.

The Week Ahead
 
According to the timeline put forth by Treasury Secretary Jacob Lew, Congress has just 10 legislative days to negotiate a deal to raise the debt ceiling before the nation’s borrowing capacity is reached on November 3. Speaker of the House John Boehner (R-OH) is aiming to address the debt ceiling issue before he steps down from the post, but he may face a mutiny from conservatives if he brings a ‘clean’ ceiling hike—one without policy riders that conservative members are demanding—to the floor. Those members, led by the Freedom Caucus, are reportedly considering a move to remove Boehner as Speaker immediately if he allows for a clean bill to reach the House floor.
 
While Boehner has agreed to stay on as Speaker until the Conference elects his replacement—in an election that has yet to be scheduled by the Conference—the uncertainty around the House’s top job may have an impact on the ceiling hike and other legislative priorities. The most promising candidate to replace Boehner, House Ways and Means Chairman Paul Ryan (R-WI), has yet to decide whether or not he even wants the job, as the position will likely have serious consequences for his family life and political future. Even if Ryan throws his name in the ring, conservative lawmakers are pushing for a series of rules changes to House procedures that would give their faction greater leverage in future deal making. The Republican Conference has a regularly-scheduled meeting set for Wednesday, and House leadership has asked Members to submit any proposals for concrete rules changes in writing by close of business Tuesday.
 
In legislative action this week, the Senate is set to consider a bill (S. 2146) that would outlaw the relaxed immigration policies of so-called “sanctuary cities.” Senate Majority Leader Mitch McConnell (R-KY) has scheduled a cloture vote on the bill for tomorrow afternoon, with the body set to vote on a judicial appointee earlier in the day. The House Transportation and Infrastructure Committee has scheduled a markup for their version of a long-term highway spending bill for Thursday, which includes $325 billion in spending on transportation projects over a six-year period. Additionally. a budget reconciliation package—a procedural bill that allows for major legislation to circumvent the 60-vote requirement of a cloture vote in the Senate—will be moving to the House floor after it passed the House Budget Committee by a party-line vote, 21-11, just before Congress broke for recess. The package includes a defunding of Planned Parenthood and repeals of major portions of the Affordable Care Act (ACA), including the medical device and ‘Cadillac’ excise taxes.  For a full rundown of the major issues facing Congress for the remainder of the year, please refer to TRP’s Fall Legislative Update.
 
Debt Limit Deadline Pushed Up to November 3; Boehner Considers Moving Clean Hike
 
Last week, Treasury Secretary Jacob Lew sent a letter to Speaker Boehner asserting that the deadline to raise the nation’s debt limit was now November 3, two days earlier than the Department of the Treasury’s previous estimate. Although some Republicans disagree with that timeline, it leaves Congress with roughly 10 legislative days to address the issue before the nation slips into default. A default would likely have dire consequences for the recovering global economy, potentially triggering market turmoil and a downgrade of America’s credit rating.
 
Republican lawmakers have not revealed their specific plans to address the issue, but many took Boehner’s suggestion that he wanted to “clear the decks” before retiring as a sign that the Ohioan wants to extend the nation’s borrowing capacity. In recent years, Republicans have had to rely on Democrats to move any debt-limit increase, which means they will come under intense pressure to agree to a “clean” hike. The last increase came, at Democrats’ insistence, without any conditions and cleared the House with the support of just 28 Republicans. Observers expect Boehner will again attempt to pass a “clean” bill to lift the debt ceiling before he leaves Congress, while Majority Leader Mitch McConnell (R-KY) and others in the Senate, will likely make a long shot attempt to secure entitlement reforms such as a reduction in cost-of-living adjustments to Social Security recipients and new restrictions on Medicare – including means testing and raising of the eligibility age. Republicans may also consider including other policy riders, such as halting Environmental Protection Agency (EPA) and National Labor Relations Board (NLRB) decisions, but the President is unlikely to sign a ceiling hike that includes such provisions.
 
GOP Building Consensus on ACA Replacement
 
After years of effort, Republicans are coalescing around the outlines of a plan to repeal and replace the Affordable Care Act (ACA). Last Tuesday, former Florida Governor Jeb Bush released an ACA alternative that is similar to the proposals from fellow candidate Sen. Marco Rubio (R-FL) and former 2016 hopeful Gov. Scott Walker. The Bush plan contains provisions similar to recent proposals from Congressional Republicans. Each of the plans center on a tax credit to help individuals afford health insurance, along with more limited protection for people with pre-existing health conditions and a cap on federal payments to states for the low-income Medicaid program. The emerging Republican proposals are designed to be simpler and less costly than the 2010 healthcare reform law. The GOP plans would do away with the ACA’s requirements that insurance plans offer fairly comprehensive benefits, which Republicans say are driving up premium costs. The tax credits in Republican plans are largely based on age, in contrast to ACA’s tax credits, which are based on income and therefore give low-income people more assistance. The GOP approach would also weaken some of the protections now in place for pre-existing conditions. 
 
Bush’s plan, as well as a proposal from Rep. Fred Upton (R-MI), Sen. Richard Burr (R-NC) and Sen. Orrin Hatch (R-UT), includes protections only for people with “continuous” coverage. That means people with pre-existing conditions would only be protected if they remain insured. The ACA bans insurers from denying coverage for health reasons, and pairs that with a mandate for people to buy insurance so that people don’t wait until they are ill to purchase coverage. The Republican proposals drop the mandate, which they denounce as infringing on individual liberty, while providing less protection for people with pre-existing conditions. Despite general agreement on the replacement plans provisions, Republicans face significant barriers to getting an ACA alternative enacted. For a plan to have any chance, a Republican would have to win the White House in 2016. Even then, Democrats could block a proposal in the Senate, provided that Republicans don’t do away with the filibuster. Still, the move toward a consensus among the party’s Presidential contenders could help Republicans fight back against Democrats, who have long argued that the GOP doesn’t have a plan to help the uninsured — partly because no legislative proposal has ever reached the floor.
 
HHS Sets Target of Only 1 Million New ACA Exchange Enrollees in 2016
 
Last Thursday, the Obama Administration announced a surprisingly low enrollment goal for The Affordable Care Act – a target of 10 million people covered through HealthCare.gov and state exchanges by the end of 2016. That is a slim increase from the 9.9 million people who had enrolled and paid their premiums as of June, and only a modest gain from the 9.1 million who are projected to still have coverage at the end of 2015, as people switch to other insurance or drop coverage. The enrollment goal is less than half of what the CBO projected, and reflects the White House’s acknowledgment that the sign-up season beginning Nov. 1 will be the most challenging so far. Federal officials said their enrollment estimates differ from the CBO’s in part because that office had predicted more people would lack coverage through their jobs—and turn to HealthCare.gov—than is the case. The officials also said the stronger economy left fewer people uninsured and eligible for subsidized coverage through the sites than the CBO had forecast. Thursday’s announcement drew criticism from Republican opponents of the law, who suggested that premiums could further rise if insurers were surprised by a lower-than-expected sale of plans through the exchanges.
 
Court Strikes Down 340B Orphan Drug Policy
 
Last Wednesday, a federal court ruled that drugmakers do not have to sell orphan drugs to rural and cancer hospitals at a discount under the federal program known as 340B. The 340B program requires drug companies participating in Medicaid to discount outpatient medications for hospitals and clinics to help low-income patients. The drug industry's trade association, Pharmaceutical Research and Manufacturers of America (PhRMA), has twice sued the Obama Administration, arguing that the policy undermined incentives for drugmakers to continue researching and developing new orphan drugs. The ACA expanded access to 340B discounts but also excluded orphan drugs from the program. The Department of Health and Human Services’ (HHS) Health Resources and Services Administration, however, interpreted the law to compel drugmakers to give certain hospitals discounts for those drugs when they're used to treat something other than the rare diseases and conditions they were developed to target. U.S. District Judge Rudolph Contreras in Washington, D.C., decided Wednesday to vacate an HHS interpretive rule that the Administration issued to salvage the policy. He wrote that the rule was contrary to federal law. A previous court ruling invalidated the policy when it was in a different form. The Administration could appeal the decision.
 
Study: Recent Medicaid Surge Projected to Subside
 
According to a new study from the Kaiser Family Foundation, Medicaid spending is expected to slow next year despite every state experiencing an uptick in spending and enrollment during fiscal 2015. The report found that states experienced growth nationwide—regardless whether they expanded their Medicaid programs through the ACA—and that the number of people enrolled in Medicaid increased on average by 13.8 percent in fiscal year 2015, following enrollment growth of 8.3 percent the year before. Spending increased on average by 13.9 percent in 2015 and 14.3 percent the previous year, which Medicaid officials have attributed to both an increase in provider payments and the cost of prescription drugs. But researchers suggest that enrollment will taper off next year, as an improving economy will mean fewer people applying for Medicaid. Growth is projected to rise most in those states that expanded eligibility, continuing a recent trend. In the states that expanded Medicaid, enrollment is projected to increase on average by 4.5 percent in fiscal 2016.  Meanwhile, non-expansion states are expected to continue to see some increased participation—an estimated 2.8 percent—among those previously eligible but not enrolled.