Health Policy Report

The Week in Review
 
The debate on whether or not to grant President Obama ‘fast-track’ authority in negotiating trade agreements finally reached its conclusion last week with the President and Congressional Republican leadership emerging victorious. After failing to pass the full trade package earlier this month, Republican leaders devised a plan to navigate around Democratic resistance by decoupling trade promotion authority (TPA) from trade adjustment assistance (TAA). In a quick succession of votes beginning Tuesday, the Senate approved TPA and TAA for the second time, but in two separate bills. The House then passed TPA before finally approving TAA (H.R. 1295) on Thursday by a resounding vote of 286-138, two weeks after similar legislation had been defeated. President Obama is expected to sign the trade package this week, giving the Administration greater authority in negotiating trade deals such as the Trans-Pacific Partnership (TPP).

In non-trade related action, the House passed legislation (H.R. 1190) to repeal an Affordable Care Act (ACA) related provision—the Independent Payment Advisory Board (IPAB)—by a vote of 244-154. The IPAB repeal, which was paid for by raiding the ACA’s Prevention and Public Health Fund, garnered only 11 Democratic votes and will now head to the Senate. It has already generated a White House veto threat, however. House members developed a much broader consensus, 378-25, in their passage of a bill (H.R. 805) to prevent the Commerce Department’s National Telecommunications and Information Administration (NTIA) from handing over its authority on Internet domain names before the Government Accountability Office (GAO) releases a report on the impact of internationalizing the system.
 
Finally, the Supreme Court made waves this week by issuing a series of highly anticipated rulings. In King v. Burwell, the Court ruled 6-3 in favor of the government, upholding health insurance subsidies for millions of Americans who purchase coverage through the federal exchange. The Obama administration gained another win in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project as the Court decided 5-4 that ‘disparate impact’ was enough for housing discrimination cases to deserve federal scrutiny. Finally, on Friday the Court released its ruling in Obergefell v. Hodges, deciding that gay marriage licenses fell under the equal protection clause of the 14^th Amendment, effectively legalizing gay marriage across the country. 
 
The Week Ahead
 
The House and Senate will be out of session for the Independence Day recess and plan to reconvene on Tuesday, July 7. Among the first items to be considered by the House when they return is the bipartisan legislation known as the 21^st Century Cures Act (H.R. 6). Floor action on the bill was postponed until after the recess following a request from Republican leaders to the Energy and Commerce Committee to look for $2 billion in budget offsets as a replacement to Medicare cuts that were opposed by providers. In the Senate, Majority Mitch McConnell has fast-tracked legislation (H.R. 160) that would repeal the medical-device tax implemented by the Affordable Care Act. The measure passed with significant Democratic support in the House.  
 
SCOTUS Upholds Federal Subsidies in King v. Burwell
 
After months of political speculation in Washington, the Supreme Court finally issued its ruling on King v. Burwell last week, affirming the status quo by deciding that 6.4 million people can continue to receive subsidies that allow them to purchase health insurance. In a 6-3 decision authored by Chief Justice John Roberts, the majority argued that ending federal subsidies and sending markets into a “death spiral” could not have been the legislative intent of Congress, despite the language that suggested subsidies were limited to exchanges “established by the State.” The Chief Justice was joined by the four liberal judges and moderate Anthony Kennedy, who voted against the health care law in its last legal challenge in 2012.
 
The content of the decision surprised some legal analysts by not including an application of the ‘Chevron test,’ which would have allowed an agency’s interpretations—in this case, the Internal Revenue Service—to be followed in the case an ambiguous statute. However, while the Chevron test was not applied, the Court confirmed that the subsidy language is ambiguous, with Chief Justice Roberts calling it “a problem” in a nod to the plaintiffs and his conservative colleagues. The more convincing argument for Roberts was that the context of the law outweighed the unclear language of a single provision, noting that “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.”
 
CBO Issues Report on 21st Century Cures; GOP Begins Whipping Votes
 
The consideration of the 21^st Century Cures Act (H.R. 6) continued last week, with the Congressional Budget Office issuing a report that raised fresh concerns over the bill’s cost. The bill was given a score of $106 billion over five years due to its mechanism for raising NIH funding, which even some supporters conceded would be difficult to offset through other measures. Additionally, industry opposition to certain Medicare offsets included in the bill has forced sponsor Rep. Fred Upton (R-MI) and the Energy and Commerce Committee to find suitable funding alternatives. The original version of Cures was passed unanimously out of Committee in May, but Rep. Upton has promised some final tweaks to soothe the anxieties of lawmakers and industry leaders, such as fixing the Medicare offsets and correcting ambiguous language in the funding increases for the National Institutes of Health (NIH) and Food and Drug Administration (FDA).
           
Even with the minor setbacks, Cures remains an immensely popular piece of legislation, with 230 members of the House having signed onto the bill as cosponsors. House leadership has also begun whipping votes for the bill, with Majority Whip Steve Scalise (R-LA) reaching out to congressional offices to generate support and resolve any outstanding issues with House Republicans. Assuming that Rep. Upton and the Energy and Commerce Committee can make the necessary fixes to the bill during the Independence Day recess, Cures should be near the top of the House agenda when the body reconvenes on July 7.
 
Markup of HHS-Labor Appropriations Bill; Senate Version Moves Out of Committee
 
Both the House and Senate held markup sessions for appropriations legislation for the Departments of Labor, Health and Human Services (HHS), and Education. The House version includes language that would block new discretionary funding for the implementation of the ACA and seeks to take back $6.8 billion in funds from the Center for Innovation at the Centers for Medicare and Medicaid Services (CMS). On Wednesday, the updated package was voted out of Committee on a 30-21 party line vote.
 
The Senate acted similarly, targeting the ACA through a $1.15 billion reduction to the CMS – an effective 28% reduction in its program funding. However, some health programs emerged as winners, such as the National Institutes of Health, whose budget would be increased by $2 billion under the provisions of the appropriations bill to a total of $32 billion. The bill was voted out of committee on Thursday, also on a party line vote of 16-14. Both the Senate and House versions stand little chance of becoming law as the anti-ACA provisions would likely trigger a veto from President Obama. The Labor-HHS-Education appropriations bills are symptomatic of a larger budget battle taking shape in Congress that is expected to dominate Congressional debate after the August recess and could potentially lead to another government shutdown.
 
Post-King, Republicans Target ACA through Budget Reconciliation
 
With the Supreme Court ruling in favor of the government, Republicans are working on plans to force an ACA repeal through the budget reconciliation process. The parliamentary procedure would allow an ACA repeal to pass the Senate with a simple majority, rather than the 60-vote threshold that is typically required for major legislation. Republican leadership see the budget process as the only method to force a repeal past Democrats in the Senate and get it to the President’s desk. Of course, the repeal has no chance of being enacted as the President would be able to issue a veto, but getting a repeal bill to the White House would be deemed a success for conservatives eager to overturn the health care law. 
 
While forcing a veto on ACA repeal would inspire the conservative base, some Republicans, such as Rep. Tom Cole (R-OK), have suggested that reconciliation should instead be used on a proposal that the President might actually sign, such as tax reform or means-testing for Medicare. However, there are few areas of agreement between the President and Congressional Republicans, and neither side expects significant policy to emerge through the reconciliation process.
 
High Prescription Drug Costs a Major Concern among Voters in Early Primary States
 
A recent poll conducted by Morning Consult revealed that a plurality of primary voters in Iowa, New Hampshire, and South Carolina called lowering prescription drug prices an “extremely” important focus for 2016 presidential contenders. Over 80% said that they would support a candidate who would promote broad competition and increased accountability in the industry. Moreover, majorities in all three states believed that “affordability” was the most important issue facing healthcare, with drug company profits receiving the greatest amount of blame for high drug prices.  As the presidential primary season heats up, we expect there to be considerable chatter around the issue of pharmaceutical pricing and out-of-pocket costs for healthcare in general.
The Week in Review
 
The debate on whether or not to grant President Obama ‘fast-track’ authority in negotiating trade agreements finally reached its conclusion last week with the President and Congressional Republican leadership emerging victorious. After failing to pass the full trade package earlier this month, Republican leaders devised a plan to navigate around Democratic resistance by decoupling trade promotion authority (TPA) from trade adjustment assistance (TAA). In a quick succession of votes beginning Tuesday, the Senate approved TPA and TAA for the second time, but in two separate bills. The House then passed TPA before finally approving TAA (H.R. 1295) on Thursday by a resounding vote of 286-138, two weeks after similar legislation had been defeated. President Obama is expected to sign the trade package this week, giving the Administration greater authority in negotiating trade deals such as the Trans-Pacific Partnership (TPP_.
 
In non-trade related action, the House passed legislation (H.R. 1190) to repeal an Affordable Care Act (ACA) related provision—the Independent Payment Advisory Board (IPAB)—by a vote of 244-154. The IPAB repeal, which was paid for by raiding the ACA’s Prevention and Public Health Fund, garnered only 11 Democratic votes and will now head to the Senate. It has already generated a White House veto threat, however. House members developed a much broader consensus, 378-25, in their passage of a bill (H.R. 805) to prevent the Commerce Department’s National Telecommunications and Information Administration (NTIA) from handing over its authority on Internet domain names before the Government Accountability Office (GAO) releases a report on the impact of internationalizing the system.
 
Finally, the Supreme Court made waves this week by issuing a series of highly anticipated rulings. In King v. Burwell, the Court ruled 6-3 in favor of the government, upholding health insurance subsidies for millions of Americans who purchase coverage through the federal exchange. The Obama administration gained another win in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project as the Court decided 5-4 that ‘disparate impact’ was enough for housing discrimination cases to deserve federal scrutiny. Finally, on Friday the Court released its ruling in Obergefell v. Hodges, deciding that gay marriage licenses fell under the equal protection clause of the 14^th Amendment, effectively legalizing gay marriage across the country. 
 
The Week Ahead
 
The House and Senate will be out of session for the Independence Day recess and plan to reconvene on Tuesday, July 7. Among the first items to be considered by the House when they return is the bipartisan legislation known as the 21^st Century Cures Act (H.R. 6). Floor action on the bill was postponed until after the recess following a request from Republican leaders to the Energy and Commerce Committee to look for $2 billion in budget offsets as a replacement to Medicare cuts that were opposed by providers. In the Senate, Majority Mitch McConnell has fast-tracked legislation (H.R. 160) that would repeal the medical-device tax implemented by the Affordable Care Act. The measure passed with significant Democratic support in the House.  
 
SCOTUS Upholds Federal Subsidies in King v. Burwell
 
After months of political speculation in Washington, the Supreme Court finally issued its ruling on King v. Burwell last week, affirming the status quo by deciding that 6.4 million people can continue to receive subsidies that allow them to purchase health insurance. In a 6-3 decision authored by Chief Justice John Roberts, the majority argued that ending federal subsidies and sending markets into a “death spiral” could not have been the legislative intent of Congress, despite the language that suggested subsidies were limited to exchanges “established by the State.” The Chief Justice was joined by the four liberal judges and moderate Anthony Kennedy, who voted against the health care law in its last legal challenge in 2012.
 
The content of the decision surprised some legal analysts by not including an application of the ‘Chevron test,’ which would have allowed an agency’s interpretations—in this case, the Internal Revenue Service—to be followed in the case an ambiguous statute. However, while the Chevron test was not applied, the Court confirmed that the subsidy language is ambiguous, with Chief Justice Roberts calling it “a problem” in a nod to the plaintiffs and his conservative colleagues. The more convincing argument for Roberts was that the context of the law outweighed the unclear language of a single provision, noting that “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.”
 
CBO Issues Report on 21st Century Cures; GOP Begins Whipping Votes
 
The consideration of the 21^st Century Cures Act (H.R. 6) continued last week, with the Congressional Budget Office issuing a report that raised fresh concerns over the bill’s cost. The bill was given a score of $106 billion over five years due to its mechanism for raising NIH funding, which even some supporters conceded would be difficult to offset through other measures. Additionally, industry opposition to certain Medicare offsets included in the bill has forced sponsor Rep. Fred Upton (R-MI) and the Energy and Commerce Committee to find suitable funding alternatives. The original version of Cures was passed unanimously out of Committee in May, but Rep. Upton has promised some final tweaks to soothe the anxieties of lawmakers and industry leaders, such as fixing the Medicare offsets and correcting ambiguous language in the funding increases for the National Institutes of Health (NIH) and Food and Drug Administration (FDA).
           
Even with the minor setbacks, Cures remains an immensely popular piece of legislation, with 230 members of the House having signed onto the bill as cosponsors. House leadership has also begun whipping votes for the bill, with Majority Whip Steve Scalise (R-LA) reaching out to congressional offices to generate support and resolve any outstanding issues with House Republicans. Assuming that Rep. Upton and the Energy and Commerce Committee can make the necessary fixes to the bill during the Independence Day recess, Cures should be near the top of the House agenda when the body reconvenes on July 7.
 
Markup of HHS-Labor Appropriations Bill; Senate Version Moves Out of Committee
 
Both the House and Senate held markup sessions for appropriations legislation for the Departments of Labor, Health and Human Services (HHS), and Education. The House version includes language that would block new discretionary funding for the implementation of the ACA and seeks to take back $6.8 billion in funds from the Center for Innovation at the Centers for Medicare and Medicaid Services (CMS). On Wednesday, the updated package was voted out of Committee on a 30-21 party line vote.
 
The Senate acted similarly, targeting the ACA through a $1.15 billion reduction to the CMS – an effective 28% reduction in its program funding. However, some health programs emerged as winners, such as the National Institutes of Health, whose budget would be increased by $2 billion under the provisions of the appropriations bill to a total of $32 billion. The bill was voted out of committee on Thursday, also on a party line vote of 16-14. Both the Senate and House versions stand little chance of becoming law as the anti-ACA provisions would likely trigger a veto from President Obama. The Labor-HHS-Education appropriations bills are symptomatic of a larger budget battle taking shape in Congress that is expected to dominate Congressional debate after the August recess and could potentially lead to another government shutdown.
 
Post-King, Republicans Target ACA through Budget Reconciliation
 
With the Supreme Court ruling in favor of the government, Republicans are working on plans to force an ACA repeal through the budget reconciliation process. The parliamentary procedure would allow an ACA repeal to pass the Senate with a simple majority, rather than the 60-vote threshold that is typically required for major legislation. Republican leadership see the budget process as the only method to force a repeal past Democrats in the Senate and get it to the President’s desk. Of course, the repeal has no chance of being enacted as the President would be able to issue a veto, but getting a repeal bill to the White House would be deemed a success for conservatives eager to overturn the health care law. 
 
While forcing a veto on ACA repeal would inspire the conservative base, some Republicans, such as Rep. Tom Cole (R-OK), have suggested that reconciliation should instead be used on a proposal that the President might actually sign, such as tax reform or means-testing for Medicare. However, there are few areas of agreement between the President and Congressional Republicans, and neither side expects significant policy to emerge through the reconciliation process.
 
High Prescription Drug Costs a Major Concern among Voters in Early Primary States
 
A recent poll conducted by Morning Consult revealed that a plurality of primary voters in Iowa, New Hampshire, and South Carolina called lowering prescription drug prices an “extremely” important focus for 2016 presidential contenders. Over 80% said that they would support a candidate who would promote broad competition and increased accountability in the industry. Moreover, majorities in all three states believed that “affordability” was the most important issue facing healthcare, with drug company profits receiving the greatest amount of blame for high drug prices.  As the presidential primary season heats up, we expect there to be considerable chatter around the issue of pharmaceutical pricing and out-of-pocket costs for healthcare in general.