Health Policy Report

July 25, 2016

The Week in Review

With Congress starting its seven-week recess, the Republican Party held its national convention in Cleveland, Ohio to formally nominate Donald Trump for President. While many observers expected the convention to serve as a lightning rod for protests, the fireworks mostly came from the speaker’s podium as Republican stalwarts, celebrities, and numerous members of the Trump family all spoke to a raucous crowd assembled in Cleveland’s basketball arena. The speeches were fairly light on policy and some – most notably Sen. Ted Cruz (R-TX) – failed to provide a full endorsement of the nominee, but Republicans were united in their opposition to presumptive Democratic nominee Hillary Clinton. In his acceptance speech, Trump described a nation in turmoil and portrayed himself as the candidate who would return “law and order” to American society. From a health policy perspective, the focus on the personal attributes of the candidates overshadowed differences on the Affordable Care Act (ACA) – or Obamacare – which had been a crucial part of the Republican campaign in the 2010 midterms and 2012 presidential election.

For the Democrats, a quiet week ended with a bang as Hillary Clinton named Sen. Tim Kaine (D-VA) as her running mate. Before entering the Senate, Sen. Kaine was mayor of Richmond, VA and governor of the Commonwealth in the late 2000s. He is known as a relative moderate, speaks Spanish, and serves on the Senate Armed Services Committee, which may augment the ticket’s foreign policy credentials.

The Week Ahead

The Democratic National Convention will take place this week in Philadelphia, Pennsylvania, where Democrats are expected to officially name Hillary Clinton as their nominee for President. Most analysts expect the Democratic convention to be tamer than its Republican counterpart, but look for Clinton’s allies – President Barack Obama, Sen. Elizabeth Warren (D-MA), and others – to attempt to strike a balance between criticizing Donald Trump and putting forth a more positive view of the country. 

DOJ Moves to Block Mergers of Four Major Health Insurers

On Thursday, the Department of Justice (DOJ) filed two antitrust lawsuits against the merging of four major health insurers – Cigna Corp by Anthem Inc. and Humana by Aetna – citing concerns that the mergers would put competition within the industry at risk and harm consumers. Attorney General Loretta Lynch relayed the agency’s concerns last week that the mergers would stifle innovation in the industry and limit competition in several markets, including employer-provided competition, competition in the Medicare Advantage market and on the insurance exchanges. Although both cases are being investigated separately, the lawsuits are being filed as related and will be considered collectively by a judge. Nine states and the District of Columbia joined the U.S. against the proposed takeover of Cigna by Anthem, while eight states and D.C. joined the case against Aetna’s takeover of Humana. The mergers would be worth a combined $82 billion.

Three of the health insurance giants have expressed their commitment to challenging the decisions in court.  Aetna and Humana have said they would “vigorously defend” their proposed merger, and that “the facts do not support the basis for DOJ action” while Anthem has called the action an “unfortunate and misguided step backwards for access to affordable healthcare for America.” However, Cigna has been coyer in their statements, claiming that the insurer is currently evaluating its options and suggesting the merger may not go through. Meanwhile, Democratic lawmakers and medical groups have largely lauded the Justice Department’s decision to block the proposed mergers, including the American Medical Association, Families USA, and Sen. Richard Blumenthal (D-CT).  They all shared the DOJ’s sentiments, including that the mergers would give the newly combined companies far too much power over the health insurance market and allow them to dictate prices with little fear of competition.

Humana Exits Exchanges; United Reports $600 Million Loss in 2016 

Humana, one of the nation’s top health insurers, announced Thursday that it is pulling out of the Affordable Care Act (ACA) exchanges in all but a handful of states after a year of nearly $1 billion in losses. The company announced during an update of its second quarter earning guidance that it plans to exit nearly half of the markets for 2017, and will take part in “no more” than 11 state marketplaces, down from 19 states this year. Humana previously said it would scale back its involvement in the exchanges for 2017. The announcement comes the same day that the Obama administration declared it would step in to block the multibillion-dollar merger between Humana and Aetna. Meanwhile, UnitedHealth Group – another top health insurer – warned Tuesday that steeper-than-expected losses in its health exchange business could drive it to exit the three remaining marketplaces the company planned to participate in next year. The insurer reported $600 million in losses on the exchanges in 2016.

GOP Healthcare Platform Revealed; Echoes House Republican Health Care Plan

On Monday, the Republican Party released its official 2016 healthcare platform under Republican presidential nominee Donald Trump. Most notably, the platform echoes many of the proposals included in the healthcare plan House Republicans laid out last month and makes no mention of Trump’s controversial campaign proposals to control drug costs through drug importation and Medicare drug price negotiation. Instead, key provisions of the platform, among other things, include: repealing and replacing the Affordable Care Act (ACA); leaving Medicare untouched for Americans over 55 years of age but providing the option of premium support for future seniors to protect the program’s financial solvency; converting Medicaid into a block-grant program; supporting the passage of the Comprehensive Addiction and Recovery Act to fight the opioid crisis and ensuring the Centers for Medicare and Medicaid Services (CMS) does not punish doctors for limiting opioid prescriptions; and allowing the sale of health insurance policies across state lines to increase competition and lower prices.

While Trump’s ideas on drug pricing may be seen as a response to Republican voters’ concerns about drug prices, the recently revealed platform suggests that he may be shifting towards traditional Republican health policy ideas. And, if and when it comes time for a “President Trump” to implement his health policies, he will likely be reliant on Republicans in Congress for thought leadership.

Gun Control Debate Threatens Mental Health Bill

Hopes are dimming for the passage of a mental health bill in the Senate this year due to legislative calendar constraints and a battle that has emerged over gun politics. Notably, Senate staff in both parties reported last week that the legislation may have to wait until 2017, particularly given a closing legislative window to get anything done this year.

Although the House this month overcame years of delay to pass a mental health reform bill on a broad bipartisan vote, the legislation is stalled in the Senate as Republicans and Democrats have yet to find agreement over gun politics. Sen. John Cornyn (R-TX) has been looking to attach gun-related language – already part of his own broader mental health bill – that would require a full judicial hearing to prohibit anyone from buying guns due to mental illness. However, Democrats have expressed concern that the language would actually make it easier for people living with a mental health condition to get guns and that including any gun-related language would potentially derail the mental health bill. 

Meanwhile, a lack of time on the legislative calendar is also providing an obstacle to the bill’s passage. The Senate will be in full election mode when it returns for one month in September, and will be preoccupied with passing a continuing resolution to fund the government. If any floor time does open up in that month-long window before Congress breaks for the election, it could go to consideration of the Senate’s version of the “21st Century Cures Act,” which seeks to speed up the approval of new drugs. HELP Committee Chairman Lamar Alexander (R-TN) has made clear that this legislation, which faces its own struggles, is a top priority. If the mental health bill cannot pass the Senate before the election, there would be little time to get it through this Congress.

Nevertheless, hope springs eternal that the mental health legislation can pass. “Senator McConnell has asked us to see if we can narrow the amendments to three or four and get a time agreement and devote a day to it, and I think if we're able to do that then we should be able to do it in September,” Sen. Alexander said. “That will be up to him of course.”