Health Policy Report

The Week in Review
 
Last week witnessed a flurry of transportation action, as the Senate worked through the weekend in hopes of advancing their version of highway funding legislation. The Senate’s six-year measure would pay for new highway funding for three years by using a variety of offsets on top of the current federal gas tax, which on its own is not generating enough revenue to keep the Highway Trust Fund solvent. The Senate bill would generate $9 billion by selling crude oil from the Strategic Petroleum Reserve, $16 billion by cutting the dividend rate paid by the Federal Reserve, and $4 billion by indexing customs fees to inflation. In order to placate Democrats, mass transit funding has been expanded in the bill and an offset taking away Social Security benefits for those with a felony warrant was removed. Even with all the changes, the Senate will eventually need to come up with another package of offsets to pay for the bill’s final three years.

House leaders have remained committed to their own solution to the highway funding problem – a measure that would keep the Highway Trust Fund solvent through December, allowing for the negotiation of a broader package after the August recess. The House is also pushing their version to avoid a ride-along amendment that would reauthorize the Export-Import Bank as conservatives in both bodies desperately want to keep the bank closed permanently. Senate leaders worked through the weekend on their proposal and the issue is likely to reach a resolution sometime this week.
 
Outside of transportation, House leaders passed a bill (H.R. 1734) giving states greater authority in regulating the disposal of coal ash—a waste product from coal-fueled power plants—despite opposition from Democrats and a veto threat from the White House. The Senate heard from Secretary of State John Kerry on Thursday on the details of the nuclear deal with Iran, which would curb the Iranian nuclear program in exchange for sanctions relief. Republicans have sharply criticized the deal and while it is subject to Congressional approval, a rejection would be subject to a White House veto.
 
The Week Ahead
 
With highway funding expiring this Friday, the Senate is under a tight deadline to finish its work on the highway legislation. House leadership has offered a cool reception to the six-year Senate bill, while Majority Leader Mitch McConnell (R-KY) and Senate GOP leaders hope the July 31 deadline will force the House's hand.  The House plans to depart Washington for the five-week summer recess on Thursday afternoon. House Republican and Democratic leaders are still pushing the five-month patch approved by the chamber earlier this month.  If the Senate passes its bill in time, it’s unclear if the House will take it up. Members of both parties have expressed concern about the Senate measure providing offsets for only three of the six years of transportation policy it authorizes. But if the Senate doesn’t pass its bill before Thursday, the House may adjourn anyway for the recess and leave the upper chamber with no other option but to pass the five-month extension.
 
In the House, members are expected to spend the week on legislation to curb administrative regulations and reform the Department of Veterans Affairs (VA).  The House will take up a bill to authorize the VA to fire or demote employees based on poor performance or misconduct. Another bill that could hit the floor this week would direct the VA to develop a plan to consolidate all provider programs at facilities outside the agency’s system into a single program known as the Veterans Choice Program.  In addition, the House will vote on legislation this week that would require Congress to approve all new major regulations; no major regulations would become law until Congress approved them.
 
CR Likely Needed to Avert Shutdown
 
The ongoing budget battle in Congress has grown bleaker in recent weeks, and last week House Speaker John Boehner (R-OH) conceded that the body is likely to take up a stopgap spending measure after the August recess in order to avert a government shutdown. While both chambers’ appropriations committees have passed all twelve fiscal 2016 appropriations bills—a feat not accomplished by the Senate Appropriations Committee in six years—the full House has only passed six and even those have languished under the scrutiny of Senate Democrats. With government funding set to run out on September 30, and both bodies about to enter the August recess, the prospects of a comprehensive budget deal are slim.
 
Making the passage of spending bills even more difficult are the many controversies and policy fights that have been attached to appropriations – from a Confederate flag amendment slowing down the Interior-Environment bill to the effect of a planned papal visit to Congress in September. Complicating matters further still are the strict spending caps that were put into place as part of a budget deal in 2011 – caps that an agreement between Rep. Paul Ryan (R-WI) and Sen. Patty Murray (D-WA) managed to circumvent last year, but that Republicans now want to enforce as they control both houses of Congress. The partisan intransigence on spending caps has been compounded by the policy riders attached to spending bills, including measures that would defund the Affordable Care Act (ACA), undermine Environmental Protection Agency (EPA) regulations, and prevent the Federal Communications Commission (FCC) from implementing its “net neutrality” rule for the Internet. Democrats have promised to thwart any spending bills that stick to the spending limits, and the White House has ruled out signing any bills that will strike down key elements to its signature programs.
 
The likely result of this ongoing battle is the passage of a continuing resolution, or CR, that will maintain FY 2015 spending levels for a definite amount of time, expected to be about eight weeks, pushing the funding deadline back into December. Under the conditions of a CR, the government cannot enter new contracts or launch new programs, making life difficult both for federal agencies and the many industries which rely on federal dollars. However, the brinksmanship that was witnessed in the shutdown of 2013 is not as likely this year, as Members from both sides fear the political fallout a shutdown would bring ahead of the 2016 election.
 
Cures Bill Update: Upton Urges Senate Action
 
Rep. Fred Upton (R-MI), Chairman of the House Energy and Commerce Committee, will be selling his signature legislation to Senate Health, Education, Labor, and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) and ranking member Patty Murray (D-WA) this week in an effort to have the higher chamber adopt the House’s health innovation bill. The legislation, known as the 21^st Century Cures Act (H.R. 6), garnered overwhelming bipartisan support in the House, but the Senate is working on its own measure which Alexander is hoping will be marked up by the end of the year. Meanwhile, Upton has urged his Senate colleagues to pass the House version and ensure that Cures reaches the President’s desk before 2016 election politics take hold.
 
Upton has also received mild support from the White House, with the President largely supporting the Cures Act, with the exception of the sale of crude oil from the Strategic Petroleum Reserve as an offset. The broad support may put pressure on the Senate to adopt the House measure, but Alexander has not given any indication that he will abandon the Senate effort.
 
Pressure Mounting in Senate to Delay ‘Meaningful Use’ Stage 3
 
Industry organizations, including the American Medical Association and the American Hospital Association, are strengthening their efforts to encourage the Centers for the Medicaid and Medicare Services (CMS) to push back the third and final stage of “meaningful use” requirements beyond its current deadline of 2018. The requirements aim to force healthcare providers to adopt electronic health records (EHR) standards and embrace the use of health technology to allow for the electronic exchange of patient information. Stages 1 and 2 have already been implemented with mixed results, but stakeholders seem united in their opposition to the next step forward.
 
Opponents received a significant boost last week after Senate HELP Committee Chairman Lamar Alexander told Department of Health and Human Services (DHS) Secretary Sylvia Mathews Burwell to delay stage 3 implementation.  Although Alexander was clear that he did not want to roll back progress on the adoption of EHR, he urged a slower implementation to allow the industry to progress further with stage 2 before moving on to additional regulations. There is also a chance that Health IT language becomes a part of the Senate’s health innovation bill, or 21^st Century Cures (should the Senate abandon its own version), when it comes to the HELP Committee after the August recess.
 
IRS: 7.5 Million Paid an Average Penalty of $200 for Not Having Health Insurance
 
The Internal Revenue Service (IRS) released a report on Tuesday suggesting that about 7.5 million Americans paid a penalty in lieu of having health insurance per the individual mandate created by the ACA in 2010. Initial reports from the IRS suggest that 81 percent of taxpayers, including dependents, avoided the penalty by reporting that they had insurance throughout the year. The penalty for not having insurance last year was calculated as 1 percent of annual income or $95, whichever is greater, leading to an average penalty of $200. IRS figures also include information on subsidies for health care, with 2.7 million Americans claiming about $9 billion in subsidies, for an average of $3,400. Finally, about 5 million taxpayers neither indicated they had health insurance nor paid a penalty, with the IRS saying that they are currently “analyzing” this group’s status.
 
Anthem to Buy Cigna in $54.2 Billion Deal
 
In a move that will create the largest US health insurer by membership, Anthem Inc. announced on Friday that they intend to purchase Cigna Corp. for about $54.2 billion. The acquisition marks the latest—and largest—development in a series of consolidations of the health insurance market over the past few months. Insurance and antitrust regulators are likely to scrutinize the deal, especially after another recent major merger: Aetna’s purchase of Humana for $37 billion three weeks ago. The two deals would reduce the number of national insurers to just three, sparking fears among some lawmakers of a lack of competition in the market. Shares of Cigna dropped on Friday, signaling investor concerns over a possible antitrust breakup, but Anthem CEO Joseph Swedish—who would be CEO and Chairman of the joint company—remains confident of the deal’s approval.