Health Policy Report

March 27, 2017

The Week in Review

At the start of last week, House Republicans were planning a floor vote on their health care package, the American Health Care Act (AHCA), and expecting to take a monumental step towards fulfilling their long-held goal of rolling back the Obama healthcare legacy. But by the end of the week, that goal appeared more elusive than ever. The bill was withdrawn from consideration indefinitely on Friday as intraparty differences on policy spoiled the first major legislative effort of the Trump era and left Republicans with a remarkable political defeat. What follows in our policy roundup is a summary of how the bill evolved in an attempt to placate both the moderate and conservative wings of the party, why that effort was ultimately unsuccessful, and with a considerable degree of uncertainty, our analysis on what will happen next in health policy.

While the AHCA dominated headlines, the House successfully advanced a minor healthcare change that would repeal the McCarran-Ferguson Act for health and dental insurance. The bill (H.R. 372) would essentially strip health insurers of their protections from antitrust regulations, a move that is largely supported by both parties. However, the bill was intended to be a supplement to the Republican health package and it is unclear whether the Senate will take up the legislation.

The Senate last week quietly advanced a pair of resolutions that would nullify Obama Administration rules related to wildlife and Internet privacy. The wildlife resolution (H. J. Res. 69), which has also been passed by the House, would rescind a rule prohibiting the hunting of certain keystone predator species native primarily to Alaska. The Senate also advanced its own resolution (S.J. Res. 34) that would nullify a rule requiring broadband providers to fulfill certain requirements in protecting consumer identity information. Both resolutions were passed along partisan lines.

Neil Gorsuch began the formal process for confirmation to the nation’s highest court last week by appearing before the Senate Judiciary Committee. Democrats pressed Gorsuch on his past rulings and stances on controversial legal issues, such as abortion and enhanced interrogation of suspected terrorists, but the conservative judge was able to get through the hearing process without much controversy. Nevertheless, Senate Minority Leader Chuck Schumer (D-NY) announced last week that he intends to lead a Democratic filibuster of Gorsuch’s nomination. It still remains unclear whether the full minority caucus will support the blockade, however, and Republicans will only need 8 Democratic defections in order to confirm his lifetime appointment. Should Gorsuch’s nomination be blocked, some Republicans have advocated using the so-called ‘nuclear option’ that would change Senate rules and allow for Supreme Court nominees to be confirmed by a simple majority.

The Week Ahead

With the Republican healthcare effort stalled indefinitely, President Trump and Republican leaders are reportedly going to prioritize tax reform as their next major legislative package. The exact nature of tax reform is still uncertain and will likely remain in discussion through the spring and into the summer. In the medium-term, Congress still needs to find a way to fund the government for the remainder of the fiscal 2017 year as the current continuing resolution (CR) will expire on Apr. 28.

The Senate returns today to hold a cloture vote on a treaty allowing Montenegro to join the North Atlantic Treaty Organization (NATO). At the committee level, the Banking and Health, Education, Labor, and Pensions (HELP) Committees are set to advance President Trump’s nominees for Labor Secretary and Chair of the Securities and Exchange Commission. A planned committee vote on Gorsuch’s Supreme Court nomination will likely be pushed to next week.

Last week’s House chaos pushed back its planned floor schedule, and the House Rules Committee is currently anticipating the consideration of two healthcare bills unrelated to the AHCA that were originally slated for concurrent consideration. Specifically, those bills would overhaul the medical liability system for cases related to federally-subsidized health care (H.R. 1215), and exclude stop-loss insurance from the regulatory scheme that governs most insurance plans (H.R. 1304).

Trump, Speaker Ryan Cancel Friday Vote on AHCA

After working tirelessly this past week to obtain the Republican votes necessary to pass the bill, President Trump and House Speaker Paul Ryan (R-WI) agreed to pull the vote on the American Health Care Bill (AHCA) minutes before a scheduled vote Friday. Dealing a potentially fatal blow to House leadership’s efforts to repeal and replace major provisions of the Affordable Care Act (ACA), Speaker Ryan called the delayed vote a result of “growing pains” for a new administration in a press conference following the announcement Friday afternoon.

There is now significant uncertainty about the future of Republicans’ efforts to repeal and replace the ACA. Speaking to the press Thursday night, White House Budget Director Mick Mulvaney suggested that President Trump is prepared to leave the ACA in place and move on to other priorities. The New York Times also reported Thursday that President Trump now regrets taking on the health care repeal before his administration could propose a tax reform plan that more Republicans would favor. Trump had previously taken a very aggressive stance on the repeal bill, stating last Tuesday that Members who voted against the bill could expect to lose their seat.

With respect to legislative efforts, it appears likely that the House might have abandoned their efforts after failing to advance the bill last week. Potential exists that key Senate leaders, such as Sen. Lamar Alexander (R-TN), could take a role in looking to broker an agreement that could pass the Senate with 60 votes. Under such a scenario, major changes would be likely to the House approach on Medicaid expansion, tax credits, and insurance reforms. Moreover, Medicaid per-capita caps would be unlikely to pass bipartisan muster. Such efforts could be characterized as an attempt to “fix” the ACA, or could end up being a rebranding exercise altogether – even something to the tune of “Trumpcare,” perhaps. But significant challenges would exist in reconciling such a package with Republican promises to “repeal and replace” the ACA.

As long as the ACA remains in place, it is likely that Health and Human Services (HHS) Secretary Tom Price will look to his regulatory toolbox to provide “relief” from ACA regulations and reverse Obama administration regulations in general. Additionally, the Trump administration has indicated they will seek to facilitate expedited approval of Medicaid waiver applications to reshape the program for the poor and disabled. Specifically, Secretary Price and CMS Administrator Seema Verma have suggested that states may consider policies imposing work requirements for able-bodies adults, “Health Savings Account-like features,” and various cost-sharing policies common in commercial insurance, like premium payments and emergency room copayments.

House Leaders Confirm: AHCA is ‘Dead’

While members of the hardline House Freedom Caucus spent the weekend trying to revive negotiations on the White House-backed bill that sunk in the lower chamber last Friday, key House leaders suggested they are ready to turn their attention elsewhere. “This bill is dead,” said House Energy and Commerce (E&C) Committee Chairman Greg Walden (R-OR), whose panel had jurisdiction over the bill. When asked if the country is “stuck” with the ACA, E&C Health Subcommittee Chairman Michael Burgess (R-TX) replied: "Yes." Chairman Walden indicated the Committee will instead move on to tackle issues associated with the exchange market and reauthorization of the Children's Health Insurance Program (CHIP) and Federally Qualified Health Centers.

Although Freedom Caucus emphasized over the weekend that negotiations should continue over the House bill, Republican leaders – both on Capitol Hill and in the White House – signaled that they are more inclined to work with Democrats than to continue negotiations with the group of about three dozen of Congress’s staunchest conservatives. “This is not the end of the debate,” Freedom Caucus Chairman Mark Meadows (R-NC) said on Sunday. "We may be in overtime, but I can tell you at the very end of the day, the most valuable player will be President Trump on this, because he will deliver.”

President Trump, meanwhile, threw cold water on Meadows’ overtures after spending considerable time courting votes from Freedom Caucus over the past two weeks. While Trump initially focused blame for the failure on Democrats, on Sunday he turned his criticism toward conservative lawmakers, complaining on Twitter: "Democrats are smiling in D.C. that the Freedom Caucus, with the help of Club For Growth and Heritage, have saved Planned Parenthood & Ocare!"

White House Open to Working with Democrats on Health Reform

Following Congress’s failure last week to move forward with legislation to repeal and replace the ACA on a strict party-line vote, the White House is expressing openness to working with Democrats on a healthcare reform bill. White House chief of staff Reince Priebus on Sunday said that all options are on the table for future negotiations on healthcare, saying that Trump is not “closing the door on anything.” Priebus said the administration welcomes proposals from the other side of the aisle, saying that “Democrats can come to the table as well.” He suggested that “it would be nice to get some Democrats on board,” while putting the impetus on GOP lawmakers, adding that “at the end of the day, I think it’s time for the party to start governing.”

Moderate Republicans in Congress have also said they would be willing to work with Democrats on healthcare reform. Rep. Charlie Dent, the co-chairman of the moderate Tuesday Group, expressed frustration with House Leadership's efforts to rush their bill through Congress, comparing it to the Democrats' passage of the ACA in 2010. "If we're going to have a durable, sustainable healthcare reform in this country, it must be done on a bipartisan basis," Dent said. Sen. Lindsey Graham (R-SC) also urged bipartisanship moving forward, saying that “I don’t think that one party’s going to be able to fix this by themselves.” Sen. Chuck Grassley (R-IA) tweeted that the lesson learned from both the ACA and the House decision to withdraw the GOP bill was that “major social policy change in U.S. must be bipartisan.” Grassley pointed to a plan from Sens. Bill Cassidy (R-LA) and Susan Collins (R-ME), which he thought could gain traction.

Democrats, for their part, appear willing to take a seat at the negotiating table – as long as the GOP takes full-scale “repeal” off the table. Senate Minority Leader Charles Schumer (D-NY) said on Sunday, “provided our Republican colleagues drop replace and stop undermining the ACA, [Democrats] are willing to work with our Republican friends – as long as they say, 'no more repeal.’” Schumer indicated that Democrats have their own suggestions for how to improve the healthcare law. "We have ideas, they have ideas to try to improve ObamaCare,” he said. “We never said it was perfect, we always said we'd work with them to improve it, we just said repeal was off the table.”

Will the White House Let the ACA ‘Explode’?

As Republicans head back to the drawing board on legislative action to alter the ACA, the Trump Administration will be confronted with a politically challenging question of whether to take regulatory action to help shore up the faltering Exchanges, or – as President Trump tweeted on Sunday – allow for the bill to “explode.” Many insurers, for which the Exchanges have not been a profitable market, will need incentives to stay in the market and not impose another round of rate hikes. Without considerable assurances from the Administration on whether they will support the Exchanges in the years ahead, insurers could continue their exodus from the marketplaces, leading to increased costs for many consumers.

Among the key decisions facing the Trump Administration in the coming months:

  • Cost-sharing Subsidies The Trump administration and Congress have to decide whether to settle a GOP lawsuit over the subsidies, which help low-income Exchange enrollees. The problem is, it’s no longer clear whether Congress would be able to approve the money. It would likely need the Freedom Caucus for that, and Chairman Meadows has said he could support the payments only as part of a plan to replace the ACA.
  • Stabilization Health and Human Services (HHS) Secretary Tom Price has told Republicans the Department is considering another rule to stabilize the markets next month – but that was based on the assumption that Congress would pass a repeal and replacement plan. HHS hasn’t said whether it will stick with its plans.
  • Enrollment Outreach Right after the Trump was sworn in, the Administration dialed back all of the efforts to encourage people to sign up for 2017, and total enrollment dropped from last year. That included cancelling millions of dollars of advertising that had already been paid for by the Obama Administration.  Now HHS will have to decide whether to promote the law in the next open enrollment, or keep saying the law has failed.
  • Recruiting Insurers The administration has noted the many insurers that dropped out of the Exchanges in the last enrollment season, but it does have the power to try to recruit more into the marketplaces – if it wants to. Trump has previously shown willingness to use the bully pulpit in support of his populist agenda, including negotiating with Ford Motor Company and Carrier, and air conditioning manufacturer, to keep jobs in the United States.

On Sunday, White House chief of staff Reince Priebus did suggest that Trump doesn't really want a collapse. "He wants to make sure that people don't get left behind,” Priebus said. “He wants to make sure that there's competition in the marketplace so that rates are lower and people can choose their doctor."