Health Policy Report

April 17, 2017

The Week in Review

Lawmakers left Washington to start a two-week break in honor of the Easter and Passover holidays. As with a previous recess in February, numerous Republican lawmakers faced hostile receptions in town hall meetings over the American Health Care Act (AHCA) and other Trump Administration policies. The Republican plan to overhaul the Affordable Care Act (ACA) is still alive, but it remains unclear whether the White House or congressional leadership will be able to bridge the divide between the moderate and conservative wings of the party. More details on President Trump’s position is included in our roundup below.

The Week Ahead

Congress is on the second week of its two-week break for the Easter and Passover holidays. Spending negotiations will continue to remain in the headlines as lawmakers plan for a funding bill to govern federal spending for the remainder of the 2017 fiscal year. The urgency of the spending bill will likely push back consideration of any tax reform or health care package later into the spring. The Senate returns next week on Monday, Apr. 24, and the House is scheduled to reconvene a day later.

CMS Finalizes Market Stability Rule

Thursday, the Centers for Medicare and Medicaid Services (CMS) issued its highly anticipated final rule on stability in the individual and small group insurance markets, including Exchanges. The agency said the rule is designed to provide “short-term relief for patients and issuers now” but cautioned that it would not represent a “long-term cure.” The final rule keeps most of the changes the Department of Health and Human Services proposed in February – including more flexibility in the way insurers are allowed to calculate the value of their coverage. Although this is one of the more controversial changes, because liberal groups say it could expose people to more out-of-pocket costs – HHS says it's necessary "to improve the health and competitiveness of the markets."

The new rule includes several additional changes insurers have requested:

  • Reducing the duration of the sign-up period for 2018 by half, from Nov. 1 to Dec. 15.
  • Requiring people who sign up for coverage in special enrollment periods to prove they qualify – for example, if they moved and need new a new plan. This change is intended to cut down the ability of people to sign up for coverage once they get sick. 
  • Allowing insurers to require that people pay past-due premiums before enrolling in a new plan with the same insurer the following year.
  • Allowing insurers the flexibility to offer health plans with fewer options. (Note: Democrats warn that because of the structure of Affordable Care Act (ACA) subsidies, this change could actually lead to a reduction in subsidies for some people.)

The final rule also included a key deadline for insurers – they will have until June 21st to tell the government whether they'll participate in the federal ACA marketplaces. Some stakeholders have complained that the administration rushed to publish the final rule even though it had to run through more than 4,000 comments, and that the final rule does not address the insurance industry's primary concern regarding the importance of continued enforcement of the individual mandate.

Future of Cost-Sharing Subsidies Uncertain

A powerful cadre of stakeholders, including some of Washington’s most influential healthcare and business interests, sent a pair of letters Wednesday to President Donald Trump and Congress requesting they “take quick action” to ensure that the Affordable Care Act’s (ACA) cost-sharing reductions (CSRs) continue to be funded. The CSRs are currently being challenged in a lawsuit from the U.S. House of Representatives: House vs. Price. As the legal appeal is pending, Congress and the Trump administration are both capable of taking action to continue the cost-sharing payments, but could pay a political price for doing so. 

The groups, some of whom have strongly opposed the ACA in the past, warn of dire repercussions across the health care system if the subsidies – expected to total $7 billion this year – are cut off. They argue that elimination of the CSR policy would lead to higher premiums, which could drive out middle-class Exchange customers who don't receive financial assistance, and increase costs for taxpayers. The groups also warn that if fewer individuals have coverage, uncompensated care at hospitals will increase. Recent analysis from the Kaiser Family Foundation estimated that without the CSRs, insurers would need to increase premiums by approximately 19 percent to compensate for increased costs. The letter also notes the possibility for insurers to leave the market, noting that “if reliable funding for CSRs is not provided, it may impact plan participation.”

The respective letters were signed by America’s Health Insurance Plans (AHIP), the American Academy of Family Physicians (AAFP), the American Hospital Association (AHA), the American Benefits Council, BlueCross BlueShield Association, the American Medical Association (AMA), the Federation of American Hospitals (FHA), and the U.S. Chamber of Commerce.

The letters come after the Department of Health and Human Services (HHS) spokeswoman Alleigh Marré on Tuesday disputed an “inaccurate” New York Times report claiming that HHS had decided to continue to pay the subsidies. She clarified that the administration “is currently deciding its position on this matter.” Additionally, The Wall Street Journal reported that President Trump had made threats in an interview last Wednesday, stating he was willing to withhold CSR payments as a way to force Democrats to the negotiating table on healthcare. The comment drew immediate response from Democratic leaders, and Senate Minority Leader Chuck Schumer (D-NY) assured the public that Trump’s “cynical strategy will fail.”

Trump Mandate to Cut Staff Could Harm HHS Operations

A mandate issued Wednesday by the White House to all federal agencies to cut staff could harm efforts at HHS to release data on the impact of Affordable Care Act coverage provisions and MACRA pay models, according to reports. Because human resource departments tend to be the first to cut staff in these situations, efforts to properly train people to combat fraud could also be affected. Agency officials have warned that their staffing units were already lean before the hiring freeze, and HHS is one of the smaller federal agencies with only approximately 80,000 full-time employees.

The White House memo outlined plans to lift the current Executive Order mandating a federal hiring freeze and instead instituted sweeping plans to overhaul the federal government workforce. The memo directs agency heads to take immediate action to operate under the funding levels outlined in the President’s FY18 “skinny budget” and deliver longer term plans to the Office of Management and Budget (OMB) by the end of June to cut “duplicitous or unnecessary” programs to further reduce the size of their civilian workforce. OMB Director Mick Mulvaney also noted the need for “congressional buy-in,” given that much of the restructuring would eventually flow through the annual budget and appropriations process, which is the prerogative of Congress. A final report is due to the White House by September, and restructuring changes will be incorporated in Trump’s fiscal 2019 Budget.

Although the federal hiring freeze was lifted, federal agencies will not be free to hire “willy-nilly,” as Mulvaney said Wednesday, and were advised to begin planning for initial job cuts where possible. Mulvaney added that the memo to replace the across-the-board hiring freeze would put in place a “smarter, more strategic, and surgical plan.” Mulvaney did not say how many vacancies in the federal government would be filled after the freeze is lifted, but clarified that Departments should hire or fire based on their proposed 2018 budgets. A blueprint for the budget was released in March and called for a 16%, or $12.6 billion cut to HHS' budget. Where those cuts will be made has not been detailed, except for the National Institutes of Health, which stands to lose $6 billion. A full budget is expected by mid-May, and it's unclear how many people will be let go, or from which HHS agencies.

Trump Claims He Won’t Touch Tax Reform Until HealthCare Passed

President Trump told Fox News' Maria Bartiromo that he won't start working on tax reform until the administration passes a new healthcare bill, refuting claims he had failed on healthcare and assuring the reporter that negotiations were still happening. Trump promised tax reform and infrastructure would follow as soon as the healthcare battle was complete.

When pressed by the host as to why healthcare reform must come first, Trump declared that business managers who say tax reform is more impactful are correct. He claimed that by working through healthcare first, he would be “saving a tremendous amount” for tax reform and that the administration and Republican party would be able to put a “much better plan” in place than the “failing” Affordable Care Act (ACA).

Trump said he won't set a deadline on tax reform, since the media “attacked” him when the GOP missed the healthcare deadline, but "it's coming soon." He also noted that tax reform will "be tough" to pass, "but it won't be as tough as healthcare."