TRP Health Policy Report

August 4, 2014

Last week saw a flurry of activity on Capitol Hill as lawmakers looked to complete work on a series of legislative priorities before adjourning for the August recess. On Friday night, the House voted 223-189 to pass a $694 million bill (H.R.5230) to deal with the influx of migrants at the southern border, overcoming concerns from conservatives that had nearly derailed it a day earlier. Following passage of the border supplemental package, the House approved a second measure (H.R.5272) in a 216-192 vote that would limit President Obama's power to shield undocumented immigrants from deportations. Neither bill is likely to advance, given strong opposition by Senate Democrats and the White House.

Passage in the House came one day after Senate Republicans blocked consideration of a supplemental spending bill (S. 2648) put forward by Appropriations Committee Chair Barbara Mikulski (D-MD) that would have provided $2.7 billion in federal aid to the agencies tasked with addressing the border crisis. The largely party-line 50 to 44 procedural vote fell 10 votes short of the 60 needed to advance. Lawmakers remain sharply split on border policy questions, leaving no clear path to compromise when they return in September.
Last Thursday, the Senate approved legislation (H.R. 3230) overhauling the Department of Veterans Affairs, 91-3, sending the package to President Obama. The House passed the reform bill on Wednesday in a 420-5 vote. Lawmakers had been racing to agree on a package before starting their August break. Also on Thursday, the Senate voted 81-13 to approve an $11 billion highway bill (H.R. 5021) extension they had overwhelmingly rejected two days earlier. The vote sent the legislation to President Obama for his signature just hours before the Transportation Department said it would need to begin cutting payments to states. Earlier in the day, the House rejected proposed Senate changes to the bill by a vote of 272-150, sending the House version back to the Senate for approval.
Elsewhere, the Senate voted 54 to 42 to block consideration of a bill (S. 2569) to end subsidies that encourage firms to send jobs overseas, and 58-33 to advance President Obama's nominee to the Eleventh Circuit Court. In healthcare-related developments, the House voted along party lines last Wednesday to move forward with a lawsuit against President Obama (H.Res. 676). The 225-201 vote authorized Speaker John Boehner to sue the President on behalf of the House for delaying a provision in Affordable Care Act (ACA) that requires large and mid-sized employers to provide insurance to their workers. Republicans see the delay as an example of the President overstepping his authority, although they agree that with the decision to postpone implementation of the employer mandate.
The Week Ahead
Members of the House and Senate are in recess until September 8.
House Approves Resolution Authorizing ACA Lawsuit
Last Wednesday, the House voted 225-201 to approve a resolution (H. Res. 676) authorizing a lawsuit against President Obama for his use of executive action to delay the Affordable Care Act's employer mandate. The vote largely was along party lines, with all but five GOP lawmakers voting for the measure and all Democrats voting against it. The lawsuit would assert that the Obama Administration's delay of the employer mandate falls outside the constitutional powers of the President. House Speaker John Boehner (R-OH), who would file the suit on behalf of the House, has said the delay should have been authorized and enacted by Congress as the Constitution does not afford the President the power to choose what laws to change and what laws to execute. He noted that the lawsuit would focus on changes to legislation made without Congressional approval.
The White House and Democrats called the lawsuit a political stunt, arguing that Republicans care more about attacking the President than legislating. The legal and political fallout from the decision to pursue the lawsuit remains largely unclear. Many legal experts have questioned whether the courts would take up such a suit, or if the House has met the standard of showing that it has been harmed by the President's actions. Another question is whether the House, in acting without the Senate, has standing to sue the White House. The lawsuit has led to increasingly contentious exchanges between the White House and GOP leaders, particularly over whether the lawsuit is a prelude to the House seeking to impeach President Obama. House Republicans leaders have said they have no connection to calls to impeach President Obama and such a notion is merely a Democratic fundraising “scam.”
White House Appeals ACA Subsidy Case
In related news, the White House on Friday asked a federal appeals court to grant another hearing in a case challenging ACA subsidies. Just hours later, the court gave the subsidies’ opponents 15 days to respond to that request. The Justice Department filed the petition with the U.S. Court of Appeals for the D.C. Circuit in the case Halbig v. Burwell. Last month, the court ruled that ACA subsidies cannot flow through the federal exchange, but only through state marketplaces. The ruling by the three-judge panel conflicted with a separate decision handed down the same day by the Fourth Circuit Court of Appeals. The majority in that case, King v. Burwell, found that subsidies for plans bought on state exchanges are legal.
Lawyers on both sides agree that a strict reading of the ACA specifies that only an “exchange established by the State” is eligible for subsidies, but the White House says that was not the intent of Congress. In order for the D.C. Circuit Court to revisit Burwell, a majority of the court's judges will have to agree to rehear the case. Last week, plaintiffs in the Burwell case filed a petition with the U.S. Supreme Court to review their case, in the hope that it will take up the case in a few months and issue a ruling by next spring. Each justice on the high court will vote whether to accept or reject the petition. If the justices do take up the case, it would mark the third ACA challenge to reach the Supreme Court.
Trustees: Medicare Solvency Extended by Another Four Years
The Medicare Hospital Insurance Trust Fund will remain solvent until 2030, four years longer than projected last year, according to an annual report released last Monday by the Medicare Board of Trustees. Due in part to cost controls implemented in the Affordable Care Act, per capita spending is projected to continue to grow slower than the overall economy for the next several years. The report cited a number of factors for the improved outlook, including lower-than-expected program spending in 2013 and lower projected utilization in the types of healthcare needed by Medicare patients. The trustees also said that Medicare spending per beneficiary has remained constant for the past two years and is projected to grow very slowly over the next several years. However, the report predicted that the average cost per beneficiary would increase by around 40% by 2023, from $12,210 last year to $17,360.
The trustees noted that the reasons for the extended solvency are unclear. HHS Secretary Sylvia Mathews Burwell said that it is not yet possible to know exactly how much of the fund's improved fiscal health can be attributed to the ACA versus other cost-curbing changes in the healthcare system. The trustees also noted that Medicare costs likely will continue to increase faster than workers’ earnings, retirees' incomes and the entire economy. According to the report, Medicare is expected to comprise 5.5% of the country's gross domestic product by 2040, up from 3.5% now. If the program is not reformed by 2030, when it is projected to become insolvent, Medicare will only be able to pay for 85% of beneficiaries' hospital care. That proportion will continue to decrease to 75% by 2047, according to the report. Overall, the report was largely similar to one published by CBO earlier this month, which also predicted Medicare would remain solvent until 2030.
IOM Report Calls for Changes to Graduate Medical Education Funding
Last Tuesday, an expert panel of the Institute of Medicine proposed an overhaul of the way the United States pays for physician training. The panel was led by former CMS administrators Donald Berwick and Gail Wilensky. While some residency slots are paid for by states and other sponsors, most are federally funded by Medicare or Medicaid. In 2012, Medicare paid $9.7 billion for physician training, while Medicaid paid $3.9 billion. In addition, the Department of Veterans Affairs contributed about $1.4 billion, and HHS' Health Resources and Services Administration (HRSA) contributed approximately $500 million.
The IOM committee proposed an overhaul of the GME financing program with the goal of shifting the program “to a performance-based system,” rather than one that directs money to facilities with an accredited training program. Under the IOM recommendations, the current Medicare medical education payment system would be phased out over 10 years. Policymakers would reassess whether Medicare should continue to subsidize doctor training and to what extent. The panel calls for level Medicare funding over the next decade, but it would be distributed with a declining share providing direct subsidies to teaching programs. Under the IOM reform plan, an increasing share would go to a “GME transformation fund” that would finance training and fund training positions “in priority disciplines and geographic areas.”
Among those that would be most immediately affected are major teaching hospitals in the Northeast, which currently account for a disproportionate amount of Medicare medical education funding and number of doctors-in-training. The panel called for an end to the current system of payments that favor those hospitals, and instead for Medicare to make a flat “per resident” payment to training sponsors based on the national per-resident amount, adjusted for geography. Stakeholder groups, including the Association of American Medical Colleges said the proposal would amount to a 35% reduction in funding for teaching hospitals. Health industry officials said the cuts would threaten training programs for health professionals and potentially endanger patients. Implementing the IOM recommendations would require action from Congress, because government support for graduate medical education is written into Medicare and other federal laws.
KFF Poll:  53% of U.S. Residents Disapprove of ACA
According to a new Kaiser Family Foundation poll, 53 percent of U.S. residents in July said they had an unfavorable view of the Affordable Care Act, the highest level since the law was passed in 2010. The percentage of respondents who disapproved of the ACA increased by eight points from Kaiser's June poll, from 45% to 53%, marking one of the largest swings that the monthly poll has recorded. Researchers said the biggest change appears to be among people who previously did not have an opinion of the health law or refused to express it, and who now view it unfavorably. Negative opinions most recently peaked at 50 percent in January, just as the ACA’s rollout was beginning to improve after its bumpy rollout last October. Prior to that, a previous record of 51 percent shared an unfavorable view of the law in October 2011.
This month's eight-point increase in unfavorable opinions coincides with several news events that brought debate over the health reform law back into headlines. Last week, House Republicans authorized a lawsuit against President Obama over his delay of the reform's employer mandate. The Supreme Court also dealt a blow to health law's birth control coverage mandate at the end of June, ruling that some for-profit businesses can opt out of covering contraceptives on religious grounds. Still, the Kaiser poll found that most people want their lawmakers to improve the ACA (60 percent) rather than repeal and replace it with another law (35 percent). That includes a strong majority of Democrats (86 percent), most independents (58 percent) and almost a third of Republicans.