TRP Health Policy Report

Last week, the House passed a fiscal 2015 Energy and Water spending bill (H.R. 4923), marking the midway point in the chamber’s appropriations process for fiscal 2015. The House has passed five other fiscal 2015 appropriations bills while the Senate has yet to approve any spending bills due to a partisan stalemate over amendments. In other floor activity, the House voted 258-160 for legislation (H.R. 4718) to make bonus depreciation tax breaks permanent. On Wednesday, the House ratified the Workforce Investment and Opportunity Act by a 415-6 vote, sending the measure to President Obama’s desk.

In the Senate, lawmakers approved a series of Executive Branch nominations, including Shaun Donovan to be Director of the Office of Management and Budget (OMB), who was approved in a 75-22 vote last Thursday. Senators also approved San Antonio Mayor Julian Castro’s nomination to serve as Secretary of Housing and Urban Development (HUD) in a 71-26 vote on Wednesday. Last Friday, the Senate failed, 41-56, to reach the 60 votes needed to advance a bipartisan sportsmen’s bill (S. 2363). Republicans rejected the package after Majority Leader Harry Reid (D-NV) blocked votes on GOP amendments.

Last week also saw House Republicans renew their challenge to the legality of the Affordable Care Act (ACA), announcing plans to sue President Obama over the Administration's decision to delay the law’s employer mandate. On Thursday, GOP lawmakers unveiled a draft House resolution that would authorize the House to file a lawsuit against the President, which the chamber is expected to vote on this month. Speaker John Boehner (R-OH) said that the lawsuit would be about the division of powers between the Executive and Legislative branches, saying the White House decision to alter the health law violated that separation of authority. President Obama and many Democrats have called the GOP effort a "stunt" and criticized Republicans for inaction on legislation such as a stalled bill to reform the nation's immigration system.

The Week Ahead

Both the House and Senate are in this week with focus on finding consensus on the Highway Trust Fund and VA healthcare bills. The appropriations process also moves ahead with possible House action on the fiscal 2015 Financial Services spending bill (H.R. 5016). House members are also scheduled to take-up a measure (H.R. 5021) to provide short-term funding for the Highway Trust fund. House lawmakers will vote on a series of suspension bills, including the Permanent Internet Tax Freedom Act (H.R. 3086). In the Senate, lawmakers may consider a bill to counter the Supreme Court’s Hobby Lobby ruling on contraceptives. Senators will also debate legislation (S. 2244) to extend the Terrorism Risk Insurance Act (TRIA) for seven years. Congressional leaders will continue discussions on how to address the issue of child immigrants on the border. In notable committee action, Senate Finance will meet tomorrow for a hearing on care for the chronically ill. On Wednesday, the House Energy and Commerce Committee will examine potential inconsistencies in Affordable Care Act (ACA) eligibility determinations.

Senators Ask Gilead to Explain Sovaldi Pricing

Last week, two influential Senators issued a series of questions to Gilead Sciences about how it priced its hepatitis C drug Sovaldi, adding to the chorus of objections to the product's $1,000-per-pill price. Sens. Ron Wyden (D-OR), chairman of the Senate Finance Committee and Chuck Grassley (R-IA), the Judiciary Committee's ranking member, called on the specialty drugmaker to justify the high price of the medication, which can cost more than $84,000 per treatment. In a letter sent last Friday, the Senators asked for a justification for how Gilead set the price for Sovaldi, given the impact its cost will have on Medicare, Medicaid and other federal spending. The Senators cited the burden on government payers and the fact that the drug is being sold for much less in other countries. They also charged that the biotech firm that developed Sovaldi had expected to sell it for $36,000 for a round of treatment and wanted to know why Gilead has decided to more than double that pricing.

The Senators gave a long list of documents they want Gilead to turn over in the next 60 days, including those related to the costs of developing and marketing Sovaldi. Industry watchers say that the government is unable to do much about the medication’s price. The best that payers can hope for is reduced costs when industry rivals release Hepatitis C treatments of similar quality in the coming months. Many industry insiders have argued that treating people with Sovaldi means fewer patients will need liver transplants when their disease becomes critical, saving the healthcare system billions. However, critics accuse Gilead of taking advantage of the fact that there currently are no better treatments for hepatitis C on the market. In their letter, Wyden and Grassley note that Sovaldi could increase Medicare spending by $2 billion between 2014 and 2015 if just 25,000 people on Medicare Part D received treatment. Leading House Democrats have also written to Gilead asking the company to explain its pricing and have called for an Energy and Commerce Committee hearing on the issue.

House, Senate Democrats Propose Bill to Reverse Hobby Lobby ruling

Last Wednesday, Democrats in the House and Senate proposed legislation that would prevent employers from denying birth-control coverage to women, an option now available to some private companies under the Supreme Court’s recent Hobby Lobby ruling. Reps. Louise Slaughter (D-NY), Diana DeGette (D-CO) and Rep. Jerrold Nadler (D-NY) filed the Protect Women’s Health from Corporate Interference Act in the House. Sens. Patty Murray (D-WA) and Mark Udall (D-CO) filed an identical bill in the upper chamber on the same day. Under both bills, for-profit companies with group health plans would be prohibited from using religious beliefs to deny employees contraception coverage or any critical health service required by federal law.

In the Hobby Lobby case, the Supreme Court said the Affordable Care Act mandate to require free contraception was overly burdensome under the Religious Freedom Restoration Act (RFRA).

The House and Senate bills tackle that issue directly, exempting federally mandated health services from RFRA unless they are religious employers such as houses of worship or religious non-profits who object to contraception. In related news, Senate Majority Whip Dick Durbin has announced plans to introduce legislation that would require corporations now exempted from the ACA mandate to disclose their coverage policy to their employees and job applicants. The new bills are part of a concerted effort by Democrats to turn the Supreme Court’s Hobby Lobby decision into a motivating force for the liberal base in the November elections.

GAO Study Finds Most Insurers Met MLR Rules in 2011, 2012

According to a new report from the GAO, about 75% of health insurers avoided having to pay refunds as required by the ACA's medical-loss ratio (MLR) provision in 2011 and 2012. Under the MLR, insurers must issue refunds to customers if they spend less than 80% of the premiums they collect for plans sold on the individual and small-group markets, and less than 85% of plan premiums in the large-group market, on medical care. The GAO found that insurers selling plans on the individual, small-group and large-group markets spent an average of 88% on medical care in the years covered by the study. In 2011, insurers issued $1.1 billion in refunds, compared with $520 million in 2012, the report stated. GAO also found that in 2012, nearly one-third of insurers operating in the individual market had to issue refunds. The number of small-group market insurers issuing refunds was 18.6% while 13.7 of large-group insurers had to issue refunds. GAO researchers estimated that insurers would have saved about 75% on those refunds if plans had been able to include broker fees in their MLR calculations.

CMS Shows Medicaid Enrollment Growth in May

According to CMS’ latest monthly report, Medicaid and the Children's Health Insurance Program (CHIP) added almost a million new patients in May. Between April and May 928,628 people signed up for Medicaid or CHIP across the 48 states that reported data – up from over 805,000 who joined in April but down from the 1.4 million who joined in March. Under the ACA, the federal government finances 100 percent of the cost of expansion for the first three years, eventually lowering its payment share to 90 percent. In 2012, the Supreme Court ruled that the federal government couldn’t penalize states for not expanding Medicaid, leading a number of states to opt out of the expansion. Those states argued they didn’t trust the federal government to pay for 90 percent of the expansion’s cost.

Even states that didn't expand Medicaid have seen the program's enrollment increase as people who were eligible under previous rules have sought coverage to comply with the ACA's requirement to have health insurance. The CMS study found that the 26 states that agreed to expansion saw 17 percent enrollment growth in the Medicaid and CHIP programs. Overall, the agency says 11.4 percent more people enrolled in CHIP and Medicaid by the end of May compared to average enrollment between July and September 2013. The report says almost 66 million people in total are enrolled under Medicaid and CHIP based on statistics from 49 states and the District of Columbia.

Surveys Find Health Coverage Growing Under ACA

Last Thursday saw the release of three new surveys finding that the Affordable Care Act is bringing down the nation’s uninsured rate. A Gallup study found that the insured rate dropped to 13.4 percent in the second quarter of 2014, the lowest level recorded since it began tracking rates in 2008 and a decrease from 17.1 percent at the end of 2013. The pollster said that since the beginning of the law's open enrollment period, the total uninsured rate has declined 3.7 percent as millions of people gained coverage. A separately study by the Commonwealth Fund found that the uninsured rate among working-age Americans dropped from 20 percent to 15 percent in the last year, with 9.5 million newly insured. Those findings mirror results from an April RAND Corp. survey, which found an increase of 9.3 million insured adults.

Meanwhile, the Urban Institute reported that among adults between age 18 and 64, 13.9 percent lacked coverage in early June, and estimated 8 million had gained coverage since September. While the findings will have little impact on the political debate over the ACA’s cost and structure, it provides advocates with evidence that the law is meeting coverage goals. Questions remain about how many people are paying their premiums and whether consumers like their health plans and how easily they can obtain care. Still, the polls were immediately cheered by ACA-activists and the White House, who said the findings validated their assertions about the 2010 healthcare reform law.