TRP Health Policy Report

Riding a surge of voter discontent, Republicans seized control of Congress in last Tuesday’s midterm elections, a result that transforms the political dynamic in Washington and gives the GOP new power over President Obama’s final two years in the White House. Republicans gained at least seven Senate seats to assemble a majority of at least 52 seats, with further pickups possible, once tallying in Alaska is complete and Louisiana holds a run-off next month. The GOP gained at least 12 seats in the House and has won at least 243 seats – a majority that is likely to grow as final races are called. The sweep left Democrats without a majority in either chamber for the first time since 2006. In separate news conferences last Wednesday, President Obama and Senate Republican leader Mitch McConnell (R-KY) talked of cooperation in the aftermath of the huge GOP election victory, flagging areas of potential compromise, including tax reform, trade deals and other policy matters. President Obama also hosted leaders from both parties at the White House on Friday to discuss how they can accomplish goals in the lame-duck legislative session that begins this week.

In a nod to GOP opposition to the Affordable Care Act (ACA), President Obama said he is open to making “responsible” modifications to the health law, but did not specify what changes he is willing to accept. McConnell said he’d prefer to fight for a full repeal of the ACA, but acknowledged that such a move might be impossible while the President is in office and able to veto any such effort. McConnell said lawmakers would move to repeal the 2.3 percent excise tax on medical devices and make other targeted changes to the health law. Meanwhile, House Speaker John Boehner (R-OH) struck a combative tone in his first post-election comments, vowing the House would again vote to repeal the ACA and warning the White House against “poisoning the well” by acting unilaterally on immigration. Last Thursday, McConnell and Boehner penned an op-ed in the Wall Street Journal outlining the leaders’ legislative priorities as Republicans enter 2015 with majorities in both chambers. Along with a renewed pledge to repealing the ACA, other commitments include authorizing the Keystone XL pipeline and reforming the tax code.
 
In notable healthcare news, the Supreme Court agreed Friday to hear another challenge to the ACA – a case that questions the legality of subsides in federally-run exchanges. The justices said they will review a lower court ruling that upheld IRS regulations that allow health insurance tax credits purchased through federal exchanges operating in more than 30 states. Conservative groups argue the subsidies should be limited to people who buy insurance through state-run exchanges. Arguments are likely in March 2015, with a decision before July. The White House promised a vigorous defense.
 
The Week Ahead
 
The House and Senate are both scheduled to return on Wednesday to begin the lame-duck session and organize for the 114th Congress. House Republicans and both parties in the Senate will hold elections Thursday to pick their leaders, while House Democrats have scheduled their leadership elections for November 18. In the Senate, the Appropriations Committee will hold a hearing Wednesday on the government response to the Ebola outbreak. Separately, several committees will hold confirmation hearings with hopes of moving executive branch nominations to the Senate floor during the lame-duck session. In the House, the Foreign Affairs Committee will convene Thursday for an Ebola hearing. Two panels, the House Oversight Committee and House Energy and Commerce Committee, both held hearings over the recess over the Administration's response to Ebola.
 
Unlike previous lame-duck sessions that saw compromises reached on major legislative items, it is possible that extending the continuing resolution (CR) could be the only notable accomplishment ahead of the 114^th Congress. Aspirational rumors about potential deals are emerging on issues including tax extenders, Ebola, and Syria, but there’s no certainty as to how Senate Republicans will choose to cooperate on these measures with a pending majority in 2015. And with the government funding bill expiring in early December, lawmakers will have little time to negotiate how federal funds should be spent for the rest of the fiscal year. 
 
Spending, Tax Deadlines Await Congress
 
When lawmakers return to Washington this week, they will face a familiar list of spending and tax deadlines. Most immediately, lawmakers will have to tackle the question of how to prevent the government from running out of money when its current spending bill expires December 11. Leaders in both parties hope to pass a new spending measure that runs through September 2015, the end of the fiscal year. It isn’t clear yet if lawmakers will be able to agree on individual, tailored spending bills or pass one measure combining several together. Republicans in the House might also try to attach measures reducing federal regulations, which could spark partisan disputes.
 
Before year’s end, lawmakers must also grapple with a number of expired tax breaks that many on both sides of the aisle agree should be renewed, though they diverge over the duration. Republican leaders view next year’s budget process as their first major opportunity to curb federal spending and pass other GOP policies, potentially including an effort to repeal the 2010 healthcare law. But even with their new majority, Republicans won’t have the 60 seats needed in the Senate to overcome Democratic procedural hurdles on most legislation. However, the federal budget requires only a simple majority, generally 51 votes, to pass the chamber. Lawmakers can then use a parliamentary tactic called “reconciliation” to pass other measures connected to the budget. It remains unclear how viable reconciliation is toward advancing the GOP agenda, but senior aides confirm that leadership in both chambers are carefully reviewing their options.
 
GOP-Controlled Senate Considers ACA Changes
 
Last week, Republican lawmakers and strategists signaled that a drive to repeal the Affordable Care Act will continue to stall despite the party’s takeover of the Senate, prompting GOP leaders to instead concentrate on paring back unpopular provisions of the law. Senate Republicans said Wednesday they would still hold a vote to repeal the law to show voters they support eliminating it. But with President Obama certain to block any repeal bill passed in the Senate and GOP-controlled House, Republicans will quickly turn their attention to dismantling specific provisions of the law. Sen. Mitch McConnell (R-KY) cited the law’s tax on medical devices, its requirement that big employers provide insurance to all workers clocking 30 hours a week or more (or pay a fine), and its mandate that most Americans carry insurance (or pay a fine). However, the President said the ACA’s individual mandate was too critical to bringing healthy people into the insurance market to consider scrapping it. He said he would “take a look” at measures to address the medical device tax, but offered no specifics.
 
Although the tax revenue goes into general treasury funds and is not specifically tied to paying for ACA programs, the medical device revenue was initially projected to raise $30 billion in a decade (post-implementation estimates now are considerably lower). Some Democrats have declared that rolling back the device tax will lead to similar demands by other healthcare industries that help pay for the law. But repeal of the tax has drawn significant support in the past from significant numbers of Democratic lawmakers, especially in states where the industry is a prominent employer. Meanwhile, major trade groups for the medical device industry said they it would continue to argue the tax hurts U.S. jobs and innovation.
 
Another possible health policy target for the GOP is the Independent Payment Advisory Board (IPAB), a mechanism to help lower Medicare spending. Republicans have attacked the 15-member board as a panel that will dictate treatments and lead to denial of some care. At the moment, the board is nonexistent, because the White House hasn’t nominated anyone for it, and Republicans have explicitly refused to make recommendations.
 
Key Congressional Panels to Maintain Health Focus
 
Fresh from success at the polls, Congressional Republicans plan to maintain the Senate HELP and House Energy and Commerce Committee’s focus on laws and regulations they’d like to change –namely the Affordable Care Act –while also seeking policy areas where they could find common ground with Democrats. Aides in both chambers say Republicans are likely to continue efforts to amend aspects of the ACA and to keep up oversight, particularly with the second open-enrollment period ending February 15. In the Senate, Republicans will take the HELP panel in a new direction in the 114th Congress, particularly when it comes to the health law. While retiring Chairman Tom Harkin (D-IA) was a strong champion of the ACA, a GOP-led committee will likely spend more time conducting oversight over the law’s implementation and advancing legislation to repeal and dismantle it.
 
Sen. Lamar Alexander (R-TN), the current ranking member who is expected to succeed Harkin, has said he wants Republicans “to repair the damage Obamacare has done and prevent future damage.” He is likely to adopt a step-by-step approach, rather than promote only one comprehensive package. While Alexander is expected to take the HELP gavel, the term limits that kept his colleague Michael B. Enzi (R-WY) from serving as ranking member this Congress would not exclude him from the chairmanship next year if he wants the job. Enzi served the six-year maximum as the panel’s ranking Republican, but only two as chairman.
 
In the House, Energy and Commerce Chairman Fred Upton (R-MI) and Rep. Diana DeGette (D-CO) are leading an effort to unveil a bipartisan ‘21^st Century Cures’ bill early next year, aiming to strengthen American innovation in discovering, manufacturing and delivering medicines and treatments for diseases. Committee Democrats are losing two long-serving members to retirement – former chairmen John Dingell (D-MI) and Henry Waxman (D-CA) – and the race between Reps. Frank Pallone (D-NJ) and Anna Eshoo (D-CA) to serve as ranking Democrat remains too close to call. Both lawmakers are likely to work closely with party leadership, particularly when it comes to advocating for the Affordable Care Act.
 
Supreme Court to Hear Case on Health Law Subsidies
 
Last Friday, the Supreme Court agreed to review whether consumers can receive subsidies through the Affordable Care Act for insurance purchased through a federal exchange. The case, King v. Burwell, rests on whether the federal government can legally provide healthcare subsidies in 34 states that have opted out of creating their own exchanges. Currently, about 5 million Americans have subsidized insurance they bought through the online marketplace run by the federal government.
 
Citing language in the Affordable Care Act, conservative groups have argued that the subsidy is limited to people who buy insurance through state-run exchanges. But the White House and Democratic lawmakers say the law intended to provide insurance subsidies nationwide, regardless of whether it was bought through a federal or state exchange. The language in the ACA saying subsidies may be paid through an “exchange established by the state” needs to be read in the context of the entire statute, they assert.
 
A federal appeals court based in Virginia agreed with the Administration's position, but now the high court has decided to review that ruling, putting a central element of the law back into jeopardy. Many legal experts had predicted that the justices would take no action for now because a separate challenge to the insurance subsides is still pending before the U.S. Court of Appeals for the District of Columbia. The Supreme Court does not reveal how many justices vote to hear a case, but its rules require at least four. The King vs. Burwell case is likely to be argued in the first week in March, with a decision before July.
 
White House Requests More than $6 Billion to Combat Ebola
 
Last Wednesday, the Obama Administration formally requested that Congress approve more than $6 billion in emergency funding to fight the spread of the Ebola virus. The request is in addition to the $88 million in funding approved by Congress in September to combat Ebola and the $750 million in funds that Congress authorized the Department of Defense to shift to help pay for efforts to stop the virus' spread in West Africa. In a letter to House Speaker John Boehner (R-OH), President Obama wrote that the money would help “to contain and end the outbreak at its source in Africa, enhance domestic preparedness, speed the procurement and testing of vaccines and therapeutics and accelerate global capability to prevent the spread of future infectious diseases.”
 
The new money for the immediate response would be divided between public health agencies including the CDC, NIH, FDA, and for humanitarian needs overseas. Funding requested for the contingency fund would be distributed between HHS, the State Department and international aid organizations. The resources would be used for training healthcare workers, acquiring protective equipment, managing Ebola treatment units, tracking the disease, education and outreach, for burial teams and to address food insecurity. In addition, some of the funds would go toward creating 50 Ebola treatment centers across the U.S., purchasing protective equipment for medical workers and enhancing airport and border screening for Ebola. The funding request is before the Senate and House Appropriations committees as part of their considerations of a $1 trillion spending measure. On Wednesday, Senate Appropriations is scheduled to hold a hearing during which the Administration is expected to further explain the request. HHS Secretary Sylvia Mathews Burwell and Department of Homeland Security Secretary Jeh Johnson are both expected to testify.