TRP Health Policy Report
November 17, 2014
In notable healthcare news, HealthCare.gov launched its second enrollment effort under the Affordable Care Act (ACA) on Saturday to largely positive reviews, suffering from fewer of the logjams that marked the site’s rollout last year. The smoother opening came as a relief to the White House, which has poured resources into upgrading HealthCare.gov. The exchanges are a centerpiece of the health law and allow consumers to obtain coverage, re-enroll in plans and determine their eligibility for premium subsidies. Thirty-seven states rely on the federal site, while 13 states and the District of Columbia are running their own exchanges. The enrollment period runs through Feb. 15.
Elsewhere, former HHS Secretary Kathleen Sebelius said that a move by either the Supreme Court or the incoming Congress to undermine or repeal the ACA’s individual mandate would send the private insurance industry into a “death spiral.” During a speech last Thursday, Sebelius warned that doing away with the individual mandate, while leaving in place the ACA's provision protecting people with preexisting conditions, and would leave private insurance companies with high-risk pools they couldn't afford to cover. Sebelius urged Republicans, following their expected symbolic ACA-repeal vote, to tread carefully on piecemeal repeal efforts that could have major unintended consequences to industry, as could the high court's upcoming ruling. But she predicted a handful of ACA changes will gain bipartisan support: repealing the device tax, changing the 30-hour work week and reducing paperwork required of large employers.
The Week Ahead
This week, the Senate will take up its version of the Keystone XL bill (S. 2280) that would provide for the approval of TransCanada Corp.'s pipeline, which the State Department has been reviewing for six years. The project would transport Alberta's heavy crude to refineries in the U.S. Gulf Coast. Senators will also debate an NSA surveillance bill (S. 2685) and a measure that reauthorize the Child Care and Development Block Grant program (S. 1086). The Senate also plans to consider a series of judicial nominations. In the House, members will consider three bills (H.R. 1422/HR 4012/H.R. 4795) designed to set new requirements for EPA regulations.
Off the floor, three committees will review efforts to address the Ebola outbreak. On Tuesday, the House Foreign Affairs Global Health Subcommittee will examine efforts to combat Ebola, and the Energy and Commerce Oversight Subcommittee will hear an update on the U.S. response to the virus. On Wednesday, the Energy and Commerce's Health Subcommittee plans to look into the efficacy of medical protocols in the wake of Ebola. That same day, the Senate Homeland Security Committee will examine public health preparedness in dealing with the virus.
ACA Enrollment in 2015 Won’t Meet Forecast
Last Monday, HHS projected that up to 9.9 million people would be enrolled in the ACA in 2015, millions fewer than Congressional Budge Office (CBO) had previously estimated. Specifically, the figure was less than CBO’s projection of 13 million for 2015 enrollment, raising questions about the exchanges' performance, compared with expectations. HHS officials described their figures as more complete than the CBO's and said the health insurance marketplaces are simply not “ramping up” at the rate the office projected. HHS officials said it's likely to take “four or five” years for the system to reach maturity, but emphasized that 9 million to 9.9 million exchange participants in 2015 will still be “important and significant.” The tension between the HHS and CBO projections is likely to draw criticism from Capitol Hill, where critics of the law are sensitive to any signs it might be encountering trouble.
Last year, HealthCare.gov was plagued by serious technical problems at its launch, but HHS Secretary Sylvia Matthews Burwell insisted Monday that her agency was better prepared for the open enrollment season this year. Burwell also promised a better consumer experience, claiming the website is “simpler, faster and more intuitive.” For those coming back to the website, for instance, 90 percent of the information needed will be pre-populated. New consumers will have a much shorter application to fill out, while others should be able to access the site through mobile applications. Enrolling people could nevertheless be challenging this year, Burwell said, in part because this year's potential customers are likely less eager to enroll than those who signed up last year. Additionally, open enrollment runs just three months, compared with six months last year.
HHS Withdraws 340B 'Mega Reg,' Plans to Issue Guidance
Last Friday, HHS withdrew a proposed regulation for the 340B drug pricing program in light of a court ruling against another 340B rule challenged by the pharmaceutical industry. Drug manufacturers, hospitals and pharmacies that participate in the 340B program have been waiting since last spring for what they call a “mega-reg” – a regulation that may narrow the reach of the drug discount program. Under the 340B program, drug manufacturers provide discounts between 20% and 50% on certain outpatient drugs to hospitals that serve large numbers of low-income and uninsured patients. The savings and revenue generated by the discounts can be used to improve patient care, including the addition of new services. Drugmakers and some lawmakers have criticized the 340B program, arguing it creates perverse incentives for hospitals to buy physician's offices and clinics that serve low-income patient populations in order to gain access to the discounts. The drug industry has advocated for rules requiring hospitals to demonstrate that 340B savings are used directly to treat the patient populations that qualified them for the program.
The change in direction stems from a lawsuit filed last year by PhRMA, which sued HHS over a regulation that required drugmakers to offer reduced prices for orphan drugs if they were used for non-orphan conditions or diseases. Orphan drugs are some of the most expensive drugs sold in the U.S. and many have been approved to treat a wide range of conditions. A judge struck down that rule but the HHS agency that oversees the 340B program (HRSA) eventually re-issued the policy as an interpretative rule. In a notice posted to its website, HRSA said that, rather than issue the omnibus regulation it initially drafted, the agency will instead propose guidance next year that will address “key policy issues raised by various stakeholders committed to the integrity of the 340B program.” It will separately issue proposed rules related to civil monetary penalties for manufacturers, how the ceiling prices of 340B drugs are calculated and dispute resolution.
Device Tax Repeal Gains Steam
After gaining control of the Senate and upping their majority numbers in the House during the midterm elections, aides say Republicans will soon move to repeal the medical device tax imposed under the Affordable Care Act. Implemented in January 2013, the medical device tax imposes a 2.3 percent excise tax on products that range from surgical gloves to defibrillators. It is projected to raise $20 billion between 2013 and 2019, but the IRS is reportedly struggling to collect the tax from medical device companies, and is coming up well short of first-year targets.
In March 2013, the Senate approved a symbolic resolution calling for repeal of the tax, with more than 30 Democrats joining Republicans in support of the non-binding measure. Senate Majority Leader Harry Reid (D-NV) did not allow an actual binding vote on the legislation – but with Sen. Mitch McConnell (R-KY) at the helm, that will change. Opposition to the tax is also widespread in the House and has significant support from both Republicans and Democrats – especially in states such as Minnesota and Indiana, which are home to major medical device manufacturers. The med-tech industry has aggressively lobbied Congress to repeal the tax, which they say has driven up the price of devices and led to job cuts. Though the White House has previously supported keeping the tax intact, it’s unclear what action President Obama would take if Congress approved its repeal. During a press briefing on November 5, President Obama did not rule out the possibility of signing a repeal of the tax into law.
Gallup Poll: 35% Willing to Defy Individual Mandate
According to a new Gallup poll, roughly 35 percent of uninsured people in the U.S. would rather pay a fine than buy coverage under the Affordable Care Act. The polling data also found that the number of people defying the individual mandate has grown over the last year, increasing 6 percentage points since last November. Those who do not obtain insurance will face a fine of at least $325 in 2015, depending on their income. The penalty is more than double that of the previous year; though about the same number of people said they planned to get coverage. About 30 percent of people said they did not know about the fee for the individual mandate, Gallup found. A majority of the insured, 55 percent, said they did plan on buying insurance, with most people planning to buy coverage through the government-run exchanges. One-fifth of people said they didn’t know where they would get insurance, though they planned to.
Gallup also found that uninsured Americans' familiarity with the exchanges is low, with 46 percent saying they are “not familiar at all” with the exchanges, and another 19 percent claiming they are “not too familiar” with the exchanges. Eight percent say they are “very familiar” and 22 percent are “somewhat familiar.” The individual mandate first went into effect in January 2014. Within a year, the penalties will increase to $695 per adult or 2.5 percent of a family’s income, whichever is greater. The government has estimated that as many as 6 million people could be hit with fines by 2016. Government officials have predicted the fines would sting just enough to prompt people to gain coverage. Still, not everyone will face a fine. About 80 percent of uninsured people will be exempt from the mandate, according to CBO projections.