TRP Health Policy Report

June 30, 2014

The House and Senate both completed legislative business for the week last Thursday, with lawmakers returning to their districts for the Fourth of July recess. Before adjourning, the House voted 229-185 to approve legislation (H.R. 4899) to require the Department of Interior to conduct additional onshore and offshore oil and gas lease sales. Earlier in the week, the House voted 265-144 to reauthorize the Commodity Futures Trading Commission (H.R. 4413) before turning attention to other two energy-related bills. On Tuesday, the House voted 238-173 to pass a bill (H.R. 3301) from House Energy and Commerce Chairman Fred Upton (R-MI) to eliminate certain pipeline and electricity transmission permit requirements. On Wednesday, House members voted 266-150 in favor of legislation (H.R. 6) to expedite Energy Department permits for natural gas exports to WTO countries. In the Senate, members voted 95-3 to approve a jobs training bill (H.R. 803) and advanced a series of executive branch and judicial nominations.

The Week Ahead

The House and Senate are in recess until July 8. Lawmakers will return to Washington next month for a work period that is expected to focus on a host of unfinished business, including highway funding, appropriations, and terrorism risk insurance. In appropriations work, floor action is expected on a $27.3 billion House Energy and Water Development bill and a $21.3 billion Financial Services funding bill. The prospects are more uncertain for a House Agriculture-FDA bill that was pulled from the floor earlier this month. Republican leaders have cited a number of reasons for the delay, including dispute over a provision that would waive new school lunch nutritional requirements.

In the Senate, the Appropriations Committee plans to move more spending bills next month, including Defense, Energy-Water and Financial Services. Elsewhere, Senators are expected to vote on legislation to renew the Terrorism Risk Insurance Act. Off the floor, conferees from both chambers will continue working to resolve their differences over how to pay for legislation (H.R. 3230) to remedy wait times for patients at Veterans’ Affairs facilities. Lawmakers are also contemplating whether to reauthorize the Export-Import Bank. The House is also likely to take up Senate-passed legislation to modernize federal workforce development programs.

Despite ACA Enrollments, Healthcare Spending Decreases

Last Wednesday, the Department of Commerce's Bureau of Economic Analysis reported that spending on healthcare decreased in the first three months of the year despite a surge of ACA enrollments. An earlier estimate found healthcare spending had increased by 10 percent in the first quarter, boosting overall growth. Some experts interpreted that figure as a sign that people were using their new coverage under the Affordable Care Act (ACA). But the final GDP report paints a decidedly different picture, finding healthcare spending decreased and subtracted 0.16 percent from economic growth as the economy shrank by 2.9 percent.

Healthcare spending is considered a marker for how well the health law is faring. As more people have access to health insurance they are expected to seek treatment that should contribute to an increase in healthcare spending. The White House pushed back on the report’s finding, with officials saying they remain optimistic that more people will be using their insurance under the health law. “Looking ahead, it is likely that the coming quarters will see faster growth in total healthcare spending as the millions of people who gained health insurance coverage during the Affordable Care Act’s first open enrollment period begin to use their new coverage, fulfilling the law’s goal of expanding access to healthcare services,” said Jason Furman with the Council of Economic Advisers.

At House Oversight Hearing, Dems Push on Sovaldi, High Drug Prices

Last Wednesday, two Democrats on the House Energy and Commerce Committee charged that Medicare is squandering millions of Part D dollars because drug plans are unable to negotiate for lower prices on the high-cost Hepatitis drug Solvaldi and others. At an Energy and Commerce Oversight Subcommittee hearing on Medicare waste, fraud and abuse, ranking member Rep. Henry Waxman (D-CA) and Rep. Jan Schakowsky (D-IL) said the panel needs to focus on all three areas, not just fraud. Payers, politicians and some regulators have been balking at the $84,000 cost for Gilead's Hepatitis C treatment Sovaldi since it hit the market in January. Waxman and Schakowsky cited research from Georgetown University and the Kaiser Family Foundation that found Sovaldi will increase Medicare Part D drug spending by up to $6.5 billion in 2015 alone.

“Probably the biggest source of waste of taxpayer funds in Medicare are the high prices that Medicare Part D plans pay for prescription drugs,” Waxman said, singling out Sovaldi. Analysts say that because Hepatitis C is most prevalent among baby boomers, the number of Medicare beneficiaries seeking a cure could increase unless they are treated before becoming eligible for the program. In May, Deputy Administrator Sean Cavanaugh said CMS actuaries have confirmed that Sovaldi is expected to have a significant impact on Medicare, but the agency won't have an accurate idea until 2015 Part D bids are submitted.

At the hearing, Waxman and Schakowsky said the problems with the high cost of the drug are compounded by the fact that Part D plans can't negotiate effectively for lower prices, while the drug's maker Gilead provides substantial discounts in other countries. The result, Waxman said, is the waste of hundreds of billions of taxpayer dollars – a problem he said the committee should closely examine. On June 19, Waxman, along with Rep. Diana DeGette (D-CO), the ranking member on the E&C Oversight Subcommittee, wrote a letter a letter to committee Chair Fred Upton (R-MI) requesting a hearing on Sovaldi and arguing for extending Medicaid drug rebates to low-income Medicare beneficiaries.

Boehner to Sue over Executive Action on ACA

Last Wednesday, House Speaker John Boehner (R-OH) said the House will file a lawsuit against President Obama because of actions he has taken without the approval of Congress, and suggested that healthcare has played a role in the decision. Republicans have repeatedly criticized the White House for what it describes as “selective enforcement” of the ACA. In July, Boehner plans to bring to the floor legislation that would authorize the House to file suit, which would be done through the House General Counsel, at the direction of the bipartisan legal advisory group, the Speaker wrote in a memo to House members.

The GOP has slammed the President for not enforcing the employer mandate this year and implementing another transition for 2015 that gives some employers an additional year to comply. Republicans have said that if the Administration can unilaterally delay the employer mandate because it is a burden on businesses, it should also not enforce the law's mandate that most individuals be required to have health insurance. Other administrative actions that have generated the ire of Republicans include not applying the sequester to the law's cost-sharing subsidies in 2015, delaying employee choice in the SHOP exchanges, and allowing insurers to keep renewing health plans that don’t comply with the ACA's requirements until 2016.

Recently, House and Senate Republicans have also questioned HHS' authority to administer the law's risk corridor program because the law does not set up a revolving fund and Congress has not set aside an appropriation. But HHS has said it has the legal authority to pay insurers money under the program based on its authority to collect and disseminate user fees. Democrats dismissed the lawsuit as a partisan ploy designed to please the Republican base. Democrats also said the lawsuit would highlight how the President has been prodded into action by the House GOP’s inability to make legislative process on issues, including immigration.

Avalere: Exchange Enrollees Could Face Higher Premiums in 2015

According to a report released last Thursday by Avalere Health, many U.S. residents enrolled in health coverage through the Affordable Care Act's insurance exchanges might have to pay substantially higher premiums in 2015 if they do not switch plans during the upcoming open enrollment period. Avalere researchers examined preliminary rate filings in nine states, focusing on how changes in premiums tied to the second lowest-cost silver plan from 2014 to 2015 would affect enrollees' out-of-pocket costs. Avalere officials found that two-thirds of exchange enrollees in the nine states who enrolled in silver plans in 2014 chose one of the two lowest-cost options.

Researchers also found that the range in premium prices increased from 2014 to 2015, in part because new insurers entered the exchanges with lower rates in an attempt to gain more market share. Meanwhile, other insurers that significantly increased their market share in 2014 raised their rates in 2015. The Avalere report also noted that the second-lowest cost silver plan would lose benchmark status in six of the nine states next year, while the lowest-cost silver plan in seven of the nine states would no longer be the lowest-cost option in those states next year. As a result, consumers who do not shop around for lower-cost plans would end up facing substantial after-subsidy premium increases in 2015. In related news, HHS proposed a directive last Thursday that would require insurers to notify enrollees of their new expected monthly premiums prior to coverage renewals.

Bipartisan Group Seeks Deal on Mental Health Bills

Last Tuesday, a bipartisan group of House lawmakers met in an effort to reach a deal on rival mental health bills. Reps. Tim Murphy (R-PA) and Ron Barber (D-AZ), who have each introduced mental health proposals, came out of the meeting expressing optimism about a path forward. But they cautioned that no official agreement has been made, as the lawmakers still have to write up what they discussed and craft legislative language. Murphy introduced his wide-reaching legislation (H.R. 3717) in December, winning bipartisan support and praise from many advocates of those with serious mental illness. Barber introduced his own measure (H.R. 4574) last month, drawing support from many stakeholder groups as well, including some did not support Murphy’s bill.

Aides said that last week’s bipartisan gathering was an acknowledgment that neither Murphy nor Barber’s bills alone have sufficient support to pass this year. Murphy, a psychologist who chairs the Energy and Commerce Oversight and Investigations Subcommittee, said Republicans and Democrats hope to identify what provisions have enough support to advance now and what should be set aside to be worked on later. Barber called the meeting a “first step” and said that he’s encouraged that lawmakers are looking for common ground. Other lawmakers that participated in the meeting included Reps. Leonard Lance (R-NJ), Renee Ellmers (R-NC), Bill Cassidy (R-LA) and Diana DeGette (D-CO) the ranking member of Murphy’s Subcommittee.