TRP Health Policy Report

March 23, 2015

A partisan dispute over abortion language included in a human trafficking bill (S. 178) brought the Senate to a halt again last week, with Democrats using procedural votes to block the legislation from moving forward. In response, GOP leaders indefinitely delayed a vote on Attorney General nominee Loretta Lynch. Democrats, however, are threatening to continue blocking the bill until the Hyde Amendment, which prohibits federal funding for abortions, is removed from the legislation. An attempt to broker a compromise on the measure failed last Thursday, which could foreshadow how the chamber wrestles with even tougher issues in the coming months, such as the budget, raising the debt ceiling and highway funding. 

In the House, members voted to scrap a rule from the National Labor Relations Board (NLRB) that would speed up union elections. The resolution (S.J. Res. 8) passed the House last Thursday in a 232-186 vote, sending the measure to President Obama, who has threatened to veto it.  In other activity, House members passed two Republican-backed bills that would place new restrictions on the Environmental Protection Agency (EPA). Last Tuesday, the House voted 236-181 to prohibit the Environmental Protection Agency (EPA) from appointing registered lobbyists to the agency's Science Advisory Board (H.R. 1030). The legislation passed a day after the House voted 241-175 to approve a measure (H.R. 1029) that would require the EPA to provide scientific data on proposed regulations. Both measures now move to the Senate.
Off the floor, House Republican leaders worked to resolve an internal dispute that threatened to derail their fiscal 2016 budget just days after its release. GOP lawmakers in both chambers have made passing a budget their top priority this year, but have been struggling over how to address military funds limited by ‘sequestered’ spending cuts agreed to in 2011. In an unusual intervention, House GOP leaders attempted to alter the budget while it was being considered in committee to boost military funding and remove restrictions from a portion of it. When GOP leaders couldn’t persuade the Budget Committee to amend the proposal, House Speaker John Boehner (R-OH) said the change would be made in a procedural vote when the measure is on the House floor this week. Rep. Tom Price (R-GA) gaveled the House's version of the budget through its Budget Committee last Wednesday on a 22-13 party-line vote. The Senate budget panel, chaired by Sen. Mike Enzi (R-WY), followed suit a few hours later, on a 12-10 vote that also fell along party lines. The Senate proposal matches the House GOP’s goal of eliminating the annual federal deficit over a decade, but provided few details on how safety-net programs would be changed to provide the savings. Senate budget leaders aim to reach a conference agreement with House Republicans by April 15, after lawmakers return from a two-week Easter recess.
The Week Ahead
This week, the House plans floor consideration of the Republican leadership budget blueprint and will likely debate a few budget alternatives, including one by the chamber’s Democrats. Senate Republicans will bring to the floor their budget plan, with a full week of debate and a potential all-night “vote-a-rama” Thursday to work through what could be hundreds of amendments. Senators also are hoping to resolve a dispute over abortion language that has stalled passage of human-trafficking legislation (S. 178). Majority Leader Mitch McConnell (R-KY) said the Senate would return to that bill after it finishes with the budget. Hanging in the balance is a vote on confirming Loretta Lynch as the nation’s Attorney General.
House action is also possible on legislation to restructure the system by which doctors are reimbursed for treating Medicare patients. House Republican and Democratic leaders have reached a tentative deal ahead of a March 31 deadline to avoid a 21 percent cut in payment rates. Part of the proposal would increase premium payments for some higher-income Medicare recipients. The Senate, though, may not have time to vote on the plan before the current “doc fix” sunsets at the end of the month – necessitating passage of a short-term patch, or requiring CMS to withhold reimbursement checks while Congress finalizes a solution.  For more on the state-of-play regarding the SGR fix, check out our recent blog post, Top Five Questions About the SGR Deal.
Congressional Leaders Unveil SGR Agreement
Last Thursday, Senate and House lawmakers introduced bipartisan, bicameral legislation (H.R. 1470) to permanently replace Medicare's sustainable growth rate formula. The SGR replacement measure is largely the same as legislation (H.R. 4015/S. 2000) introduced last year to replace the SGR. While there was widespread agreement on the legislation last year, both chambers of Congress failed to pass a permanent ‘doc fix’ after lawmakers reached an impasse over how to finance the package. In March 2014, Congress then approved a short-term delay to scheduled reductions to Medicare physician reimbursement rates called for by the SGR. Under the new system, providers would receive increases of 0.5% annually from 2015 through 2019, before the government transitions to a new, incentive-based system. Ultimately, doctors and other providers would be encouraged to accept an alternative-payment model focused more on patient outcomes in which payments to providers would grow by 1% annually starting in 2026. Physicians face about a 21% reduction in Medicare reimbursement rates unless Congress acts by April 1.
The breakthrough this year is that House Speaker John Boehner (R-OH) and House Minority Leader Nancy Pelosi (D-CA) have signed off on a $213 billion deal in which both sides moved away from their traditional negotiating positions. The deal would offset about $70 billion of the projected costs, while roughly half of the bill’s offsets would come from cuts to hospitals, insurers and acute-care providers. The other half of offsets would come from cuts to Medicare beneficiaries, such as additional means testing for higher-income beneficiaries. Rep. Michael Burgess (R-TX), one of the cosponsors of the legislation, said language spelling out the mechanisms for offsetting one-third of the costs of the total package would be released this week. The measure to replace the current payment system is expected to be merged with the measure to offset the costs, and the entire package will be voted on this week.
The measure still faces some resistance, mostly over how to cover the costs – a matter that isn’t addressed in the legislation. Some Republicans are unhappy that much of the package won’t be offset by spending cuts elsewhere, while some Democrats are displeased that some of the costs would be shifted to Medicare beneficiaries. In the Senate, some Democrats expressed concern about the deal because they want to include four years of funding for the Children’s Health Insurance Program (CHIP), rather than the two-year funding extension currently included in the measure. The CBO hasn’t yet issued a cost estimate, but analysts say the SGR reform agreement would add about $140 billion to the federal deficit over 10 years. Republican and Democrats say they are motivated to get past what has become a perpetual ‘doc fix’ headache. House leaders are hoping for passage by large margins this week to pressure the Senate to pass the legislation.
House, Senate Panels Adopt Budget Plans
Last Thursday, House and Senate Republicans successfully advanced separate balanced-budget plans, which each aim to achieve deficit reduction, repeal of the Affordable Care Act, an overhaul of the tax code and other budget priorities long advocated by conservatives. The House Budget Committee passed its fiscal blueprint 22-13, and the Senate Budget panel followed suit in a 12-10 vote later that day. Both the House and Senate budget blueprints call for more than $5 trillion in deficit reduction over the next decade, the majority of savings coming from repeal of the 2010 health law and cuts to social programs including Medicare, Medicaid, welfare and food stamps. But the House and Senate budget proposals differ in their approaches to Medicare and Medicaid. The House Republican plan would transition Medicare to a "premium support" model that would provide a fixed payment system for future beneficiaries. It would also give states a lump sum to run their individual Medicaid programs.
The Senate plan proposes reducing Medicare spending by about $430 billion over the next ten years, but doesn’t call for Medicare to follow the "premium support" model. Further, unlike the House Republicans' plan, the Senate GOP plan would not convert Medicaid into a block grant program. Instead, it calls for states to have more flexibility in running Medicaid programs. Meanwhile, the Senate GOP budget calls for about $400 billion in Medicaid savings over a decade. If the full House and Senate successfully pass their respective budgets this week, the next steps would be for Republicans to produce a compromise, then turn that into legislation. It would also lead directly to a veto struggle with President Obama, who has vowed to protect the health law, and has frequently criticized GOP spending priorities.
GOP Inches Closer to ACA Fallback Plan
In related news, Congressional Republicans are moving closer toward a fallback plan in case the Supreme Court strikes down billions in Affordable Care Act subsidies. Both chambers' budget proposals rely on a budget tool known as reconciliation, which they hope will make it easier to pass a bill outlining their party’s response to the Supreme Court case, King v. Burwell. If the Obama Administration loses, Congressional Republicans will be under pressure to help the 7.5 million people who would then lose $28 billion worth of subsidies. To use reconciliation, GOP leaders will have to achieve a budget compromise that consolidates distinct proposals from both chambers. While it could be difficult to appease fiscal conservatives, reconciliation could be an enticement for some to vote yes, because it would allow a GOP health package to pass the Senate with only 51 votes, instead of the 60 usually required to overcome a filibuster. Last Tuesday, Rep. Jim Jordan (R-OH) said that he is likely to support the overall budget because of its use of reconciliation. "I think reconciliation language will be a motivating reason for…many of us to lean toward supporting the budget," Jordan said.
Senate Budget Committee Chairman’s Enzi’s proposal gives power to the Senate Finance and HELP committees to draft ACA-related legislation. The Senate’s proposal offers a more targeted approach to King v. Burwell planning than the broad reconciliation process in the House. Under the House bill, 13 committees are charged with creating reconciliation bills. Those committees have until July 15, about one month after a decision from the Supreme Court is expected. By contrast, the two Senate committees will have until July 31 to present their bills. Both chambers have thus given committees a tight timeline for any King v. Burwell planning. The case, which held arguments March 4, is likely to be decided in June. Meanwhile, a group of GOP leaders is working on its own plans to make up for the subsidies that could be lost in the court case, though the party remains far from a consensus about what plan to use. Some in the GOP are adamant that nothing should be done to avert the fallout.
White House Hopes New Figures Sway Supreme Court
Last Monday, the Congressional Budget Office (CBO) again lowered the expected price tag for the Affordable Care Act, pointing to lower healthcare spending nationally. The CBO projects that the health law will cost 11 percent, or $142 billion, less over the next ten years than it thought in its projection in January. In March 2010, when the ACA was signed into law, the CBO projected costs to be approaching $200 billion per year by 2019. Now, the trend line is flatter, and costs are expected to hover around $120 billion per year. The White House touted the finding, with senior officials expressing hope that it will sway the Supreme Court to uphold the health law in full. The news came as HHS Secretary Sylvia Matthews Burwell announced that the number of people signing up for ACA coverage is continuing to rise. A total of 11.7 million signed up this year, according to the government's preliminary estimates. Burwell highlighted the figures in warning of the potential fallout if the high court rules against ACA subsidies in King v. Burwell.
For Democrats and ACA advocates, the new figures offer further evidence that the 2010 reform law is covering more people and helping to stem rising healthcare costs. Opponents argue that healthcare spending had been already declining during the recession and that many of the new signups were added to the Medicaid rolls. Both reports come at a critical juncture for the White House, which is fighting off its second major court challenge in three years. If the Supreme Court rules against the Administration, as many as 8 million people could lose their subsidies. The massive shakeup of the insurance market could then cause huge hikes in premium rates, experts have warned.