Health Policy Report

The Week in Review

With the House out of town, the Senate used most of the week’s floor time to approve a budget resolution (H. Con. Res. 71) for the 2018 fiscal year that would provide reconciliation instructions for tax reform legislation that could circumvent a possible Democratic filibuster. The vote was by a 51-49 margin, with Sen. Thad Cochran (R-MS) coming back to Washington to vote, leaving Sen. Rand Paul (R-KY) as the sole Republican defector. The resolution provides for a $1.5 trillion tax cut over the next decade, marking a compromise between fiscal hawks and those seeking a deeper tax cut to both individual and corporate rates. And in a surprise move, the resolution includes a last-minute deal with House leadership to boost defense spending that means the resolution is likely to simply be re-approved by the lower chamber this week rather than going through the conference process.

President Trump and Senate Majority Leader Mitch McConnell (R-KY) held an impromptu press conference in the White House Rose Garden on Tuesday, making a clear effort to mend what has been, at times, a fraught relationship. In addition to offering mild criticism of the Senate, President Trump used the press conference to allude to a “major announcement” this week on drug pricing and the opioid crisis. While the President offered few details on the exact nature of that announcement, White House officials have confirmed that part of the plan involves declaring the opioid epidemic a national emergency.

On Thursday, Rep. Pat Tiberi (R-OH) announced in a press release that he intends to resign from Congress and return to the private sector, effective Jan. 31, 2018. The date theoretically leaves enough time for Tiberi to see the Republican tax reform package through the legislative process, but the timing could become significant if tax reform faces delays or obstacles that would push it later into 2018.

Finally, Senate Health, Education, Labor, and Pensions (HELP) Committee Chair Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) announced a deal last week to stabilize the Affordable Care Act’s (ACA) exchange markets and appropriate the cost-sharing reduction (CSR) payments that President Trump vowed to withhold earlier this month. Full details on the plan and its political prospects are included in the roundup below.

The Week Ahead

Both chambers will be back in action this week, as the House returns following its weeklong recess. Following the passage of a budget last Thursday, Senate Majority Leader Mitch McConnell signaled that the chamber’s next priority will be a disaster relief package, with a cloture vote scheduled for this evening. The House-passed $36.5 billion aid bill (H.R. 2266) includes funding for victims of both recent hurricanes in the Southeast and Caribbean and ongoing wildfires in the West, as well as a boost to the National Flood Insurance Program (NFIP) that is due to run out of money as soon as this week.

Although not yet officially on the House schedule, lawmakers in the lower chamber are expected to approve the Senate-passed budget resolution negotiated last week. Passage in the House will send the budget resolution to the president’s desk. The House will also be considering a bill (H.R. 469) to impose limitations on the consent decrees and settlement agreements that federal agencies can use, and a bill (H.R. 732) that would limit the donation clauses that are used by some regulators in enforcement cases.

President Trump is expected to meet with Senate Republicans at their weekly policy lunch on Tuesday, with the party plotting the next steps for their tax reform push. The White House is also expected to officially declare the opioid epidemic a national emergency this week, clearing the way for additional streams of federal funding to be used to address the issue.

Details Emerge on Alexander-Murray Market Stabilization Deal

Last Tuesday, the Chairman and Ranking Member of the Senate Health, Education, Labor and Pensions (HELP) Committee announced an agreement to stabilize the individual insurance market through 2019. Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA) unveiled their proposal to colleagues Tuesday. The announcement was met with a generally positive reception, with President Trump and Senate Minority Leader Chuck Schumer (D-NY) immediately endorsing the deal – although the support was later withdrawn – while House Freedom Caucus Chair Mark Meadows (R-NC) lent more restrained support.

Following the White House’s announcement that the Administration will no longer be making the Affordable Care Act’s (ACA) cost sharing reduction (CSR) subsidy payments to insurers, Alexander and Murray proposed that Congress appropriate stable, mandatory funding for two years, through fiscal year (FY) 2019. The Congressional Budget Office (CBO) has estimated that terminating the program would cost the Federal government $194 billion over 10 years, though they have yet to confirm whether the President’s announcement to defund CSRs now means that congressional enactment of this provision would generate savings.

Originally seen as a major sticking point during negotiations, Sens. Alexander and Murray reached agreement on a number of administrative and substantive changes to the “1332 innovation waiver process” that allows for insurance flexibility for states. Specifically, the Senators proposed to allow governors to unilaterally apply for waiver approval, presumably by eliminating the current requirement that a state must first pass authorizing legislation. Approval time of waivers would be cut in half from 180 days down to 90, and fast-tracked approval would be available both for emergency waivers and for those that are modeled on another state’s successful application. Additionally, under the proposal, the lifetime of the waiver program would be extended to six years, and it would be more difficult for future administrations to cancel previously approved demonstrations.

Additionally under the Alexander-Murray proposal, so-called “Copper” plans providing catastrophic coverage (meaning they have the maximum allowable deductible under the ACA) would be available to consumers of all ages, not just those under 30 as is currently the law. As before, premium tax subsidies would not be available for these plans.  

The proposal would also compel HHS to issue additional regulations or guidance for states around the ACA’s Section 1333 provision regarding the creation of “health care choice compacts” to sell insurance across state lines. So far, HHS has not taken meaningful steps to implement the program. Lastly, the plan proposes to redirect existing Exchange User Fee funding – potentially up to $106 million – back to states to restore ACA consumer outreach efforts. If states fail to use the funding, the Federal government would be obligated to allocate their portion to enrollment advertising in the respective state.

22 Bipartisan Senators Cosponsor Alexander-Murray Bill

It was announced Thursday that 22 senators will cosponsor the bipartisan health care bill released earlier this week by Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA).  Amid opposition from President Trump and House Speaker Paul Ryan (R-WI), the list of cosponsors notably lacks the support of anyone in Senate leadership — including Sen. John Thune (R-SD), who said earlier this week there would be “a sense of urgency to move a bill.” Regardless, the list of Republican cosponsors includes a broad coalition of influential moderates and conservatives that could ultimately be helpful in building support for the package.

Given the continued mixed messages from President Trump and resistance from key House conservatives, it’s doubtful that Majority Leader Mitch McConnell (R-KY) would bring the package to the Senate floor as a stand-alone bill. Instead, it’s more likely that the bill could be taken up as part of a year-end spending package in December. Democrats will have significant leverage in that debate (any government funding bill will require support from both parties), and could ostensibly demand that Alexander-Murray be included in a broader package later this fall. The bill also has the support of the House Problem Solvers Caucus, a bipartisan group of 46 lawmakers in the lower chamber.

Nineteen Democratic Attorneys General Sue to Compel Cost-Sharing Reduction Payments

Following President Trump’s announcement two weeks ago that he was discontinuing the Affordable Care Act’s (ACA) cost-sharing reduction (CSR) payments, 19 Democratic Attorneys General filed a lawsuit in federal court in California to block the decision. 

The lawsuit, on behalf of California, Connecticut, Delaware, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, New York, North Carolina, Pennsylvania, Oregon, Rhode Island, Vermont, Virginia, Washington, and the District of Columbia, asks the court to “compel the President and the Secretaries of Health and Human Services and Treasury to make CSR reimbursement payments in accordance with the ACA and its permanent appropriation.”  The Attorneys General allege that the failure to make the CSR payments is a violation of Administrative Procedures Act and the “Take Care Clause” of the Unites States Constitution, which requires the President to “take Care that the Laws be faithfully executed.”  They allege that the Administration’s decision to stop funding CSR payments is not based on a good-faith reading of the ACA, but instead is “part of deliberate strategy to undermine” the ACA.

It is not certain whether insurers also will file a lawsuit, but America’s Health Insurance Plans and the Blue Cross Blue Shield Association stated that they are “committed to pursue every possible path to ensure that all Americans who depend on these benefits can continue to get the care they need when they need it.”

Senate HELP Committee Continues Focus on Cost of Prescription Drugs

The Senate Health, Education, Labor, & Pensions (HELP) Committee last week convened the second in a series of hearings examining the cost of prescription drugs in the United States. The hearing focused on the “supply chain” and how various aspects of the drug delivery system impact the cost of pharmaceuticals for consumers. Notably, the hearing featured tough questions regarding the merit of drug rebates insight from distributors, who were previously all but absent in the debate over increasing prices.

Witnesses included representatives from the Pharmaceutical Research and Manufacturers of America (PhRMA), the Association for Accessible Medicines (AAM), the Healthcare Distribution Alliance (HDA), the Pharmaceutical Care Management Association (PCMA), and the American Pharmacists Association (APA).  The latest “process-focused” hearing follows an initial hearing on the broader topic convened last June, that was focused on patient costs. A third, and final in the series of hearings, will address the results of a forthcoming report being produced by the National Academies of Sciences, Engineering and Medicine,  “Ensuring Patient Access to Affordable Therapies.”

During the recent deliberations, senators addressed topics regarding Pharmacy Benefit Managers (PBMs), rebates, importation policies, generic competition, and transparency in pricing. Of note, several senators raised concerns regarding “anticompetitive” practices of the pharmaceutical industry, while also expressing scrutiny of PBMs and the current drug rebate process.  Many senators called for enhanced drug pricing transparency and direct negotiations in place of rebates. A representative from PhRMA wouldn’t say whether the drug industry supports getting rid of rebates, but she blamed the rebates for driving up drug prices and suggested they should be passed to consumers instead of enriching plans and PBMs.

Witnesses largely agreed that pharmaceutical importation policies should not be explored as a solution to rising drug costs, and would only weaken the “FDA gold standard” enjoyed in the U.S. Additionally, witnesses addressed questions on trends in rising insulin prices and possible factors for increases in cost, as well as the DEA’s role in addressing the opioid epidemic. The witness representing drug distributors faced several rounds of questioning due to a recent Washington Post article on that sector’s role in weakening the Drug Enforcement Agency’s ability to stop shipments of opioids that DEA suspects are destined to be abused as street drugs.

CBO Estimates Costs of CHIP and Community Health Center Funding

The Congressional Budget Office (CBO) has issued cost estimates on the two bills approved by the House Energy and Commerce Committee earlier this month related to funding for the Children’s Health Insurance Program (CHIP) and Community Health Centers. CBO estimated that the HEALTHY Kids Act of 2017 (H.R. 3921), which would extend federal funding for CHIP for five years, would reduce the deficit by $1.1 billion over the 2018-2027 period. Additionally, CBO estimated that the CHAMPION Act of 2017 (H.R. 3922), which would extend funding for Community Health Centers and several other public health programs for two years, would reduce the deficit by $1.4 billion over the 2018-2027 period.

Thursday, the CBO explained the estimated $8.2 it would cost to fund the CHIP program for another five years, noting that the net cost is significantly less than the $118.5 billion federal allotment for three reasons. The report clarifies that the budget assumes CHIP would be beyond its scheduled expiration dates, and allots $5.7 billion in funding each year starting 2018 and through 2027. CBO also presumes if children lose coverage under CHIP, the federal government would pay for their care in other ways. Specifically, through Medicaid or through subsidies offered under the ACA, costing the government at least $35.1 billion.  Lastly, the CBO reports the net cost of the extension is less than the $118.5 billion that would be provided by H.R. 3921 because it is not expected that all the appropriated funds would be spent under the reduction of the CHIP funding bump and lowering eligibility policies.

According to CBO, extending all the public health programs in the CHAMPION Act would cost $8.9 billion and could be paid for by shortening the grace period for paying ACA premiums from three months to one month and pulling money from the ACA-created prevention fund. Of that total, the Community Health Center portion is $7.2 billion. Of the remainder, the National Health Service Corps would cost $610 million; the Special Diabetes Program would cost $563 million; the Teaching Health Center Graduate Medical Education program would cost $238 million; the Family-to-Family Health Information Centers program would cost $12 million; and the Youth Empowerment Program and Personal Responsibility Education Program — which promote abstinence — would cost $300 million. Additionally, health experts argue that several studies have shown health centers can save Medicare money, but CBO does not recognize these savings in their report.