Health Policy Report

The Week in Review
 
Speaker John Boehner’s (R-OH) shocking announcement on Friday that he will step down at the end of October capped off an incredible week in Washington that also witnessed the excitement of a papal visit and a state visit from the Chinese President, Xi Jinping. Pope Francis’ visit to Washington was highlighted by the first-ever papal speech to a joint session of Congress, where the Catholic leader urged Members to set aside their partisan differences to address income inequality, climate change, and family issues. While the Pope’s message may not drive any specific legislative activity or a new era of partisan comity, the media attention and political conversations generated by his visit demonstrated the enduring power of the Vatican in American politics.  

Apart from the fanfare of the papal visit, Congress spent the week negotiating the terms of a short-term continuing resolution (CR) that will keep the government funded beyond its current September 30 fiscal deadline. A CR with language defunding Planned Parenthood failed to reach cloture last week after Senate Democrats mounted a successful opposition. The Freedom Caucus, a group of conservative Republican lawmakers, have promised to vote against any spending measure that maintains funding for the women’s health organization. However, Speaker Boehner’s retirement announcement on Friday may have been enough to placate many members of the conservative group, who were frustrated with the Speaker’s alleged inability to force through more conservative policy proposals.
 
Last week also saw the passage of a few minor pieces of legislation. The House passed a bill (H.R. 348) that aims to streamline the regulatory review process for federal construction projects, but the measure has already come under fire from Democrats and would likely be met with the President’s veto pen if it were to progress through the Senate. Finally, the Senate considered a House-passed bill (H.R. 36) that would prohibit abortions after 20 weeks, but the measure failed cloture along a party-line vote of 54-42.
 
The Week Ahead
 
Legislatively, Speaker Boehner’s decision to step down likely lowers the risk of a federal government shutdown and paves the way for him to assure a House vote on a “clean” Continuing Resolution (CR) to fund the government beyond Sept. 30. The Senate has planned a cloture vote for today on a short-term CR that funds the government through December 11 and does not include a provision defunding Planned Parenthood. Senate leadership is hoping to get the measure passed on the Senate floor on Tuesday, providing a short window for the bill to move through the House and to the President’s desk prior to midnight on Wednesday when the fiscal year ends.  With the funding deadline looming, Republican leaders are said to be considering defunding Planned Parenthood through the budget reconciliation process, which allows for bills to circumvent the 60-vote cloture threshold typically required of major legislation.
 
Boehner’s resignation threatens to further divide his party, as Boehner’s loyalists lashed out at those in the caucus who had threatened to try to topple the Speaker. The Ohio Republican, who has been speaker since 2011, has faced pressure from conservatives in his caucus over a proposed spending plan for the 2016 fiscal year. Republicans are reportedly planning an internal leadership vote next week, with current Majority Leader Kevin McCarthy (R-CA) reportedly the leading candidate to replace Boehner as Speaker of the House. While that change is unlikely to satisfy some conservative members, the two men differ on some notable issues, such as the reauthorization of the Export-Import Bank, which Boehner supports and McCarthy opposes.
 
Boehner to Resign; CR in Motion to Avoid Shutdown
 
In what some believe may prove to be a pyrrhic victory for conservatives, Speaker John Boehner (R-OH) announced on Friday that he would be retiring at the end of October. The timing of the announcement—in the midst of a tense showdown over government funding—struck many in Washington by surprise and caused some analysts to point to the influence of Pope Francis’ visit to Congress. It remains to be seen if the likely next Speaker, Majority Leader Kevin McCarthy (R-CA), will have any more success than his predecessor at keeping the fractious Republican caucus together.
 
Before Boehner retires, he’ll need to steward a resolution to the latest budget crisis that has gripped Washington. Government funding is set to expire at the end of the current fiscal year on Wednesday, and Congress is scrambling to act before executive agencies are forced to shut down. The most likely solution could come in the form of a short-term (thru December 11) “clean” funding measure that is scheduled for a cloture vote today and can pass the Senate floor as soon as tomorrow. Assuming that the House is able to pass the measure, there should be enough time for the bill to be signed by President Obama prior to the deadline on Wednesday. Based on the White House’s interpretation of progress on the CR, the Office of Management and Budget (OMB) will decide on Wednesday whether to order agencies to go through with their shutdown plans.
 
As part of the plan to get a CR through the House, Republican leadership aims to increase Congressional probes of Planned Parenthood and send additional anti-abortion bills to the Senate. The reconciliation process offers another avenue for Republicans to advance anti-abortion measures through Congress, but it remains unlikely that any will be signed by the President or garner the necessary support for a veto override. Politically, analysts have argued that Boehner’s resignation—an apparent win for conservatives—may actually signal trouble for their long-term objectives, as a CR without defunding Planned Parenthood is likely to pass and the party’s cohesiveness has been brought into question ahead of the 2016 election. Moreover, the retirement raises additional questions on the prospects of a long-term funding deal being negotiated before early December, when the planned CR is set to expire.
 
Clinton Unveils Health Care, Drug Prices Plan
 
On Wednesday, Democratic presidential candidate Hillary Clinton presented her plan to lower out-of-pocket health care costs through the expansion of cost-saving programs introduced by the Affordable Care Act and a drug price control plan similar to that proposed by her chief Democratic rival, Sen. Bernie Sanders (I-VT). Clinton’s approach capitalizes on initiatives that have received support in the past from consumer advocates, including allowing Medicare to negotiate directly on drug prices, banning so-called “pay-for-delay” agreements between innovator and generic drug makers, and allowing drugs to be imported into the US from foreign countries.
 
Clinton’s plan also included a novel and specific approach on biologic drugs that aims to increase competition in the area through the promotion of generic biologics, or “biosimilars.” The proposal would clear the Food and Drug Administration’s (FDA) generic drug backlog and lower the exclusivity period for biologics. The ACA originally set biologic exclusivity at 12 years, but Clinton would lower that period to 7 years, claiming that it would provide $5 billion in savings for the federal government over a 10-year period. Additionally, Clinton would allow the FDA to prioritize the review of biosimilars that have only one or two competitors in the marketplace.
 
The plan was met with immediate resistance from many industry stakeholders within the healthcare industry. John Castellani, President and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), released a statement saying Clinton’s plan would “turn back the clock on medical innovation and halt progress against the diseases that patients fear most.” Health insurers have also come out in opposition of the plan, with the industry group America’s Health Insurance Plans (AHIP) criticizing the out-of-pocket spending caps included in the plan as an ineffective and overly burdensome measure to combat high drug costs.
 
Report Suggests Employers Cutting Benefits Because of ‘Cadillac’ Tax; Sanders, Dems Introduce Repeal
 
According to a new report from the Kaiser Family Foundation, 16 percent of large employers that offer health insurance benefits have changed their plans to avoid the hefty excise tax proposed by the Affordable Care Act (ACA), known as the “Cadillac Tax.” The study further elaborates that almost two-thirds of the changed plans raised cost sharing, with an additional 10 percent reducing the scope of services covered by their plan. Kaiser estimates that more than half of large employers have conducted analyses to see if their plans will hit the Cadillac tax threshold when it goes into effect on January 1, 2018. 
 
The Cadillac tax has come under increasing scrutiny from Congress, with bills already introduced in the House and Senate targeting a repeal of the ACA provision. Presidential candidate Sen. Bernie Sanders (I-VT) and eight other Senate Democrats added to that list last week with a new effort to repeal the tax that offers a full offset through a surtax on wealthy individuals. Calling the tax on health insurance plans a “disaster for millions of middle class Americans,” Sanders noted his opposition to the tax when the ACA was being considered in 2010, instead wanting a measure that would place a 5.4 percent surtax on individuals making $500,000 or more. Opponents of the bill welcomed the latest effort to repeal the tax, and with four separate bills in Congress repealing the controversial measure, it seems that a Cadillac tax repeal is gaining momentum. However, significant questions remain, most importantly on whether or not a pay-for is necessary, with Sanders and other Democrats preferring a new revenue stream, while House Republicans believe that such a provision would be unnecessary.
 
ICD-10 Implementation Unaffected by Possible Shutdown
 
The planned transition to ICD-10 codes scheduled to begin on October 1 will proceed regardless if a government shutdown is triggered at the end of the fiscal year on Wednesday. According to principal Deputy Administrator of the Centers for Medicare and Medicaid Services (CMS) Patrick Conway, plans are already in place to ensure that the nationwide changeover to new codes will be unaffected by a possible shutdown. CMS is anticipating some difficulties in the transition, but the agency has maintained that it has the staffing capacity to handle those issues even in the event of a shutdown. Providers have complained about the complexity of the new coding system, but CMS is hoping that the growing pains will be outweighed by the treatment and research that comes out of the data that ICD-10 generates.