Health Policy Report

The Week in Review

Last week, House Democrats failed in their attempt to override President Donald Trump's veto of a measure that would prevent him from circumventing Congressional appropriation authority to allocate funding for border security. Despite the Democratic resolution of disapproval’s passage in both chambers last month, the effort to overturn the President's veto did not earn the required two-thirds majority in the lower chamber. Regardless of the outcome, Congressional Democrats will likely explore additional legislative and legal maneuvers to block President Trump’s national emergency declaration.

Elsewhere on the House floor last week, lawmakers passed a bill (H.R. 7) that would amend the Fair Labor Standards Act to provide more effective remedies to victims of discrimination in the payment of wages on the basis of sex. The House also passed a resolution (H.Res. 124) expressing opposition to the banning of service in the Armed Forces by openly transgender individuals. 

In the upper chamber, the Senate failed to begin consideration of a "Green New Deal" resolution (S.J.Res 8) sponsored by Majority Leader Mitch McConnell (R-KY). The vote was intended to put Democrats on the record about the progressive wing’s ambitious climate proposal, but Senators could not reach an agreement to begin consideration of the resolution. After the failed “Green New Deal” vote, the Senate began consideration of a supplemental disaster aid bill that would provide emergency funding to states and territories that have been impacted by various natural disasters in recent months. 

The Week Ahead

In the upper chamber, Senators are looking to complete work on a supplemental disaster aid bill (text; summary) after Leader McConnell took procedural steps to block further amendments to the bill. The move drew the ire of Senate Democrats, who have strongly advocated for more aid to Puerto Rico in the bill while President Trump has complained the bill provides too much money for the island. If the disaster aid bill clears the Senate this week, House and Senate lawmakers will likely go to a conference committee to hammer out a final compromise. 

Meanwhile, Leader McConnell has also queued up a change to the Senate rules that would speed up the presidential nominee confirmation process. The Senate resolution — approved by the Senate Rules Committee in February — would limit the post-cloture debate time from 30 hours to two for executive branch nominees and District Court judges, but would not apply to Cabinet or Supreme Court nominees. Democrats are not expected to support the measure, which could lead Republicans to invoke another rule change, known as the “nuclear option,” that would allow the Senate to pass the resolution with a simple majority.

In the House, lawmakers are expected to take up a bill (H.R. 1585) that would reauthorize the Violence Against Women Act (VAWA). The lower chamber is also expected to take up a Democratic resolution (H.Res. 271) opposing recent legal steps by the Trump administration to invalidate the Affordable Care Act.

DOJ Reverses Stance on ACA Repeal; House Democrats Introduce ACA Stabilization Package

House Democratic leaders introduced legislation Tuesday aimed at reforming the Affordable Care Act (ACA) to reduce the cost of plans by expanding tax credits, increase funding for ACA outreach and education, and reverse Trump Administration rules they see as weakening the marketplace.

The Protecting Pre-Existing Conditions & Making Health Care More Affordable Act of 2019 would roll back the Trump administration’s expansion of short-term, limited duration (STLD) plans, reverse recent guidance on 1332 waivers, and fix the so-called “family glitch,” where individuals with access to employer coverage can’t receive Exchange subsidies for their family members (even if they’re low-income). Additionally, the bill includes a federal reinsurance program, restores outreach funding for open-enrollment periods, and mandates outreach and education from the federal and state governments. The legislation does not address or fund cost-sharing reduction (CSR) subsidies that were cut off by the administration in October 2017. Several of the policies were marked up as stand-alone bills before the House Energy & Commerce Health Subcommittee on Wednesday, and all were passed favorably to the full Committee despite a lack of Republican support.

The introduction of the package of policies came a day after the Department of Justice (DOJ) reversed its stance on repealing the ACA. The DOJ announced Monday night that it would side with District Judge Reed O’Conner’s decision (December 14) that the ACA’s individual mandate is no longer valid and therefore the entire law should be abandoned. The administration had previously maintained that while it agreed the mandate was no longer valid, it would uphold all parts of the law except the community rating and “guaranteed issue” provisions that protect those with preexisting conditions. The DOJ had previously moved to appeal Judge O’Connor’s decision in December.

President Trump publicly stated last week that the GOP would be known as the “party of health care,” and promised Sens. John Barrasso (R-WY), Bill Cassidy (R-LA) and Rick Scott (R-FL) were drafting a “spectacular” replacement. Many Republicans said last week that they were “blindsided” by the administration’s ACA stance reversal, and House Minority Leader Kevin McCarthy (R-CA) reportedly urged President Trump privately not to pursue efforts to have the ACA deemed invalid in federal court.

Federal Judge Strikes Down Medicaid Work Requirements in Kentucky and Arkansas

The Centers for Medicare and Medicaid Services (CMS) initiative to implement work requirements on some Medicaid beneficiaries through 1115 waivers hit a major setback last Wednesday as Judge James Boasberg of the D.C. District Court struck down work requirements in Arkansas and Kentucky. The decision in Arkansas has the most immediate effect, as the ten-month-old policy was vacated meaning that Arkansas must immediately cease disenrolling beneficiaries due to noncompliance with the requirements. Kentucky’s work requirement policy had not yet gone into effect, however, so there is no practical change in the landscape in that state for the time being.

In his opinion, Judge Boasberg wrote that the Department of Health and Human Services' "failure once again to adequately consider the effects of Kentucky HEALTH on coverage is alone … fatal to the approval.” While not specifically passing judgment on the theoretical legality of work requirements in the program if properly structured, he said that 1115 waiver authority does not grant the Secretary unlimited authority to allow states to restructure the Medicaid program as they see fit. Instead, changes must still be in pursuit of the objectives of the Medicaid program. The approval of the waivers did not properly evaluate potential coverage losses, he wrote, and the approvals were both “arbitrary and capricious” because the Secretary may not simply allow states to restructure programs without evidence as to why the changes would further the objectives of the Medicaid program.

Although last week’s decisions applied only to Arkansas and Kentucky, state legislators debating the voter-passed Medicaid expansion in Idaho killed a work requirement proposal after the decisions were released while the Idaho Senate’s Health and Welfare Committee was holding a hearing on the topic. Judge Boasberg vacated both waiver approvals and sent them back to the Department of Health and Human Services. CMS Administrator Seema Verma gave no immediate indication as to the Administration’s immediate next steps, but via Twitter she reaffirmed her previous statement that CMS “will continue to defend our efforts to give states greater flexibility to help low income Americans rise out of poverty.” The administration could appeal the decisions — and has been asked to do so by both states — but the rulings were also narrow enough to allow for the implementation of work requirements if the government can show that the policies further Medicaid’s objectives.

Federal Judge Rules Against Association Health Plan Rule

Last Thursday, a federal judge ruled against a Trump Administration rule aimed at expanding access to association health plans. Judge John Bates of the U.S. District Court for the District of Columbia struck down a proposal that would have allowed small businesses and individuals to band together to form group health plans, noting that it was a “clear effort” to work around the Affordable Care Act (ACA) market rules. He said the administration went beyond its authority under the Employee Retirement Income Security Act (ERISA), and the change ran counter to "Congress's clear intent that ERISA cover benefits arising out of employment relationships." The legal challenge was brought by nearly a dozen Democratic state attorneys general, and is likely to be appealed by the Trump Administration.

House Passes Reformed Medicaid Extenders Package, Stalled in Senate

The House passed a package of extenders and reforms to the Medicaid program Monday, but the legislation stalled in the Senate over a single Senator’s concerns. The Medicaid Services Investment and Accountability Act of 2019 (H.R. 1839), which was introduced on Thursday by Rep. Raul Ruiz (D-CA), was brought up and passed unanimously under suspension of the rules Monday evening, and comprised an extension of popular spousal impoverishment-prevention rules, reforms to the drug rebate process in Medicaid, the ACE Kids Act, and assorted other provisions. The legislation is very similar to a bill introduced late last year, the IMPROVE Act (H.R. 7217, 115th Congress), to extend several popular Medicaid programs and make other reforms.

When the Senate failed to take up the House-passed bill, lawmakers introduced and passed a stripped-down version (H.R. 259) that extended the Money Follows the Person (MFP) demonstration through fiscal year (FY) 2021 and the spousal impoverishment rules through March 31, 2019. This bill, which extends the spousal impoverishment rules and adds funds to the MFP demonstration, also includes the provisions of the IMPROVE Act which were taken out in the version of the bill passed earlier this year.

The ACE Kids Act continues to be a roadblock to final package passage for Sen. Mike Lee (R-UT), over concerns with establishing a new program that will require continued funding. Last year, the Senator blocked a December vote of unanimous consent on the package just before Congress recessed for the year. Medicaid managed-care plans also view it as a threat to their own contracts if a federal funding boost encourages states to move chronically sick kids to provider-coordinated health homes. Meanwhile, the Senate will need to take action to pass the bill by the end of this month to avoid a lapse in Medicaid eligibility rules aimed at preventing spousal impoverishment as well as funding for certain Medicaid programs. However, it is unlikely that the bill will be given time on the Senate floor, meaning that it will need to pass by unanimous consent in order to make it out of Congress and onto the President’s desk.