Health Policy Report

The Week in Review

Two major legislative packages that were negotiated for months made their way through the Senate last week, one being the conference report to the bipartisan highway funding bill (H.R. 22) and the other being the highly partisan budget reconciliation measure (H.R. 3762) that would defund Planned Parenthood and dismantle the Affordable Care Act (ACA). On Thursday, Senators approved the conference report to the highway funding bill (H.R. 22) by a vote of 83-16; previously, the measure had sailed through the House by a vote 359-65. With the Highway Trust Fund’s spending authorization expiring last Friday at midnight, the bill was quickly ushered to the White House for President Obama to sign it into law. The five-year, $305 billion measure reauthorizes the collection of the 18.4 cents per gallon gas tax that is typically dedicated to the Highway Trust Fund and adds $70 billion in miscellaneous pay-fors, including tapping surplus funds from the Federal Reserve and eliminating an annual dividend banks get for owning shares of Fed regional banks. Additionally, the bill included a renewal of the Export-Import Bank’s charter through the 2019 fiscal year, ending a months-long debate over the bank after its charter expired in June. 

The highly contentious budget reconciliation bill (H.R. 3762) also passed the Senate on Thursday by a largely party-line vote of 52-47. Democrats were unable to block the measure as it was passed under budget reconciliation rules that allow bills to circumvent the 60-vote filibuster threshold typically required of major legislation. The revised measure, which includes a much more thorough repeal of the health care law than the original House version, will now need to be re-approved by the House before heading to the President’s desk, but the White House has already issued a firm veto threat.

Action in the House last week included the passage of legislation (H.R. 8) that would streamline Energy Department reviews of permits to export natural gas, including an amendment to the bill that would lift the 40-year ban on crude oil exports. Both the underlying bill and the exportation of crude oil provision have drawn veto threats from the White House. The House and Senate also both passed additional energy-related measures targeted towards voiding two controversial Environmental Protection Agency (EPA) rules related to coal-fired power plants. The first (S.J. Res 23) would revoke greenhouse gas emission limits for new stations, while the second (S.J. Res 24) would dismantle the rule for existing power stations. Both measures have passed through the two chambers of Congress, but are unlikely to be signed by the President.

The Week Ahead

With highway funding and reconciliation settled, Congress is geared to begin a busy legislative week. Lawmakers will only have five days to complete an omnibus package funding the government beyond current funding’s expiration on December 11. Appropriators have been negotiating the policy riders for such a measure, with House Democrats having already rejected Republicans’ first offer due to its inclusion of “poison pill” riders. However, progress has been made on one Republican rider as Senate Democrats have reportedly set out their terms for allowing the 40-year-old ban on crude oil exports to be lifted. Congressional staff will be working through the weekend in the pursuit of a broad omnibus deal, but Speaker Paul Ryan (R-WI) has already braced fellow Republicans to be flexible about working past the deadline to avoid a government shutdown.

Other action in the House could include work on the developing tax extenders package as Majority Leader Kevin McCarthy (R-CA) suggested that the chamber may take up a bill this week. This year’s version of the annual tax breaks bill is set up to be more challenging than most, with House Republicans demanding permanent tax break extensions for businesses’ research and development costs and Democrats seeking to renew and expand the earned income tax credit and the child care tax credit – both of which are due to expire in 2017. Republicans have reportedly balked at Democrats’ demands that the two tax credits be indexed for inflation, which may throw the fate of a bill into question. Additionally in the House, Members may take up a conference report on a customs enforcement bill that was a companion measure to the ‘fast-track’ authority granted to the President on trade deals in June. 

The Senate begins the week with consideration of the appointment of Travis Randall McDonough as US District Judge for the Eastern District of Tennessee before moving to deliberation on the conference report to accompany the Senate’s education package (S. 1177) that will replace the George W. Bush-era No Child Left Behind law. Senate Majority Leader Mitch McConnell (R-KY) has filed for cloture on the measure and a roll call vote on advancing the bill is set to be held tomorrow. Finally, look for both chambers to start bipartisan work on a measure to tighten visa procedures in the wake of recent terror attacks.

Senate Expands Repeals of ACA in Reconciliation Bill, Passes Senate Floor

On Thursday, the Senate passed the highly partisan budget reconciliation bill (H.R. 3762) on a vote of 52-47 after Senate Republicans inserted amendments that added significantly to provisions gutting the 2010 health care reform bill. The measure as passed would defund Planned Parenthood and rescind key provisions of the ACA, including the individual mandate and the law’s excise taxes. Senate lawmakers widened the repeal of the health care law from the House version to include the elimination of health insurance marketplaces, risk mitigation programs, and Medicaid expansion, among other programs. Most notably, a standalone amendment repealing the ‘Cadillac tax’ passed with overwhelming support by a vote of 90-10, signaling that the provision may receive support in a separate tax extenders package due by the end of the year. 

The vote caps weeks of heated debate among Senate Republicans over the extent of the health law repeal, with conservatives hoping for a full repeal of the law’s root and branch. Presidential candidates Sens. Ted Cruz (R-TX) and Marco Rubio (R-FL), and Sen. Mike Lee (R-UT) originally threatened to oppose the bill for that reason, but eventually voted in favor after amendments were added to provide for a more expansive dismantling of ACA provisions. McConnell also eased concerns for senators whose states expanded the Medicaid program through the ACA by phasing in a repeal of the expansion over two years – giving state and federal lawmakers time to design a replacement.

Democrats were unable to block the amendments or the underlying measure as they were passed under budget reconciliation rules that allow bills to circumvent the 60-vote filibuster threshold typically required of major legislation in the Senate. The revised bill will now need to be passed by the House before heading to the President’s desk, but the White House is certain to veto it.  

Growing Support for Cadillac, Med Device Tax Repeals in Extenders Package

Negotiations on this year’s tax extenders package have been challenging, with House Republicans demanding permanent tax break extensions for businesses and Democrats seeking to renew and expand certain tax credits for the working poor. However, with the repeal of the ‘Cadillac’ tax on high cost health plans, there seems to be a bipartisan consensus. According to Rep. Joe Courtney (D-CT), one of several lawmakers in a bipartisan coalition working to eliminate the tax, it is likely that a full repeal of the provision could make its way into a tax extenders package – even without a way to offset the $87 billion price tag a repeal would bring. Opponents of the medical device tax have been urging key members of the House and Senate to include a suspension of that measure in the pending tax extenders package as well. Standalone measures repealing the taxes have thus far failed to be considered in the Senate, and would also be more likely to face a veto from President Obama than if they were included in a broad legislative package such as that for tax extenders.

While there is growing support for action on the taxes, a Republican House staffer said last Tuesday there is a chance the Cadillac tax would be delayed instead of repealed unless lawmakers come up with offsets. As of last Wednesday, 281 members of the House and 38 senators have signed onto legislation to repeal the health plan tax. 

Wyden and Grassley Release Report Critical of Sovaldi Pricing

Last Tuesday, Sens. Ron Wyden (D-OR) and Chuck Grassley (R-IA) released their investigation of Sovaldi, a hepatitis C drug that has drawn widespread attention for its $84,000 price tag for a 12-week treatment. The report concluded that Gilead Sciences, the company that sells Sovaldi, “pursued a calculated scheme for pricing and marketing its hepatitis C drug based on one goal: maximizing revenue regardless of the human consequences,” according to Sen. Wyden. High drug costs have been the subject of increasing scrutiny from Congress, and some lawmakers are hoping that this report will trigger a broader movement to address the issue. 

Health Spending Accelerates, Up 5.3 Percent in 2014

The Centers for Medicare and Medicaid Services (CMS) revealed Wednesday that medical spending rose 5.3 percent in 2014, breaking a five-year cycle of historically low annual growth averaging 3.7 percent. Although the reasoning for the spike has yet to be determined, CMS reported that the broadening of public and private health coverage through the ACA helped boost spending. According to CMS, the insured share of the total population increased slightly from 86 percent in 2013 to 88.8 percent last year—the highest share since 1987. Medicaid enrollment also increased 13.2 percent, compared to only a 1.7 percent hike in 2013. CMS reported that nearly eight million people enrolled in Medicaid last year, as 26 states and the District of Columbia raised income limits to allow more people to gain coverage through the federal-state program for the poor.

A breakdown of the spending included an increase in private health insurance spending by 4.4 percent to $991.0 billion and an increase in Medicare spending by 5.5 percent to $618.7 billion. While Medicaid rolls expanded, the rate of spending per enrollees dropped 2 percent in 2014 after rising 4.1 percent in the previous year. And the cost of health insurance was also up 12.4 percent from 2013, including administrative costs, taxes, and fees. Some have pointed to the introduction of costly medicines, including Gilead Sciences’ Sovaldi hepatitis drug, as a significant driver of the spike in national health spending last year. CMS reported that spending on prescription drugs rose by 12 percent to $297.7 billion.