Health Policy Report

The Week in Review

President Trump’s first week in office was marked by a flurry of executive orders filling some of his most prominent campaign promises, including measures to begin construction of a wall along the nation’s southern border, put a four-month hold on allowing refugees into the United States, and temporarily ban travelers from Syria and six other Muslim-majority countries from entering the country. Those moves have all been met with bitter resistance from Democrats, particularly the travel ban, which was partly halted by a federal judge in an emergency ruling over the weekend.

In Congress, lawmakers had a short legislative week before Republicans left for their issues retreat in Philadelphia on Wednesday. House floor action was highlighted by the passage of a bill (H.R. 7) that would bar federal funds from being used to subsidize the purchase of any health plan that covers abortions. Meanwhile, the Senate confirmed Kansas Congressman Mike Pompeo as Director of the Central Intelligence Agency and Nikki Haley as the U.S. Ambassador to the United Nations. Additionally, Health and Human Services Secretary nominee Tom Price had his official confirmation hearing before the Senate Finance Committee last week, which is covered in full in our health policy roundup below.

The Republican retreat last week offered the majority party an opportunity to reach consensus on a number of their legislative priorities early in the 115^th Congress, most prominently repealing and replacing the ACA. While discussions are still very fluid, Republican leaders suggested a preferred timeline of passing a reconciliation bill with repeal and limited pieces of replace passed in March, followed by continued White House action on undermining the implementation of the ACA, and finally a longer-term process to design a full replacement bill that would be able to gain some Democratic support. Those discussions are outlined in detail below.

The Week Ahead

Legislative action will heat up significantly when lawmakers return to Capitol Hill this week. The House is planning a series of votes on resolutions that would nullify Obama Administration rules under the powers given to lawmakers by the Congressional Review Act (CRA). Among the regulations being targeted are a Securities and Exchange Commission rule requiring companies to publish the payments they make to foreign governments as a part of their attempts to extract natural resources, an environmental regulation that aims to protect U.S. streams from waste, and a Bureau of Land Management rule related to the emission of the powerful greenhouse gas methane. The CRA stipulates that Congress may undo any regulation finalized within the last 60 legislative days of the previous Congress, and requires only a Senate majority to reach the president’s desk – meaning that Democrats cannot block the measures.

In the upper chamber, Senate Majority Leader Mitch McConnell has teed up votes on more of President Trump’s Cabinet nominees, including controversial Secretary of State pick Rex Tillerson. Tillerson has been questioned by both parties over his ties to Vladimir Putin’s Russia, but Republicans have largely fallen in line to support his nomination. The cloture vote for his confirmation will be held this evening and a final vote is expected on Wednesday. A vote on the nomination of Elaine Chao – a Bush Administration Labor Secretary and wife of Leader McConnell – is scheduled for Tuesday and she is considered to be the least contentious of Trump’s choices. Many of Trump’s other picks will be voted on in their respective committees of jurisdiction early in the week and could reach the Senate floor by Friday. 

Finally, President Trump has said that he will publicize his selection for the vacant Supreme Court seat on Thursday, setting up what may be one of the fiercest political battles in the Senate all year. The three contenders on the President’s reported shortlist are all currently federal appeals court judges: Judge William Pryor in Alabama, Judge Neil Gorsuch in Colorado, and Judge Thomas Hardiman in Pennsylvania. Of the three, Gorsuch – who is well known in conservative circles for his stances on religious liberty – is considered the frontrunner. Unlike other nominees, Supreme Court confirmations require 60 votes in the upper chamber; however, if Democrats maintain a united voting bloc against Trump’s nominee, Republicans could elect to use the so-called “nuclear option” – changing Senate rules so that a Supreme Court confirmation requires only a simple majority vote.

Trump, GOP Send Mixed Signals on Market Stabilization

As Republicans convene in Philadelphia to hash out their plans to repeal and replace the Affordable Care Act (ACA), President Trump and Congressional Republicans are sending mixed signals about their intentions to ensure stability in the individual insurance market while they work to replace the healthcare law. Most Republicans acknowledge that it will take at least two years (i.e. looking at 2019 coverage) to pass legislation and implement regulations in time for insurance carriers to design their plan offerings, but in the meantime, many are asking what Congress and the Trump administration will do to shore up the marketplaces or whether Republicans will rely on administrative flexibility provided by the ACA to further undermine the law, further weakening the insurance markets.

With respect to the Administration, stakeholders are rightfully concerned that Trump may use executive authority to roll back some of the law’s less popular provisions – many of which exist for the sole purpose of cost containment and market stabilization. As one of his first actions as President, Trump issued an Executive Order that his Administration “shall exercise all authority … to waive, defer, grant exemptions from, or delay the implementation of any provision [of the ACA] that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden … on [any stakeholder].” Additionally, the Department of Health and Human Services (HHS) pulled the plug on all ACA-related advertising in the crucial final days of the 2017 enrollment season. Even ads that had already been paid for were cancelled, according to reports on the matter. HHS is also halting all media outreach designed to spur signups in the days leading up to the deadline, and emails are no longer being sent out to individuals who visited HealthCare.gov to encourage them to finish signing up.

While the actions of the Trump administration seem to be sending clear signals on their approach to the ACA, Rep. Chris Collins (R-NY), Trump’s top congressional liaison, appears to be singing a different tune. Indeed, although Collins acknowledged in remarks to GOP lawmakers in Philadelphia that they should anticipate “administrative actions on quite a wide variety of items,” he clarified that he expects specific actions aimed at keeping insurance markets stable while the GOP works on a replacement plan. Also of note, Collins reportedly confirmed Trump’s commitment to a two-year phase-in period for any ACA replacement.

Leading Congressional Republicans appear determined to avoid any major disruptions in coverage over the next two years. Indeed, leading members of the House Energy & Commerce Committee released a package last Friday (with a hearing planned later this week) that aligns with many of the insurance industry’s proposals. Broadly, this package includes measures to loosen age-rating bands, ensure patients with preexisting conditions are not denied coverage, require pre-enrollment verification for special enrollment periods, and reduce the ACA’s 90-day grace period.

Price on Track for February Confirmation

The Senate Finance Committee held a hearing last Tuesday to discuss the nomination of Rep. Tom Price (R-GA) to be Secretary of the Department of Health and Human Services (HHS). This hearing – the last for Rep. Price before the committee holds its formal vote on confirmation – provided key insights into Rep. Price’s views on healthcare reform ranging from Affordable Care Act (ACA) repeal and replace to Medicare and Medicaid reform. While Democrats continued to press Rep. Price on his health stock trades and other issues, Republican support for his nomination continues to be strong, and he currently appears to be on track for confirmation at some point in February.

Rep. Price was grilled by Senate Democrats on several different issues related to repeal and replace of the ACA, specifically regarding the ACA’s individual mandate and the ban on denying coverage based on pre-existing conditions. Rep. Price strongly stated that Republicans will not “abandon” people with pre-existing conditions as the GOP repeals and replaces the law, and voiced support for extending funding for the Children’s Health Insurance Program (CHIP). The nominee said he could not commit to utilizing the executive order issued by President Trump to eliminate the ACA individual mandate, nor did he promise that no one would lose coverage because of the executive order. Additionally, Rep. Price did not comment on whether HHS would wait until Congress readies a replacement plan before taking steps to dismantle the ACA, noting that he would promise to put “patients at the center of healthcare.”

Throughout Rep. Price’s confirmation process, Democrats have repeatedly underscored that the Congressman’s position on Medicare and Medicaid is at odds with President Trump’s promise not to cut either program. Rep. Price stated in last week’s hearing that Medicare must be reformed if the government wishes to keep its promise to seniors. Rep. Price also evaded questions surrounding his support for reforming Medicaid into a block grant program, only commenting that he is in favor of turning Medicaid into a system “that responds to patients, not government.” Rep. Price indicated some support for the Center for Medicare and Medicaid Innovation (CMMI), calling it “vehicle that might help” incentive innovation, but argued that the directives and programs from CMMI should not be mandatory.

Additionally, Senate Finance Committee Ranking Member Ron Wyden (D-OR) heavily scrutinized Rep. Price over his stock purchase in the Australian biotech firm Innate Immunotherapeutics, although Rep. Price vehemently denied any wrongdoing, noting that the discount he received in the stock purchase was available to everyone that was seeking to invest.

GOP Senators Introduce ACA Replacement at Similar Funding Levels to Current Law

Senators Bill Cassidy (R-LA), Susan Collins (R-ME), Shelley Moore Capito (R-WV) and Johnny Isakson (R-GA) released Affordable Care Act (ACA) replacement legislation, The Patient Freedom Act of 2017, last week. The legislation is very similar to a prior bill introduced by Sen. Cassidy just before the Supreme Court decided King v. Burwell, The Patient Freedom Act of 2015. Importantly, the bill would fund replacement policies at a very similar level to those currently under the ACA. The bill also preserves funding for Medicaid expansion and even provides expansion funding to states that have not yet expanded their Medicaid program. Under the plan, states reserve the right to reject federal funding.

The bill seeks to give states more control over healthcare by creating three options for them to take, all while preserving certain ACA market protections no matter which option a state decides upon. The consumer protections that run through each option include prohibitions on annual and lifetime limits, prohibition of pre-existing condition exclusions, and prohibitions on discrimination. In addition, the bill preserves guaranteed issue and guaranteed renewability and allows young adults to stay on their parents’ plan until age 26, as well as preserving coverage for mental health and substance use disorders no matter which option the state chooses.

• Under the first state option, states would be allowed to reinstate Title I of the ACA. For states that elect this option, the individual mandate and other insurance market reforms would remain unchanged. Under this option, a State can continue to receive federal premium tax credits, cost-sharing subsidies, and Medicaid dollars at a funding level roughly equivalent to (but up to 5% less than) what a state currently receives.

 

• Under the second option, states would have flexibility to design a program that is not subject to former ACA requirements like the individual mandate (although certain consumer protections remain in place). At its core this option would provide eligible individuals with: (1) a Roth Health Savings Account (HAS), (2) a high deductible health plan, and (3) a basic pharmacy plan. This option would also allow states to auto-enroll uninsured individuals in basic health care coverage unless the individual opts out.

 

• The bill’s third option would essentially allow states to “design and regulate” their own insurance market (subject to the consumer protections left in place), without any federal assistance.