Health Policy Report

The Week in Review

The debate over healthcare reform intensified last week as the Congressional Budget Office (CBO) score on the effects of the American Health Care Act (AHCA) and Trump’s “skinny” budget for 2018 were released. Both supporters and detractors of the AHCA found favorable information in the CBO score; the CBO projects federal deficit savings of $337 billion over the next ten years, but at the cost of coverage losses for 24 million people in that same timeframe. The proposal’s effect on premium prices, the stability of the non-group market, and Medicaid spending were also detailed in the CBO’s analysis, a breakdown of which can be found below.

The budget document, dubbed “America First: A Budget Blueprint to Make America Great Again,” marks a radical departure from the priorities of President Trump’s predecessor and makes deep cuts to nearly all of the nation’s non-defense discretionary programs. Among the biggest losers are the State Department and Environmental Protection Agency, which are proposed to lose 29 and 30 percent of their budgets respectively, although the budget would also call for cuts of greater than 20 percent to the budgets of the Agriculture, Labor, and Health and Human Services (HHS) Departments. The benefactor of those cuts is the Pentagon, which would see a 10 percent boost to their budget, totaling $52.3 billion. Of course, the budget remains only a proposal and it remains unclear how closely Congress’s priorities match those of the White House; but the budget does make clear that President Trump envisions a significant reduction in the government’s role providing aid both domestically and internationally. 

Although temporarily derailed by the snowstorm barreling through the northeast, Republicans’ work on comprehensive health care reform pushed forward in the House. The House Budget Committee voted to report the AHCA to the House floor with a favorable recommendation by a vote of 19-17. The markup was the first true test for the viability of the bill, and faced defections of three conservative members who sided with Democrats in opposition of the bill. On the House floor, lawmakers wrapped up consideration of a veterans’ affairs measure (H.R. 1367) that would provide additional resources for the Veterans’ Affairs Department to attract, train, and retain qualified employees by establishing a healthcare and benefits fellowship program and creating a database of mission-critical vacant positions.

In the upper chamber, senators voted 55-43 to confirm the nomination Seema Verma, a health consulting executive, to head the Centers for Medicare and Medicaid Services (CMS). Verma is best known for her work in helping Republican governors design plans to expand their Medicaid programs, including in Indiana, where she worked with Vice President Mike Pence to design Medicaid expansion along conservative lines, including imposing a requirement that most beneficiaries pay modest premiums. With Verma’s confirmation and Tom Price installed as HHS secretary, President Donald Trump has two of the most senior HHS officials in place. Last Friday, the president nominated Dr. Scott Gottlieb to run the Food and Drug Administration (FDA). Nonetheless, many senior political appointee positions at HHS remain unfilled.

The Week Ahead

The item that has dominated Capitol Hill for the past few weeks, the Republican healthcare overhaul, has made it to the House Rules Committee after approval by the House Budget Committee last week. That vote saw three conservative defections from the Republican party-line, and Republican leadership will only be able to afford 21 total no votes on the House floor in order for the bill to pass. A manager’s amendment being considered for the bill is likely to be designed to attract more conservatives without further alienating moderates, but it remains to be seen whether House leadership can strike that delicate balance. Republican leadership has maintained the goal of advancing the bill to the president’s desk by the Easter recess, and Speaker Paul Ryan (R-WI) announced last Friday that the House will vote on the bill this Thursday – although that could slip if GOP leadership doesn’t think they have the votes for it to pass.

Additional health care items are also likely to be considered on the House floor. Unlike the primary American Health Care Act (AHCA) package, these bills will be considered through regular order rather than under the reconciliation process, meaning that they will need 60 votes in the Senate to pass. Specifically, the bills would revoke the antitrust exemption for health insurance companies (H.R. 372), narrow the regulations required of small businesses providing insurance through association health plans (AHPs) (H.R. 1101), overhaul the medical liability system for cases related to federally-subsidized health care (H.R. 1215), and exclude stop-loss insurance from the regulatory scheme for most insurance plans (H.R. 1304).

In the Senate, all eyes will be on the Senate Judiciary Committee where President Trump’s pick for the Supreme Court, Neil Gorsuch, will begin his confirmation hearing today. Senate Minority Leader Chuck Schumer (D-NY) has said that he will almost certainly oppose Gorsuch and encourage other Democrats to do so, although he will wait for a final decision until after the hearings. Thus far, Gorsuch’s meetings with senators have reportedly been positive and many observers are expecting him to garner the 60 votes necessary to be confirmed by the upper chamber. 

Floor action in the Senate will considerably quieter; the chamber is not scheduled to meet for legislative business until Tuesday, when it will consider a pair of nominations to the U.S. Sentencing Commission.

CBO Estimates 24 Million to Lose Insurance Under GOP Health Bill; Deficit Reduced by $337B

The Congressional Budget Office (CBO) estimated that over 10 years 24 million people would lose insurance coverage as a direct result of the American Health Care Act (AHCA) – the GOP-backed bill to repeal and replace key provisions of the Affordable Care Act (ACA). The CBO also projects that the AHCA would reduce deficits by $337 billion over the 2017-2026 period. Specifically, CBO predicts a $1.2 trillion reduction in outlays and a $0.9 trillion reduction in revenues over that period. A major source of the $1.2 trillion in reduced outlays will come from substantial cuts to the Medicaid program, where CBO estimates $880 billion in reduced spending.

Additionally, CBO conveyed that the plan functionally ends the ACA’s Medicaid expansion in 2020. Though the plan “grandfathers” expansion enrollees if they maintain continuous Medicaid coverage, CBO estimates that most of these enrollees would “cycle off the program.” The budget office “projects that fewer than one-third of those enrolled as of December 31, 2019, would have maintained continuous eligibility two years later.” By 2024, CBO projects that over 95 percent of Medicaid enrollees will face the lower financing rates that prevailed before the expansion. Furthermore, starting in 2020, federal financing for Medicaid will be fixed at the 2016 per-enrollee cost of the program (the “per capita cap”). This per-enrollee cost will grow at the rate of the consumer price index for medical care services (CPI-M).

The bill text of the AHCA was released last week, and has been approved at the House committee level despite criticism that lawmakers were moving ahead with legislation without a formal cost or budgetary impact. Immediately following the release, Republicans noted that the CBO projection is incomplete because it does not account for additional reforms that will be enacted in the future via regulation or additional legislation. For example, House Energy and Commerce Committee Chairman Greg Walden (R-OR) said in a statement that the score “reflects only a portion of the actions we will take to roll back red tape, free markets, and empower consumers.” Meanwhile, Democrats used the score to criticize the AHCA, with Sen. Ron Wyden (D-OR) calling it “an awful deal for the American people.”

In framing the analysis, CBO underscores that it is difficult to predict how federal agencies, states, insurers, employers, individuals, doctors, hospitals, and others will respond to proposed changes.  As a result, the estimates offered by the CBO are “in the middle of the distribution of potential outcomes.”

Trump’s Budget Proposes Deep Cuts to NIH, 

The White House has released President Donald Trump’s “America First” 2018 Budget Blueprint, titled “A Budget Blueprint to Make America Great Again.” The document released Thursday is considered a blueprint, and not a complete budget, which the White House plans to release in May. The President says at the outset of the document that the blueprint is meant to advance “the safety and security of the American people” and the budgetary proposals are part of an overall effort to “begin a new chapter of American greatness.” The blueprint would not increase federal debt in 2018, and would increase defense spending by $54 billion while proposing major cuts to domestic discretionary programs.

Notably, the blueprint proposes to make substantial cuts to healthcare-related federal spending initiatives, including a $5.8 billion cut from the National Institutes of Health (NIH). Specifically, the budget proposes a “major reorganization of NIH’s Institutes and Centers,” the consolidation of the Agency for Healthcare Research and Quality (AHRQ) within NIH, and the elimination of $4.2 billion in discretionary programs for low-income individuals. The budget would also cut more than $400 million in workforce training program funding. Additionally, the budget increases Food and Drug Administration (FDA) medical product user fees to over $2 billion in 2018, approximately $1 billion over the level, to “replace the need for new budget authority to cover pre-market review costs.”

In addition, the blueprint makes general statements about supporting services for Ryan White HIV/AIDS providers, investing in mental health activities, and supporting “efficient operations for Medicare, Medicaid, and the Children’s Health Insurance Program” without any mention of specific dollar amounts.

House Budget Panel Approves AHCA

Last Thursday, the House Budget Committee voted to report the American Health Care Act (AHCA) to the House of Representatives by a 19-17 vote. Three Republicans, Reps. Dave Brat (R-VA), Mark Sanford (R-SC) and Gary Palmer (R-AL) – all members of the House Freedom Caucus – joined Democrats to oppose advancing the repeal bill to the House floor. The vote preceded a discussion of non-binding motions to seek amendments to the AHCA, which will accompany the bill to the House Rules Committee. It was announced Friday that the House will vote on the bill this Thursday. The move shows that GOP leaders are confident they have the 216 votes needed to pass the bill, even as the far-right and centrist Republicans continue to press for changes.  The Committee adopted motions supporting:

• having work requirements for able-bodied childless adults enrolled in Medicaid;
• allowing states the option of a Medicaid block grant;
• freezing Medicaid expansion enrollment prior to 2020; and
• targeting tax credits to those who most need them, a policy that several Democrats supported.

The motions do not actually amend the AHCA; they provide instructions regarding the Committee’s support for amendments being offered in this regard. Rep. Gary Palmer (R-AL) filed the passed motion on requiring able-bodied childless adults to meet work requirements while enrolled in Medicaid. Also speaking in favor, Rep. Glenn Grothman (R-WI) said Medicaid benefits discourage work and work requirements would make it a “less seductive entitlement.” A group of conservative members in the House have expressed support for the policy, and HHS Secretary Tom Price and CMS administrator Seema Verma sent a letter last Tuesday to governors in which they appeared open to giving states waivers to make similar changes to their Medicaid programs (more on this below). Democrats strongly opposed the motion, and Rep. Barbara Lee (D-CA) called it a “baseless attack” on the working poor and a barrier to coverage for the elderly and people with disabilities.

Meanwhile, Governors John Kasich (R-OH), Rick Snyder (R-MI), Brian Sandoval (R-NV) and Asa Hutchinson (R-AK) wrote in a letter to House and Senate leadership Friday that the current GOP plan to end the Medicaid expansion in 2020 does not give states the resources or flexibility to make sure no one is left out.  They stated that the current version of the AHCA being debated in the House does not cover the objectives outlined by President Trump and HHS Secretary Price to reform Medicaid without impacting beneficiaries. The governors offered a health care proposal of their own that would preserve the expansion and make it available to other states that didn't expand it under the Affordable Care Act.

In Letter to States, Price and Verma Signal More Flexibility on Medicaid Waivers

Shortly after her swearing in ceremony on Tuesday, the Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma and HHS Secretary Tom Price sent a cosigned letter to state governors indicating that they will seek to facilitate expedited approval of Section 1115 demonstration waiver applications to reshape Medicaid. Specifically, they suggest that states may consider policies imposing work requirements for certain able-bodies adult beneficiaries, “Health Savings Account-like features,” and various cost-sharing policies common in commercial insurance, like premium payments and emergency room copayments. Additionally, they encourage the use of waiver authority to address the opioid epidemic and implementation of the Home and Community-Based Services (HCBS) rule.

On Wednesday, Senate Finance Committee Ranking Member Ron Wyden (D-OR) and House Energy & Commerce Committee Ranking Member Frank Pallone Jr. (D-NJ) sent a letter in response to Secretary Price stating that Medicaid waivers cannot be approved by the agency if they are not in line with the objectives of the program. They called the announcement from Price and Verma “an attempt to ration care for Americans.”