December 11, 2018

116th Congress Preview: Healthcare

Rich Meade

For four straight election cycles, Republican candidates successfully ran on a platform of repealing and replacing the Affordable Care Act (ACA). This election cycle, however, the tables were turned as Democratic candidates nationwide focused their message to voters on preserving ACA protections, particularly for Americans with pre-existing conditions.

Notably, half of the ads run this election cycle were on healthcare, according to CMAG/Kantar Media.As a testament to the strategy’s success, more than 40 percent of voters in this election said healthcare was the most important issue facing the country, according to CNN. In fact, four in five voters said that healthcare was the single most important or a very important issue when deciding who to vote for this election cycle, according to the PSB Research Post-Election Voter Poll, November 2018. Having run and won on the issue of healthcare, what does that mean for the legislative agenda in Washington now that the Democrats have taken back the House of Representatives?

Players

House Energy and Commerce Committee

Full Committee Chairman Frank Pallone (D-NJ) – As Ranking Member, Congressman Pallone negotiated with the Republicans on an extension of the Children’s Health Insurance Program (CHIP), the reauthorization of user fees to fund the Food and Drug Administration (the so-called PDUFA bill), and the opioids package. These negotiations show he can work across party lines on significant healthcare issues. It is likely that Pallone will face some pressure from both the progressive element of the broader Democratic Caucus and the committee to pursue more liberal policies like Medicare For All. However, this will be tempered by the addition of new, moderate members to the Committee and the political pragmatism that Pallone has routinely demonstrated.

Likely Health Subcommittee Chairwoman Anna Eshoo (D-CA) – Congresswoman Eshoo is a strong ally of Nancy Pelosi and has great credibility within the progressive wing of the Democratic caucus. Congresswoman Eshoo has also worked with Republicans on bipartisan health legislation and we expect her to be a pragmatic subcommittee chairwoman.

House Ways and Means Committee

Full Committee Chairman Richie Neal (D-MA) – As Ranking Member, Congressman Neal has not had as many opportunities for bipartisan negotiations as Pallone has had on Energy and Commerce Committee. During Neal’s tenure on Ways and Means, the Committee’s healthcare legislation has tended to be more partisan – very much a reflection of the tone and tenor surrounding the partisan debate over healthcare for the last 10 years. However, Congressman Neal has worked in a bipartisan way on a variety of smaller, more targeted healthcare bills such as his work with Congressman Boustany (R-LA) to improve Medicare reimbursements for ambulance companies and his work with Congressman Phil English (R-PA) on a colon cancer screening bill. Chairman Neal is very well-liked by his colleagues on both sides of the aisle and is known for being highly pragmatic and. He, too, will be sensitive to the addition of new members to his committee that will also be seeking out moderate compromises where possible.

Likely Health Subcommittee Chairman Lloyd Doggett (D-TX) – Congressman Doggett is one of the more progressive members of the House and has spent the vast majority of his tenure on the committee advancing drug pricing legislation that has been considered anti-competitive by the industry. We expect in this current environment a continued focus on drug pricing from Congressman Doggett. The Health Subcommittee has seen previous progressives serve as Chairman or Ranking Member with Congressmen Pete Stark (D-CA) and Jim McDermott (D-WA), so Congressman Doggett would not represent a substantial shift.

Senate Finance Committee

Full Committee Chairman Chuck Grassley (R-IA) – Senator Grassley is moving over from Chairman of the Judiciary Committee to chair the Finance Committee, a spot he held from 2003 until 2007 – Senate Republicans have six-year term limits for committee chairmanships and ranking member positions. Senator Grassley has been critical of pharmaceutical companies and even sponsored an amendment to an appropriations bill last summer with Senator Durbin (D-IL) to have the Secretary of Health and Human Services require pricing information in direct-to-consumer advertisements from drug companies. Senator Grassley has also taken a close look at the operations of large non-profit hospitals over their tax-exempt status.

Issues

We expect healthcare issues to be at the top of the agenda during the 116th Congress. Chief among the issues that will likely be discussed and debated in both the House and Senate are:

Pre-Existing Condition Protections

Incoming Chairman Richie Neal has been clear in his intention to prioritize consideration of legislation to further protect individuals with pre-existing conditions. While policy specifics have not yet emerged, it is quite possible whatever bill Chairman Neal advances could earn broad, bipartisan support. Republican members will be looking for cover on this issue after withstanding attacks about their efforts to repeal and replace the ACA and leaving individuals with pre-existing conditions more vulnerable.

Drug Pricing

This is potentially an area where President Trump could find common ground with congressional Democrats. Democratic members will have many policy options to consider under the broad umbrella of drug pricing and, with so many new members of their Caucus, significant member education and socialization of the issue will be necessary before arriving at a consensus on how to proceed.

Generally speaking, Democratic members have long supported allowing the Secretary of Health and Human Services to negotiate prices of drugs in the Medicare Part D program. In contrast, Republicans have nearly universally opposed this policy option, touting instead the benefits of the open markets in Medicare Part D as the best mechanism for serving as a check on pricing. As a candidate for president, Donald Trump spoke favorably about negotiated pricing. Shortly into his presidency, Trump met with two outspoken proponents of this policy in Congressman Elijah Cummings  (D-MD) and Peter Welch (D-VT) and expressed an interest in working together on this issue. Thus far, however, no action has come from the meeting.

This summer, Democrats unveiled their policy platform entitled “A Better Way”, which outlined broad policies they would pursue if given control of Congress. In addition to negotiated pricing, the platform included a call for a new federal agency to serve as a watchdog over drug companies. The new agency would have the authority to impose fines on drug companies if they raised their prices too quickly. While it is entirely possible Democrats will try pass legislation to create this new agency, it will assuredly be dead on arrival in the Senate.

Not included in the document was renewed discussion about reimporting prescription drugs from Canada and other countries as a way to lower costs. Not all Democratic members support this policy, but a significant number have indicated interest. It is possible this policy could be seen in the coming years as a bill or amendment.

Opioid Epidemic

The opioid epidemic is still a huge issue. There was a comprehensive bill passed last fall, but what it contained it was widely considered low hanging fruit. While not critical of any of the provisions in the bill, Democratic members thought the bill fell way short of what is required because it did not provide enough money to combat the problem and did not look at expanding Medicaid coverage to better address the problem.

The opioid package passed last fall also did not fully tackle the issue around privacy of patient’s health records. Language was included in the bill in about best practices around consensual sharing of records. But the issue about rewriting federal law so addiction treatment can be included in a patient’s health records was a bridge too far in the bill that was recently enacted. Many in Congress believes this needs to be addressed.

We expect the Democrats in the House to move forward on a comprehensive package on opioids. Since this issue is white hot in many states around the country, we suspect House action will spark Senate action even if the policies go in a different direction than those in the House.

Affordable Care Act Market Stabilization

In 2017, Senators Murray (D-WA) and Alexander (R-TN) negotiated an agreement to authorize cost-sharing reductions and fund reinsurance as means of making health insurance more affordable on the exchanges. The agreement stalled over language disagreements on how to strengthen prohibitions on using federal funds to pay for abortions. Ultimately, negotiators ran out of time to resolve their differences as the compromise was intended to be included in a broader government funding measure. It is likely, however, that Democratic members will revisit these ACA market stabilization discussions.

Medicare & Medicaid

Many Democrats campaigned on a platform of passing universal health care, also known as “Medicare for All.” That issue, however, does not enjoy a majority of Democratic support and will not be a legislative initiative prioritized or advanced by House Leadership. However, because Democratic candidates campaigned on their commitment to fix problems in Washington, expect bills to emerge to make more modest improvements in benefits and other aspects of the Medicare and Medicaid programs.

Trump Regulations

Democratic senators came one vote short of passing a disapproval resolution under the Congressional Review Act (CRA) of the Trump administration’s final regulation on short-term health plans that do not need to be ACA-compliant. It is possible the House will pass resolutions of disapproval of existing and future healthcare rulemakings from the Trump administration. Even if those resolutions are not  able to pass the Senate or would be vetoed by President Trump, Democratic members may want to push those issues to require Republican senators to take a formal position on controversial regulations.

Donut Hole

The Bipartisan Budget Act also included a provision that further closes the so-called “donut hole” in the Medicare Part D program by increasing the discount pharmaceutical manufacturers have to provide from 50 percent to 70 percent. When the Bipartisan Budget Act was scored by the Congressional Budget Office (CBO), they estimated that the provision would save $7.7 billion over ten years. Later, CBO found additional data that if they had it in preparing their score they would have estimated the savings of that provision to be $11.7 billion. The pharmaceutical industry has been lobbying Congress to restore the $4 billion difference between the two scores by lowering the discount manufacturers have to provide. We expect their lobbying to continue into the next Congress, but the likelihood for action will diminish after the first of the year.

Device Tax

There will also be a push from industry to seek a permanent repeal of the medical device tax imposed by the Affordable Care Act. A two-year delay of the tax was included in a continuing resolution (CR) that was passed in January. The medical device industry will be seeking results on the issue before the two-year delay expires. Democratic members supported the delay and many support a full repeal of the tax, so it is possible action is taken on this issue as part of a broader tax package.


Rich Meade

Rich Meade, a Vice Chairman at Prime Policy Group and Chair of the firm’s Healthcare Practice has over 25 years of experience in legislative, regulatory, political and public relations strategy. He previously served as Chief of Staff to the House Budget Committee. Rich has helped his clients navigate many complex regulatory and legislative landscapes to achieve many public policy successes including transitioning to a new Medicare payment and quality system, and developing, with the Centers for Medicare and Medicaid Services (CMS) and Office of the National Coordinator for Health Information Technology (ONC), a health information exchange (HIE) on the Nationwide Health Information Network (NwHIN).

Jonathan Kay

Jonathan is head of Penn Schoen Berland’s Healthcare Practice. An expert on medical market research, communications, and branding, Jon came to PSB specifically to build the practice, and works with a variety of clients in the space out of the Washington, D.C. office.

Jonathan Kimball

Jonathan is a Managing Director for Healthcare Public Affairs and Policy, at Burson, Cohn & Wolfe.