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February 2017

February 27, 2017

Earlier today, President Trump met with CEOs of the largest health insurance companies, telling the group that he would speak to the issues with the Affordable Care Act (ACA) in his address to the Joint Session of Congress and assured them that they will like what they hear. The President also held a meeting over the weekend with Governors Scott Walker (R-WI) and Rick Scott (R-FL) to discuss ways states can help shape health insurance programs in their state. These actions suggest a renewed commitment from the White House to make good the promises made on the campaign trail.

The legislative text that was leaked from the Hill could put additional pressure on the House committees to act more quickly because until they take action the document leaked is the “plan.” We have not yet heard of concrete plans for committee actions.

Below are some highlights from the press about recent developments in healthcare policy:

  • Fears over pre-existing conditions haunt Obamacare debate – Politico (Feb 27)
    “Republican lawmakers will resume work on an Obamacare replacement plan this week after facing anxious hometown crowds who fear losing guaranteed coverage for people with pre-existing conditions. GOP lawmakers have vowed their replacement plan will keep the requirement that insurers accept everyone regardless of potentially costly medical conditions. But the Republican proposals would be different than Obamacare in a key respect: They would allow insurers to charge more to sick people who had been uninsured right before trying to enroll in a new plan.”
  • Governors to Trump: Make sure no one loses health insurance – Axios (Feb 27)
    “In a meeting with President Trump Monday morning, governors of both parties told the president — along with Department of Health and Human Services Secretary Tom Price — they don’t want their constituents to lose health coverage. “We do not want one citizen to lose health care,” Virginia Gov. Terry McAuliffe, a Democrat, told reporters at a Capitol Hill briefing after the meeting. Nevada Gov. Brian Sandoval, a Republican, echoed this and added: “What I heard today made me feel good.” But they didn’t give any details, and a presentation given to the governors on Saturday morning analyzing the House GOP Obamacare repeal and replacement plan showed millions of people losing coverage.”
  • Trump: ‘Nobody knew that health care could be so complicated’ – Politico (Feb 27)
    “President Donald Trump on Monday claimed that “nobody knew that health care could be so complicated,” and again flirted with the idea that Republicans should let Obamacare “implode” so that Democrats shoulder the blame. Even as he re-upped his commitment to repealing and replacing Obamacare during separate gatherings with governors and insurance CEOs, Trump appeared to nod to the grim political reality of yanking away the increasingly popular law.”
  • Rising popularity of Obamacare pressures Republicans to find fast repeal plan – Washington Examiner (Feb 26)
    “Congressional Republicans who spent seven years promising to repeal Obamacare now face a do-or-die stretch on Capitol Hill, hoping to build unity and take the first steps to repeal the health care law before they break for Easter. After being heckled by liberal activists and constituents back home last week, Republican lawmakers return Monday to Washington facing a grim situation: Obamacare is more popular than ever, and unity within their own ranks is proving elusive.”

 February 24, 2017

Earlier today, a draft of the GOP’s Affordable Care Act repeal bill was leaked to the press, kicking off a flurry of conversation on Capitol Hill. While this may seem to be huge news, there are a number of things that should be pointed out about the bill. First, this is the fourth draft of the ACA repeal bill that congressional Republicans have been working on. It is still being worked on and is subject to change. Another aspect that suggests there will be significant change to the draft is that the bill is dated February 10th, meaning it is very likely that this is the version of the bill that was rumored to be the subject of a CBO score that could present roadblocks to its introduction. If Republicans want to get this to work, it will need to pass muster with CBO.

We have prepared a preliminary summary of the draft bill, which is included below:

Energy and Commerce Title

Section 101 – Terminates after October 1, 2018 the Prevention and Public Health Fund that allows the Department of Health and Human Services to make grants for initiatives to explore prevention and improvements in health outcomes.  Appropriations bills have also used this fund as a source of funding to support the National Institutes of Health.  This provision saves $18.25 billion.

Section 102 – Adds $285 million for Community Health Centers.

Section 103 & 104 – Phases out the Medicaid expansion for non-pregnant childless individuals starting on January 1, 2020.  Repeals the benchmark benefit packages for state plans.

Section 105 – Repeals the Medicaid Disproportionate Share (DSH) Hospital payment reductions starting in fiscal year (FY) 2017.

Section 106 – Repeals the cost sharing subsidies for individuals enrolled in silver health plans purchased through the Exchanges starting on December 31, 2019.

Section 107 – Establishes a per capita cap for Medicaid expenditures starting in FY 2019.  The cap is set by taking expenditures from FY 2016 and inflating those numbers by the CPI—Medical plus one percentage point.  States receive some additional funds in FY 2018 and 2019 for the purposes of improving data reporting systems.

Section 108 – Institutes a one-year ban on federal payments to Planned Parenthood and other abortion providers who provide abortions with exceptions for rape, incest, and the life of the mother.

Section 109 – Creates a new State Innovation Grants and Stability program to allow states to: provide financial assistance for high-risk individuals; stabilize individual and small group markets; lower the cost of insurance in the individual and small group markets; create incentives to purchase insurance; promote access to preventive health and dental services; and provide assistance for out-of-pocket costs.  The program will be administered by the Centers for Medicare and Medicaid Services (CMS). Funding begins January 1, 2018 and runs through December 31, 2026.  The program is funded at $15 billion for calendar year (CY) 2018 and 2019 and $10 billion for CY 2020-2026.

Section 110 – Requires insurance companies to institute a penalty of 30 percent of the monthly premium rate in the individual and small group market for individuals who do not maintain continuous coverage.  Continuous coverage is defined by not having a period of 63 days or greater without coverage.

Section 111 – Allows states to determine the essential health benefits starting in CY 2020.

Section 112 – Changes the ability of insurance companies in the individual and small group market to vary their rates based upon age from the current limit of 3 to 1 for adults to 5 to 1.  This is intended to try and make insurance less expensive for younger people and more expensive for older people.  Extends the so-called “Grandfathered Health Plans” under the ACA.

Ways and Means Title

Section 201 – Reduces to $0 the definition of excess advance payments of premium tax credits.

Section 202 – Tightens eligibility for the premium tax credit in CY 2018 and 2019 by: disallowing the premium tax credit for purchasing plans that are either “Grandfathered Health Plans” or are plans that provide coverage for abortions except for cases involving rape, incest or the health of the mother; denying the premium tax credit to non-resident aliens; disallowing the premium tax credit for plans not purchased through the Exchanges; and account for increases of income during the tax year.

Section 203 – Repeals the premium tax beginning in CY 2020.

Section 204 – Repeals the small business tax credit beginning in CY 2020.

Section 205 – Repeals the individual mandate starting in CY 2016.

Section 206 – Repeals the employer mandate starting in CY 2016.

Section 207 – Repeals the so-called “Cadillac Tax” starting in CY 2020.

Section 208 – Repeals the prohibition from using a Health Savings Account (HSA) for over-the-counter medications starting in CY 2017.

Section 209 – Lowers the tax on distributions from HSAs for non-medical use from 20 to 10 percent and from 20 to 15 percent for Archer HSAs starting in CY 2017.

Section 210 – Removes the limitation on contributions to flexible spending accounts starting in CY 2017.

Section 211 – Repeals the tax on branded medications starting in CY 2017.

Section 212 – Repeals the medical device tax starting in CY 2018.

Section 213 – Repeals the tax on health insurance providers starting in CY 2018.

Section 214 – Repeals the elimination of the deduction for expenses allocable to Medicare Part D starting in CY 2017.

Section 215 – Reduces the threshold for deducting chronic care from 10 to 7.5 percent starting in CY 2017.

Section 216 – Repeals the extension of the Medicare payroll taxes starting in CY 2017.

Section 217 – Repeals the tax on indoor tanning services starting in CY 2017.

Section 218 – Repeals the Medicare tax imposed on unearned income starting in CY 2017.

Section 219 – Repeals the limitation on the deductibility of health insurer executive pay starting in CY 2017.

Section 220 – Repeals the so-called economic substance doctrine where transactions must have a substantial purpose beyond the creation of a tax deduction starting in CY 2017.

Section 221 – Creates a new refundable tax credit for the purchase of health insurance.  The monthly credit is set as 1/12 of: $2000 for individuals under the age of 30; $2500 for individuals under the age of 40; $3000 for individuals under the age of 50; $3500 for individuals under the age of 60; and $4000 for individuals over the age of 60 for the purchase of health insurance plans in the individual market and the unsubsidized portions of COBRA premiums.

Section 222 – Excludes the deduction of employer provided health plans that are considered excessive which are above the 90th percentile of annual premiums starting in CY 2019.

Section 223 – Maximum contributions to HSAs are increased from $2250 to $4500 for individuals and from $4500 to $10000 for families.

Section 224 – Disallowance of the small employer credit for health insurance plans that provide abortion coverage except in the instances of rape, incest, or the life of the mother.

Section 225 – Allows both spouses to make catch-up contributions to the same HSAs.

Section 226 – Allows medical expenses to be covered by an HSA if the account is opened within 60 days.

Congress returns next week for an extended work session until the Easter/Passover recess starting April 7th. It will be interesting to see how much legislative progress can be made on the Republican plans during this period.

Below are some highlights from the press about recent developments in healthcare policy:

  • Exclusive: Leaked GOP Obamacare replacement shrinks subsidies, Medicaid expansion – Politico (Feb 24)
    A draftHouse Republican repeal bill would dismantle Obamacare subsidies and scrap its Medicaid expansion, according to a copy of the proposal obtained by POLITICO. The legislation would take down the foundation of Obamacare, including the unpopular individual mandate, subsidies based on people’s income, and all of the law’s taxes. It would significantly roll back Medicaid spending and give states money to create high-risk pools for some people with pre-existing conditions. Some elements would be effective right away; others not until 2020.
  • 5 takeaways from the leaked Republican bill to repeal Obamacare – Stat (Feb 24)
    “A formal draft of the House Republican plan to repeal and replace the Affordable Care Act leaked out on Friday. The final version is likely to be different — how much different, it’s hard to say. The draft obtained by Politicois dated two weeks ago, and rumors have been swirling here that Republicans received an unfavorable analysis from the Congressional Budget Office, the official scorekeepers on the cost and coverage implications of legislation.”
  • House GOP plans to keep some Medicaid expansion – and steer money to states that never bought in – Washington Post (Feb 24)
    “House Republicans have forged a plan for the future of Medicaid that would temporarily keep federal money flowing to cover almost the entire cost of people already insured through the program’s expansion under the Affordable Care Act but would block the law’s generous funding for any new participants.”
  • Boehner: Republicans won’t repeal and replace Obamacare – Politico (Feb 23)
    “Former House Speaker John Boehner predicted on Thursday that a full repeal and replace of Obamacare is “not what’s going to happen” and that Republicans will instead just make some fixes to the health care law. Boehner, who retired in 2015 amid unrest among conservatives, said at an Orlando healthcare conference that GOP lawmakers were too optimistic in their talk of quickly repealing and then replacing Obamacare.”
  • Block-Granting Low-Income Programs Leads to Large Funding Declines Over Time, History Shows (Feb 22)
    “Funding for housing, health, and social services block grants has fallen significantly over time, an examination of several decades of budget data demonstrates.  This is a red flag, since Congress may soon consider proposals to convert more programs into block grants.  This includes programs that serve families and individuals who are low income or otherwise vulnerable, such as Medicaid, which President Trump and some Republicans in Congress have called for block-granting.”

 February 22, 2017

This week is a district/state work period for the House and Senate. Republican senators and House members holding town hall meetings are receiving a lot of tough questions from their constituents, including many on their plans for the Affordable Care Act (ACA).

We are continuing to hear that the Republicans in Congress intend to include both repeal and replace provisions in the outstanding reconciliation bill. The current plan is to have the House take action on their bill in March with Senate action to follow.

Complicating these efforts was the announcement from Senator Grassley (R-IA) that the confirmation hearing for Supreme Court Justice nominee Neil Gorsuch will begin on March 20th. That could potentially put the final confirmation vote on the Senate floor just before the Easter/Passover two-week recess. This uncertainty about the calendar likely prompted the Trump Administration to post a draft notice at the end of last week extending the rate filing deadlines for plans selling policies on the exchanges from May 3 until June 21.

Below are some highlights from the press about recent developments in healthcare policy:

  • Conservatives Object to Obamacare Replacement’s Tax Credits – Bloomberg News (Feb 17)
    “Some conservative House Republicans are objecting to a major part of the Obamacare replacement outline presented to them by party leaders, underscoring the party’s continuing inability to agree on an alternative health plan. The proposal would allow Americans who lack insurance to buy coverage with refundable tax credits they can receive before the end of a tax year. House Ways and Means Chairman Kevin Brady said he and other leaders presented the idea during Thursday’s private conference of the House GOP.”
  • Trump lashes out at ‘so-called angry crowds’ at GOP town halls – Politico (Feb 21)
    “President Donald Trump on Tuesday evening portrayed the heated reception some Republican lawmakers are getting at their town halls as fiction, instead accusing liberal activists of ginning up negative headlines.” The so-called angry crowds in home districts of some Republicans are actually, in numerous cases, planned out by liberal activists. Sad!” Trump tweeted. GOP lawmakers on recess, including Sen. Chuck Grassley, are getting an earful in their home districts, with some constituents railing against Trump’s plans to repeal Obamacare, his controversial Cabinet nominees and his Supreme Court pick.”
  • Under Trump, Obamacare’s Medicaid enrollments may actually go up – Washington Post (Feb 22)
    “One of the biggest early surprises under the Trump administrationis that the long-standing Republican campaign against Obamacare seems to be shifting from “demolish it” to “fix it.” House Republicans and conservative activists remain focused on substantially rolling back the Affordable Care Act (ACA). But the Senate’s 52-seat Republican majority is split. Republican Lamar Alexander is bringing together a group opposed to a quick repeal, and Democrats are unified enough to stop Senate Republicans from overriding a filibuster.”
  • Price Could Try to Stabilize Market for Law He Derailed – Morning Consult (Feb 20)
    “Tom Price spent much of his six terms in Congress fighting against the Affordable Care Act, but as the newly-minted secretary of Health and Human Services, his first acts may focus on shoring up the very same law he railed against.”
  • Health Coverage Questions Persist for Republicans – Roll Call (Feb 22)
    “As Republican lawmakers face questions from constituents and colleagues about their plans to repeal and replace the 2010 health care law, there are few answers available, starting with what kind of legislation can pass the Senate. Republicans do not need Democratic support to undo much of the law, since they will move the legislation through the budget reconciliation process that only requires majority support in the Senate. But with only 52 Republican senators, the GOP plan will have to get support from both their conservatives and moderates, and it’s not clear what can get everyone onboard.”
  • Obamacare repeal means deep cuts to CDC – Washington Examiner (Feb 21)
    “For the nation’s public health agency, Obamacare repeal means a big funding cut, although it was never supposed to be that way. Time and time again over the last few years, Congress dipped into a special public health fund set up under the Affordable Care Act to patch over cuts to the Centers for Disease Control and Prevention, instead of using the account for new projects as intended.”

February 17, 2017

Seema Verma performed well yesterday before the Senate Finance Committee at her confirmation hearing considering her nomination to be CMS Administrator. Democratic Senators seem to be reserving judgement on her while waiting for written answers to some of their questions, but we don’t anticipate a significant fight over her confirmation. There were a couple tough questions from Republicans, most notably from Sen. Dean Heller (R-NV) who wanted to figure out whether Verma was looking to block grant Medicaid, as Nevada has benefited from the Medicaid expansion afforded under the ACA. Verma would not rule out block granting Medicaid as an option. A detailed summary of the hearing is available; should you wish to read that, please email Jacob Beaver.

Elsewhere, House Republican Leadership released a 19-page outline of their plans to repeal and replace the Affordable Care Act (ACA) to their members yesterday. This document will provide some policy specifics for members to roll out to their constituents to begin to get reactions and feedback during the district work period next week. While there are still a number of details not yet addressed, the document does provide a pretty clear picture of the direction House Republicans would like to take. Below are some of the highlights:



  • Able bodied adults covered under Medicaid expansion plans would no longer be eligible.
  • States that expanded Medicaid would receive the enhanced payments from the ACA for a transition period.
  • Medicaid would be “transitioned” to a per capita cap system over a period of time.
  • States that want to opt into a block grant system can elect to do so.
  • Repeal the disproportionate share hospital (DSH) payments.

ACA Insurance Subsidies

  • Subsidies for purchasing health insurance through the exchanges would be phased out over a period of time. During the transition, younger citizens would receive a more generous subsidy than older citizens.


  • Individual and employer mandates repealed immediately.


  • All of the taxes imposed by the ACA would be repealed. The document specifically drew out the following taxes for repeal:
    • The tax on health insurance premiums
    • The medicine cabinet tax
    • The tax on prescription drugs
    • The tax on medical devices
    • The increased expense threshold for deducting medical expenses


Tax Credits

  • Create a new portable monthly advanceable and refundable tax credit for the purchase of health insurance in the individual market.
  • Available to all citizens and qualified aliens who do not have insurance provided by an employer or the government.
  • Dependent children up to the age 26 are eligible for the credit.
  • Older Americans would receive a higher credit than younger Americans.
  • Credit can be used to pay for unsubsidized COBRA payments.
  • Credit is indexed for inflation.

Expanding HSAs

  • Increase the maximum HSAs contribution limit to $6550 for self-only coverage and $13,100 for family coverage.
  • Allow both spouses to make catch up payments if they are 55 or older.

State Innovation Grants

  • Grants to states to design programs to help lower the cost of care for the most vulnerable populations.


  • There were no specifics in the document about financing the new tax credits and HAS expansion. However, there was discussion at yesterday’s House Republican Conference meeting of placing a limitation on the employer deduction for health coverage as a means for financing these new initiatives.

Below are some highlights from the press about recent developments in healthcare policy:

  • Trump says Obamacare repeal ‘moving fast’ – Politico (Feb 17)
    “President Donald Trump asserted Friday that Republican plans to repeal and replace Barack Obama’s healthcare reform law are “moving fast,” a counter to reports of division among Capitol Hill Republicans on the process. Trump, noting that his pick for health and human services secretary, former Rep. Tom Price, had been confirmed, also took a dig at Democrats in an early-morning tweet, writing at about 5:15 a.m. that they had engineered “long delays” in confirming him.”
  • Trump pick to head Medicare and Medicaid grilled on Obamacare repeal – CNN (Feb 16)
    “Seema Verma, President Donald Trump’s nominee for administrator of the Centers for Medicare and Medicaid Services, took the hot seat Thursday, testifying before lawmakers on the Senate Finance Committee. As the head of the federal agency that administers Medicare and Medicaid, if confirmed, Verma would find herself smack in the middle of the contentious political debate around overhauling Obamacare.”
  • GOP leaders unveil new health law outline, divisions remain – Associated Press (Feb 16)
    “Top House Republicans unveiled a rough sketch of a massive health care overhaul to rank-and-file lawmakers Thursday, but a lack of detail, cost estimates and GOP unity left unresolved the problem that’s plagued them for years: What’s the party’s plan and can Congress pass it? At a closed-door meeting in the Capitol basement, House Speaker Paul Ryan, R-Wis., and other party leaders described a broad vision for voiding much of President Barack Obama’s 2010 statute and replacing it with conservative policies. It features a revamped Medicaid program for the poor, tax breaks to help people pay doctors’ bills and federally subsidized state pools to assist those with costly medical conditions in buying insurance.”
  • Medicaid exposes rifts within the GOP over the program’s future after the ACA – Washington Post (Feb 16)
    “As congressional Republicans move from talking points to details of how to abolish the Affordable Care Act, behind-the-scenes jockeying over the future of Medicaid demonstrates the delicate trade-offs the GOP faces in trying to steer health policy in a more conservative direction. For years, many Republicans have railed against the ACA’s expansion of Medicaid, which has extended coverage to about 11 million people. But now that they have the political power to reverse those gains, internal disagreements have emerged.”
  • Walden Introduces Bill to Protect Patients with Pre-Existing Conditions – House Energy and Commerce Committee (Feb 16)
    “Energy and Commerce Committee Chairman Greg Walden (R-OR), along with 42 cosponsors, today introduced R. 1121, the Pre-Existing Conditions Protection Act of 2017. Chairman Walden first signaled his intent to introduce the bill while speaking with CNN’s Jake Tapperin January. The bill introduced today reflects feedback from the patient community.”
  • Big questions on House Republican Obamacare plan still unresolved – Axios (Feb 16)
    “The House Republican briefing on their most likely Obamacare replacement plans was a bit of an anticlimax. Republicans who emerged from the briefing said there were major elements still under discussion, like what kind of Medicaid reform it would include and how they’d pay for the package. House Ways and Means Committee chairman Kevin Brady said he and Energy and Commerce Committee chairman Greg Walden gave their colleague “a very in-depth view of what the replacement will be,” including health savings accounts, high-risk pools to cover sick people, and “greater state control of health care.””

 February 15, 2017

House Republicans are holding a Conference meeting tomorrow morning on the Affordable Care Act. We are expecting leadership to present the membership with options for moving forward with reconciliation to begin to asses where the votes may be. We continue to hear that GOP leadership is likely to present a so-called “repeal plus” plan. The “repeal” would be repealing taxes, mandates, and the subsidies. The “plus” would be an expansion of health saving accounts for certain and possibly Medicaid changes (block grants or per capita cap) and limitation on employer deduction of health insurance coverage.

There are limits to what can be included in the reconciliation bill because of the Byrd rule which limits extraneous provisions from reconciliation bills. There are five criteria for what is considered extraneous, but there is no hard and fast definition. Therefore, the Senate Parliamentarian’s judgement as to what is extraneous holds incredible bearing.

The next Prime Speaker Series will feature two of the leading experts on Senate rules overall, most notably on the budget and reconciliation process, and will shed a lot of light on what can and cannot be done in reconciliation. The featured speakers are Eric Ueland, Staff Director of the Senate Budget Committee, and Bill Dauster who is currently Senator Van Hollen’s Policy Director and is formerly Deputy Chief of Staff for the Senate Majority Leader.

The event will be held on Wednesday, February 22 from 8:00am-9:00am in our atrium on the 10th floor at 1110 Vermont Ave, NW. If you are interested in attending, please contact Jacob Beaver.

Below are some highlights from the press about recent developments in healthcare policy:

  • Top priority for insurers: Keep Obamacare’s coverage mandate and subsidies – Axios (Feb 13)
    “The Trump administration’s highly anticipated Obamacare “market stabilization” regulation, which could come as soon as this week, may help insurers by tightening the enrollment rules. But that’s not what’s at the top of health insurers’ wish list. They care a lot more about keeping the subsidies and individual mandate tax — and they want the taxes on them repealed permanently.”
  • Doubts grow that GOP can repeal Obamacare – Politico (Feb 14)
    “Republicans have reached a gut check moment: After spending more than six years vowing to fix the flagging patient that is Obamacare, it’s the GOP’s own repeal effort that’s on life support. Undoing the health care law despised by conservatives seemed to be a straightforward proposition for the party after it won the White House and retained control of both chambers of Congress. Instead, Republicans are sniping over how much of the law to scrap, what to replace it with and when. At this moment, it’s far from a sure thing any plan could get through Congress.”
  • CMS Issues Proposed Rule to Increase Patients’ Health Insurance Choices for 2018 – CMS.gov (Feb 15)
    “The Centers for Medicare & Medicaid Services (CMS) today issued a proposed rule for 2018, which proposes new reforms that are critical to stabilizing the individual and small group health insurance markets to help protect patients. This proposed rule would make changes to special enrollment periods, the annual open enrollment period, guaranteed availability, network adequacy rules, essential community providers, and actuarial value requirements; and announces upcoming changes to the qualified health plan certification timeline.”
  • A Deep Dive Into 4 GOP Talking Points On Health Care – Kaiser Health News (Feb 14)
    “Republican leaders have a lengthy list of talking points about the shortcomings of the health law. Shortly before his inauguration last month, President Donald Trump saidthat it “is a complete and total disaster. It’s imploding as we sit.” And they can point to a host of issues, including premium increases averaging more than 20 percent this year, a drop in the number of insurers competing on the Affordable Care Act marketplaces and rising consumer discontent with high deductibles and limited doctor networks.”
  • GOP looks to cap employer tax break in Obamacare replacement – Washington Examiner (Feb 14)
    “Republicans facing tough questions about how to pay for their Obamacare replacement are looking hard at a controversial but revenue-raising idea: capping the tax break for employer-sponsored coverage. The proposal is part of draft legislation that House Republicans are working on, according to lobbyists with knowledge of the discussions. Not only is House Speaker Paul Ryan a huge fan of limiting the tax break, but it also could help solve the underlying financial problem of keeping the law’s benefits while repealing the taxes that pay for them.”
  • Freedom Caucus ready for Obamacare replacement that expands HSAs, bans abortion funding – Washington Post (Feb 15)
    “House conservatives, frustrated by the House and Senate GOP’s signals on what a replacement of the Affordable Care Act might look like, are looking at joint legislation from Rep. Mark Sanford (R-S.C.) and Sen. Rand Paul (R-Ky.) as their preferred replacement. That legislation would expand health savings accounts, eliminate most regulations on what plans must cover and prevent the funding of abortions through HSAs.”
  • Humana Plans to Pull Out of Obamacare’s Insurance Exchanges – New York Times (Feb 14)
    “Humana announced on Tuesday that it would no longer offer health insurance coverage in the state marketplaces created under the federal health care law, becoming the first major insurer to cast a no-confidence vote over selling individual plans on the public exchanges for 2018. President Trump immediately seized on the company’s decision as evidence that the Affordable Care Act needed to be repealed and replaced. “Obamacare continues to fail,” he said on Twitter.”
  • Another day, another drugmaker getting yelled at – Washington Examiner (Feb 14)
    “Outrage is brewing in Congress over another drugmaker that raised the price of a drug for a rare disease. Lawmakers are demanding answers about the costs of research and development and how much revenue and profit the company stands to gain from drug. A congressional hearing with company officials could be on the horizon.”

February 13, 2017

A blueprint for the GOP’s replace plan is beginning to emerge. The plan will likely include health savings accounts (HSAs), high-risk health insurance pools (as a way to try to stabilize the insurance market after the repeal provisions pass), significant Medicaid reform, and tax credits – which would be adjusted due to circumstances such as family size – to help in the purchase of insurance policies. It is becoming clear that in addition to repeal of the Affordable Care Act (ACA), congressional Republicans want to try to include several replacement elements in the reconciliation legislation. However, it is still unclear whether the Senate Parliamentarian will allow the replacement pieces to be included in that bill.

Changes to the Medicaid program are turning out to be one of the more complex issues to address in the replace plan. Many Republicans in the House, along with President Trump, want to use block grant funding by giving each state a fixed amount of money for each beneficiary, or a lump sum for the entirety of a state’s Medicaid program. But questions have arisen on whether the funding should be allocated on the status of each state’s Medicaid enrollment before the enactment of the ACA or after. The per capita cap option is continuing to be discussed but also runs into the same funding allocation question. It is becoming clear that a funding formula fight might develop and once it commences, it will be difficult to address.

The GOP is also facing a growing problem of how to pay for ACA replacement. It is going to be expensive, and there is no easy way to pay for it. After several years of attacking the ACA’s industry taxes and other funding sources, Republicans are discovering that paying for replacement is not easy. Senate Finance Committee Chairman Hatch recently said that he wants to repeal all of the ACA taxes in the reconciliation legislation, which creates a large funding problem. However, there have been recent reports of some Republicans viewing some of those taxes as a possible funding source.

As another possible funding option, House GOP leadership has been discussing the option of limiting the tax break for employer health coverage. This option is currently being opposed both by certain members of Congress and the business community. Speaker Ryan recently would not commit to including it in the GOP plan. The employer benefit cap would be a large source of revenue in any Republican replacement plan. If they repeal the ACA taxes and cannot agree on an employer benefit cap, they face a sizable future funding gap.

Below are some highlights from the press about recent developments in healthcare policy:

  • GOP dilemma on health law taxes: To repeal or not to repeal? – Associated Press (Feb 11)
    “Republicans love cutting taxes, especially if they were authored by a president named Barack Obama. But as they push their wobbly effort to erase his health care overhaul, they’re divided over whether to repeal the levies the law imposed to finance its expanded coverage for millions of Americans.”
  • 200 patient groups ask Price to keep protections for those with pre-existing conditions – The Hill (Feb 13)
    “More than 200 patient groups are asking the newly confirmed Health and Human Services secretary to preserve key ObamaCare protections, including one that guarantees coverage for those with pre-existing conditions. In a letterto Tom Price, I Am Essential, a coalition of patient and community organizations, says certain ObamaCare provisions have provided improved access to care to millions living with chronic and serious health conditions.”
  • The stealth Republican force behind Obamacare repeal – Politico (Feb 11)
    “Republican town halls are erupting with protests as Americans fret over the future of their health insurance. But listen to Lamar Alexander for a few minutes, and you might think not a single bad thing will come of the GOP’s plan to rip apart Obamacare and stitch together a replacement. The folksy Tennessee senator is quietly prevailing upon Republican lawmakers to take a deep breath when it comes to rewriting the health care law that controls a sixth of the American economy. His goal, in a nutshell: to reassure millions of Americans that Republicans aren’t trying to snatch away their health insurance.”
  • Grassley Launches Inquiry Into Orphan Drugs After KHN Investigation – Kaiser Health News (Feb 10)
    “Republican Sen. Chuck Grassley, chairman of the Senate Judiciary Committee, has opened an inquiry into potential abuses of the Orphan Drug Act that may have contributed to high prices on commonly used drugs. In a statement, Grassley said the inquiry is “based on reporting from Kaiser Health News” and strong consumer concern about high drug prices.”
  • Employers Balk at Curbs on Generous Health Plans – Wall Street Journal (Feb 13)
    “The Affordable Care Act’s tax on high-cost employer health plans faced sharp opposition from employers and unions. Now, Republicans are drawing equal fire for ACA replacement proposals that those groups say would have some of the same effects. The ACA’sso-called Cadillac tax is levied on the value of employer health plans above a certain threshold, in part to discourage what backers argue are overly generous plans and high usage of costly care. It is one of the few aspects of the law that Congress has tweaked, delaying its impact until 2020.”
  • Pilot program could open door to home-based Medicare coverage – The Hill (Feb 13)
    “A pilot program to fund home-based assistance for some Medicare Advantage patients could open the door for reimbursement under Medicare, where payment for nonmedical support services is largely off limits. Sens. Chuck Grassley (R-Iowa) and Ben Cardin (D-Md.) are pushing legislation to give the Centers for Medicare and Medicaid Services (CMS) the authority to test potential savings from offering home and community-based care to certain Medicare beneficiaries 65 and older.”

February 10, 2017

Around 11:30am this morning, Dr. Tom Price was sworn in as the 12th Secretary of Health and Human Services (23rd including the predecessor agency Health, Education, and Welfare). While Vice President Pence made remarks touting the credentials of Dr. Price before administering the oath of office, the ceremony ended without having further remarks being made. The perfunctory nature of the ceremony may be an indication of the amount of work and decisions awaiting the new secretary.

We are continuing to hear that the committees will begin action on reconciliation instructions in March. There is a lot of discussion on expansion of health savings accounts (HSAs) and “reforming” Medicaid, an especially important topic of discussion, as 18 Republican senators represent states that have expanded Medicaid. Nevertheless, there are not yet a lot of specifics around what those policies would like. We expect House Leadership to begin outreach to members on these issues as early as next week to begin the process of listening and attempting to build consensus on a plan moving forward.

Below are some highlights from the press about recent developments in healthcare policy:

  • Senate confirms Obamacare opponent Price to lead health department – Politico (Feb 10)
    “The Senate early Friday morning installed Rep. Tom Price as the nation’s top health care official, putting him in charge of HHS and Republicans’ effort to make good on their pledge to repeal and replace the sweeping Affordable Care Act. Price’s confirmation came by a slim 52-47 margin, ending weeks of partisan rancor marked by ethics allegations, boycotts and sharp breaks with Senate tradition and decorum. The seven-term congressman maintained full Republican support throughout the process, ensuring his path to HHS secretary was never in real danger. No Democrats voted for him.”
  • Hiring Freeze at FDA: Upton and DeGette Say It Puts Priorities at Risk – Regulatory Affairs Professionals Society (Feb 9)
    “Hampering the US Food and Drug Administration’s (FDA) ability to hire puts bipartisan priorities at risk, Reps. Fred Upton (R-MI) and Diana DeGette (D-CO) wrote in a letter sent Tuesday to the acting director of the Office of Management and Budget (OMB).The letter comes as President Donald Trump in late January ordered a freezeon all government hiring, which has some exemptions for public health, though it’s unknown how the freeze impacts FDA or user fee funding to hire new employees. FDA had been battling nearly 1,000 staff vacancies prior to the freeze taking effect.”
  • Republican senators wrestle with changes to Medicaid – The Hill
    “Republican senators who hail from states that expanded Medicaid are meeting about the future of the program as their party moves ahead with the repeal of ObamaCare. The senators had their first meeting on Wednesday in the office of Sen. Rob Portman (R-Ohio), who is from a state that expanded Medicaid and whose Republican governor, John Kasich, has been a vocal defender of it. Asked if the senators were trying to preserve the expansion of Medicaid, Portman told The Hill: “We’re trying to get a sense of where everybody is right now; we’re not decided on anything.””
  • House Conservatives Want Faster Obamacare Repeal, Slower Tax Reform – National Journal (Feb 9)
    “House con­ser­vat­ives have a mes­sage for their lead­ers: Hurry up and re­peal Obama­care, but slow down your plans to re­form the tax code. Dur­ing dis­cus­sion ses­sions at the Her­it­age Found­a­tion-sponsored con­ser­vat­ive mem­bers’ re­treat, mem­bers said they are com­ing to the con­sensus that their lead­ers should move an Af­ford­able Care Act re­peal bill sim­il­ar to the one both cham­bers passed in 2015 and fig­ure out a whole­sale re­place­ment later.”
  • Town hall crowds turn up the heat on Republicans – Axios (Feb 10)
    “Several congressmen hosted town halls across the nation last night, and some of the hottest issues that came up again and again were the uncertainty surrounding Obamacare and Trump’s controversial executive orders. Politico’s Dan Diamond made a timeline of tweets documenting the rooms overflowing with angry constituents who pushed their representatives to protect their healthcare and dig deeper into Trump…”

February 8, 2017

We are hearing that the Energy and Commerce Committee will be marking up their reconciliation instructions in March. It is still not clear what that legislative package will look like, let alone what Ways and Means will be reporting to meet their reconciliation instructions. The Subcommittee on Health did report out two bills to close loopholes in Medicaid eligibility to better ensure only the truly needy are allowed to enroll in the program.

Meanwhile, the Senate is expected to see another marathon session leading up to the confirmation vote of Dr. Price. Leader McConnell has pledged to keep the Senate in session into the weekend to complete the confirmation process of several key cabinet members including Dr. Price.

Below are some highlights from the press about recent developments in healthcare policy:

  • From ‘Repeal’ to ‘Repair’: Campaign Talk on Health Law Meets Reality – NY Times (Feb 6)
    “Soon after he was elected, Mr. Trump reacted to Republican suggestions of a delay in replacing the health act by insisting that repealing and replacing the law must happen at about the same time. Now, Mr. Trump and his Republican allies on Capitol Hill have recast their ambitions for a rapid-fire repeal, talking privately and publicly about a more deliberative process that could be phased in over weeks or months.”
  • Conservatives in Congress call for Obamacare repeal ‘in the next few months’ – Washington Post (Feb 8)
    “A trio of House and Senate conservatives told reporters Wednesday that full repeal of the Affordable Care Act needs to happen in the spring, contradicting President Trump’s recent comments that repeal might come as late as 2018. “Repeal needs to get done in the next few months so we can look forward,” said Sen. Mike Lee (R-Utah). “It would be folly to assume that whatever comes next has to be in one giant bill. … It’s better to look at this in terms of bites at an apple.””
  • CMS Chief Nomination Is Advancing in Vetting Process, HHS Says – CQ Roll Call (Feb 8)
    “The Office of Government Ethics may “very soon” publicly post an agreement with Seema Verma, the Trump administration’s choice to run the Centers for Medicare and Medicaid Services, the Health and Human Services Department told CQ Roll Call. The deal would bring her nomination closer to Senate consideration. The agreement would address “all potential conflict issues,” HHS spokesman Matt Lloyd said.”
  • Obamacare repeal-replace effort begins to jell – Politico (Feb 7)
    “Republicans on Capitol Hill and within the Trump administration are scrambling to get Obamacare repeal efforts back on track by stuffing as much of a replacement policy as possible into a repeal bill. Four replacement measures are under consideration, with a goal of beginning work on the legislation in the relevant House committees by the end of February, according to congressional sources familiar with the tentative plans.”
  • When Trump speaks, Republican policymakers shrug – and get back to work – Washington Post (Feb 8)
    “When President Trump told Fox News Channel host Bill O’Reilly recently that the rollout of a Republican health-care plan would “maybe… take till sometime into next year,” he contradicted many congressional Republicans who have promised a swift repeal of the Affordable Care Act. And they followed what has become an uncomfortably common routine: making sense of his words, figuring out how they mesh with their own promises — and getting back to work.”
  • AARP threatens to sue Trump administration over Obamacare change – The Hill (Feb 7)
    “The AARP says it would consider suing the Trump administration if it went forward with a regulation that would allow insurers to charge older people more under Obamacare. The Department of Health and Human Services is in the process of putting forward a regulation on “stabilization” of the Obamacare marketplaces, and The Huffington Postreported on Monday that one proposal in the regulation is to change the ratio set out under Obamacare on how much more insurers can charge older people compared to younger people.”
  • Could Minnesota Health Reforms Foreshadow Repeal and Replace? – Kaiser Health News (Feb 7)
    “What’s going to happen to the federal health law? The quick answer is no one knows. But in the midst of the uncertainty about the Affordable Care Act, states still must govern their insurance markets. Most have been muddling through with the 2017 status quo, but Minnesota is a special case, taking three unusual actions that are worth a closer look.”

February 6, 2017

During a pre-game interview before the Super Bowl, President Trump suggested it may take until next year before the process for coming together on a replacement for the Affordable Care Act (ACA) is finalized. The President’s comments are consistent with what we heard from the Congressional Republicans’ retreat last month where they spoke about passing the repeal legislation first; having the Department of Health and Human Services (HHS) take administrative actions to try and stabilize the insurance markets next; and then putting in place policies to “replace” or “repair” the ACA. It may also be recognition by the President that the legislative process outside of budget reconciliation may take some time to play out.

Elsewhere, the Senate is attempting to confirm Dr. Price as HHS secretary this week. Assuming that the Majority’s efforts are successful, we would expect more clarity on plans for the ACA to come forward swiftly following his confirmation.

Below are some highlights from the press about recent developments in healthcare policy:

  • Tom Price has his finger on the Obamacare destruct button – Politico (Feb 6)
    “Tom Price spent years railing against Obamacare. Now he’ll finally have sweeping power to do something about it. The Georgia Republican congressman is on the verge of becoming the Trump administration’s top health care official, armed with broad authority to begin unwinding Obamacare by using as much executive power as possible, even as Congress struggles to find consensus on a plan to repeal and replace the health care law.”
  • The trouble with the piecemeal Obamacare replacement strategy – Axios (Feb 3)
    “If the GOP follows through with its latest Obamacare repeal strategy — chopping up the replacement into a series of mini-bills — we may never know how health care costs and coverage under a new Republican plan compare to current law. That’s because a true apples-to-apples comparison won’t be possible that way, at least not for a long time.”
  • Hospitals Fear Changes to Health Law, Press GOP on Revenue Concerns – Wall Street Journal (Feb 6)
    “Hospital executives are descending on Washington with a message: They are concerned about losing insured patients and revenue under any plan to dismantle or significantly alter the Affordable Care Act. In a flurry of recent meetings, the executives have told lawmakers they don’t want Americans to lose insurance under any alternative the Republicans devise for the Affordable Care Act. If that happens, however, hospitals say they want Congress to restore billions of dollars in federal funding they lost when the ACA took force.”
  • Study: GOP Medicaid plan could save more than $100 billion – Washington Examiner (Feb 6)
    “Transforming Medicaid into a block grant or per capita cap program could save the federal government more than $100 billion over five years, a new study found. The research from the healthcare firm Avalere Health was released as the GOP-controlled Congress eyes overhauling Medicaid as part of a replacement to Obamacare. However, critics say that the move could shift more costs to the state.”
  • Trump loses backbone on drug prices. Is there a pill for that? – Washington Post op-ed (Feb 4)
    “Amid all the kerfuffle in the last week over immigration, the Supreme Court, Iran and Arnold Schwarzenegger’s TV ratings, too little attention was paid to an extraordinary meeting at the White House at which President Trump reneged on a campaign promise and sold out millions of “forgotten” Americans to giant drug companies. It was almost exactly a year ago that Trump, campaigning in New Hampshire, said it was crazy that the federal government, effectively the world’s largest buyer of prescription drugs, was not allowed to negotiate directly with the drug companies to get lower prices, boasting that he could save taxpayers $300 billion a year on Medicare “on Day One.””

February 3, 2017

Interim Budget Chairwoman Diane Black expressed in an interview this week that she expects the committees to produce their reconciliation instructions repealing the Affordable Care Act (ACA) by the end of February with a House vote sometime in March.  Additionally, Chairman Hatch put out a statement recently restating his intentions to repeal the ACA and put forward a replacement for it.  These comments are interesting as there has been recent speculation about the Republican’s struggles to meet their stated goals with the actual policy.

Drug pricing has also been receiving a lot of attention recently.  The President met with the President of the trade group Pharmaceutical Research and Manufacturers of America (PhRMA) and a number of their member companies’ CEOs telling the group that while drugs have produced extraordinary benefits, “the pricing has been astronomical for our country…”  Additionally, Chairman of the Energy and Commerce Committee Greg Walden announced the committee would take up a bill next week to encourage the development of generic drugs.

On Thursday, the House Energy and Commerce Committee, Subcommittee on health held a hearing entitled “Patient Relief from Collapsing Health Markets.” There were three witnesses Dr. Doug Holtz-Eakin, President, American Action Forum; Dr. J. Leonard Lichtenfeld, Deputy Chief Medical Officer, American Cancer Society; and J.P. Wieske, Deputy Commissioner of Insurance, State of Wisconsin.

Thursday’s hearing was ostensibly focused on the four pieces of draft legislation meant to, in the words of Rep. Brett Guthrie (R-KY) “repair the leaks before we replace the pipes” for Obamacare. The bills, the Plan Verification and Fairness Act of 2017, which would cut the number of special enrollment periods; the State Age Rating Flexibility Act of 2017, which would allow insurers to charge older people five times as much as younger people in order to decrease premiums; the Health Coverage State Flexibility Act of 2017, which would cut the grace period for consumers who haven’t paid their bill; and the Preexisting Conditions Protection and Continuous Coverage Incentive Act of 2017; which would help to cover those with preexisting conditions by encouraging continuous coverage.

The hearing unsurprisingly featured many of the same partisan arguments that have dominated the healthcare debate for years, though Mr. Holtz-Eakin, the former director of the Congressional Budget Office, said the bills represented “sensible policy” that could earn “bipartisan support.” Considerable discussion from both Republicans and Democrats focused on the ability for high risk pools to cover those with preexisting conditions adequately, as well as how they could be funded. Additionally, Democrats expressed considerable skepticism that the Republican bills would allow for older and sicker Americans to get healthcare they could afford.

Additionally, unrelated to the four bill legislative proposals, Energy and Commerce Chairman Greg Walden announced that the committee take up a bipartisan bill next week focusing on drug pricing. Specifically, it would encourage and incentivize companies to make generic drugs.

If you’d like the full summary of the hearing including opening statements, testimony, and questioning session, please email jacob.beaver@prime-policy.com.

Below are some highlights from the press about recent developments in healthcare policy:

  • Two top Republicans open to repairing Obamacare ahead of repeal – Washington Post (Feb 2)
    “Two top Republicans long expected to lead the Senate’s role in repealing the Affordable Care Act said publicly this week that they are open to repairing former president Barack Obama’s landmark health-care law ahead of a wholesale repeal, which has been a GOP target for eight years.”
  • The GOP’s Obamacare repeal plan could hurt Republican areas. This map shows how. – Washington Post (Feb 3)
    “A new analysis suggests that some of the impact of these disruptions might end up concentrated in Republican areas. The Congressional Budget Office recently examineda version of the GOP repeal-and-delay bill — one passed by Republicans in 2015 and vetoed by President Obama — and concluded that, because of insurers exiting the market, some 10 percent of Americans might be left living in an area that had no insurers participating in the individual market at all.”
  • Insurers Shrink from Exchanges as Lawmakers Mull Changes – Associated Press (Feb 1)
    The Affordable Care Act’s insurance exchanges have become too risky for major health insurers, and that’s creating further doubt about coverage options consumers might have next year. Anthem CEO Joseph Swedish said Wednesday his company is waiting to see whether the government makes some short-term fixes to the shaky exchanges before it decides how much it will participate next year. The Blue Cross-Blue Shield carrier is the nation’s second largest insurer and sells coverage on exchanges in 14 states.
  • HSAs: ‘Tax-Break Trifecta’ Or Insurance Gimmick Benefiting The Wealthy? – Kaiser Health News (Feb 3)
    “Expanding the use of such accounts, based on a long-held conservative view that consumers should be more responsible for their health care spending, is part of almost every GOP replacement plan under consideration on Capitol Hill. Here’s the theory behind HSAs: Making consumers bear a bigger up-front share of medical care — while making it easier to save money tax-free for those costs — will result in more judicious use of the health system that could ultimately slow rising costs.”
  • What’s likely to happen on drug prices, and what you can ignore – Axios (Feb 2)
    “President Trump may have gone from accusing pharmaceutical companies of “getting away with murder” to meeting with the CEOs of those companies but the fight over drug prices is far from over. What the president has called for in the past — drug price negotiations, presumably in Medicare — is far from the top of the list of what’s likely to pass through a Republican-controlled Congress, and he’s talking about that less now anyway. Instead, he’s aligning more with congressional Republicans in calling for market reforms to create more competition faster.”
  • Upton Introduces Legislation to Strengthen Medicaid – Office of Rep. Fred Upton (Feb 3)
    “Under Medicaid regulations, income received as a lump sum, such as lottery winnings, is counted as income only in the month received. As a result, states are effectively not allowed to dis-enroll lottery winners from Medicaid. This forces taxpayers to bear the burden of paying the health care benefits for individuals who no longer require assistance. H.R. 829 will close this loophole by requiring states to count monetary winnings from lotteries of $80,000 or more as if they were obtained over multiple months, even if obtained in a single month.”

February 1, 2017

Senate Finance Committee Democrats did not attend the scheduled markup for the consideration of the nomination of Dr. Price to serve as Health and Human Services secretary yesterday, denying the Republicans on the committee a quorum to conduct the markup.  Today, the Finance Committee Republicans met and Chairman Hatch entertained a motion from Senator Isakson to suspend the rules for the purposes of approving Dr. Price’s nomination.

Taking this action certainly allows for consideration of the nomination by the full Senate in a matter of days. However, this will likely result in a much closer vote in the full Senate of his confirmation. It is yet to be seen how the circumstances of his committee confirmation will affect his relationship with Senate Democrats after he is confirmed, assuming the Republican votes for him hold.

Elsewhere on the Hill, the House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing yesterday entitled, “Medicaid Oversight: Existing Problems and Ways to Strengthen the Program”. Testifying at the hearing were: Carolyn L. Yocom, Director of Health Care for the U.S. Government Accountability Office (GAO); Ann Maxwell, Assistant Inspector General of the Office of Evaluation and Inspections for the Office of Inspector General (OIG) at the U.S. Department of Health and Human Services (HHS); Paul Howard, Senior Fellow and Director of Health Policy at the Manhattan Institute; Josh Archambault, Senior Fellow for the Foundation for Government Accountability; and Timothy M. Westmoreland, Professor from Practice and Senior Scholar in Health Law at Georgetown University Law Center.

Most of the discussion at the hearing revolved around the expansion of Medicaid thanks to the Affordable Care Act. Chairman Tim Murphy (R-PA) said that states are gaming Medicaid by counting traditional-Medicaid beneficiaries as newly eligible beneficiaries to get more federal money, and also said that Medicaid expansion had put 11 million additional people into the program that was hurting the ACA’s individual mandate. Democratic members, however, were quick to say that while the issue of fraud in the Medicaid system is certainly a concerning one, they were more concerned that the hearing was an exercise to lay the groundwork for drastic cuts to the Medicaid and roll back the historic accomplishments of its expansion.

If you’d like a full summary of the hearing including opening statements, testimony, and questioning session, please email jacob.beaver@prime-policy.com.

Below are some highlights from the press about recent developments in healthcare policy: