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May 2017


May 26, 2017

The Congressional Budget Office (CBO) came out with its cost estimate for the House-passed version of the American Health Care Act (AHCA). There are several points of data in the report that should be a cause for concern for Republicans. However, there are a few items in the report Republicans are likely to point to as signs for optimism.

CBO has not altered the projection that 14 million more people will be uninsured in 2018. That number should be troubling for Republicans. Because of the so-called MacArthur amendment, states will be allowed to apply for waivers of some key provisions of the Affordable Care Act (ACA). As a result, CBO projects that one-sixth of the population live in states where non-group markets could become unstable beginning in 2020. This situation could be particularly problematic for individuals with higher-than-average expected health care costs which are usually people with pre-existing health conditions.

House Republican Leadership was upbeat about this report because it also projects that in states that make moderate changes to market regulations premiums could be roughly 20 percent lower by 2026. CBO was not able to project how much lower premiums would be in states that make more substantial changes to insurance markets in their states.

The deficit reduction numbers lowered somewhat from the last CBO estimate, but these numbers still give the Senate some flexibility as they consider their policy options. Keep in mind that in one of the amendments the House made to the committee reported version of AHCA they lowered one of the taxes to a level below where it was before passage of the ACA. As a result, the Senate can simply bring that tax back to its pre-ACA level to generate additional revenues which grants the Senate the desired flexibility in crafting policy options.

There is also some speculation that the Senate may act on the cost sharing reduction payments that were challenged in the courts by Congress. The thinking is that if Congress were to affirmatively act to authorize these payments, even if for a limited period of time, it may offer some stability to the insurance markets while the Senate works its way through their consideration of AHCA. We are told that CBO has factored these payments into the policy baseline so there should not be a score to legislation authorizing the payments.

We are also hearing that despite Leader McConnell establishing a work group to explore options with the AHCA, virtually all Republican Senators are engaged on this issue and are seeking to make their own contributions to this legislative effort. Our current outlook is Senate floor action on the AHCA sometime before the August recess.

Below are some highlights from the press about the past week’s developments in healthcare policy:


May 19, 2017

Momentum continues for the so-called PDUFA legislation reauthorizing the user fees on prescription drugs as the House Energy and Commerce Committee reported its version of the bill on Thursday.  The bill reported from the subcommittee also includes the hearing aid other-the-counter provision just as the Senate version of PDUFA legislation did.  The legislative and regulatory developments around hearing aids will be disruptive to hearing health care to the benefit of the consumer.  We expect actions on the other “DUFA” bills for generic drugs, devices and biosimilars to move quickly as well.

There was also speculation this week around a possible re-vote in the House of the American Health Care Act (AHCA).  That is because the Clerk of the House has not yet transmitted the version of AHCA passed by the House to the Senate as the House is awaiting for the score of the bill from the Congressional Budget Office (CBO) out of an abundance of caution, which will be released on Wednesday of next week. If CBO does not attest that AHCA reduces the deficit by at least $2 billion over ten years, as the budget resolution directed committees to do, then the House-passed bill would not have reconciliation protections in the Senate.  We are not expecting the CBO score to come back with savings below the $2 billion threshold.

There has also been a lot of speculation around possible administrative actions taken by the Trump Administration around drug pricing.  Secretary Price has been holding listening sessions with stakeholders on the issue.  It is not yet clear what actions will be taken, but we do not think the actions are likely before Congress passes or moves on from the AHCA.

Below are some highlights from the press about the past week’s developments in healthcare policy:

  • CBO score of Obamacare repeal bill expected Wednesday – Politico (May 19)
    “The Congressional Budget Office and the Joint Committee on Taxation plan to release a score of the House-passed Obamacare repeal bill on Wednesday afternoon, the CBO said in a blog post The Senate parliamentarian can’t review the legislation and the GOP cannot start writing its health care bill in the upper chamber until the CBO scoring is complete. Savings under the Senate version has to at least equal savings under the House bill — otherwise the measure would violate budget rules and the GOP repeal effort would come to a swift end.”
  • The White House budget director dropped a hint about how Trump could bring drug prices down – Washington Post (May 12)
    “Mulvaney explained at the LIGHT Forum at Stanford University that drugmakers receive a “tremendous giveaway” from Medicare’s prescription drug benefit because they do not have to pay a mandatory rebate off the average price, as they do in Medicaid. Instead, in Medicare’s prescription drug benefit, private companies bargain with drug companies to win rebates for their members.”
  • Many Medicare beneficiaries spend 20 percent or more of their income on premiums, other health costs – CNBC (May 15)
    “Having government-run health care doesn’t mean you won’t be on the hook for some steep medical bills. More than a quarter of all Medicarebeneficiaries — 15 million elderly and disabled Americans — spend 20 percent or more of their household income in premiums and out-of-pocket health costs, a new study says. And those cost burdens are more common among Medicare beneficiaries who have low incomes, the Commonwealth Fund report found.”
  • American Medical Association: Millions could lose coverage in GOP health plan – The Hill (May 15)
    “The nation’s largest doctors group warned Senate leaders Monday that millions of people could lose health coverage under the Republican healthcare plan. In a letter to Majority Leader Mitch McConnell(R-Ky.) and Minority Leader Charles Schumer (D-N.Y.), the American Medical Association (AMA) pushed back against any “significant changes” to the Affordable Care Act or Medicaid programs.”
  • McConnell: Senate ‘can’t take forever’ on health care – Politico (May 16)
    “Senate Majority Leader Mitch McConnell on Tuesday declined to put a timeline on passing health care legislation, but said the Senate “can’t take forever” on it. “We can’t take forever,” McConnell told Bloomberg TV, citing instability in the individual insurance market. “I don’t think we have forever to address this, but I’m not going to put a strict timeline on it.””

May 12, 2017

Yesterday, the Senate Committee on Health, Education, Labor, and Pensions (HELP) reported S.934 – The Food and Drug Administration Reauthorization Act of 2017 out of committee on a strong bipartisan vote of 21-2. The dissenting votes came from Sens. Sanders (D-VT) and Paul (R-KY). This is the so-called PDUFA bill that reauthorizes the industry user fees to fund the Food and Drug Administration (FDA).

There are also a number of important reforms included in S.934 that will improve the approval process and continue the important reforms started by the 21st Century Cures Act. Interestingly, one of the provisions included in the bill is a bipartisan bill that would allow hearing aids that are intended to be used by adults for mild to moderate hearing loss to be sold over the counter and would eliminate the requirement for a medical evaluation consistent with the FDA position. We expect the Senate to move quickly on this legislation as the current authorization expires at the end of September.

We are expecting the score of the House-passed American Health Care Act (AHCA) to be released by the Congressional Budget Office (CBO) the week of May 22nd. The fiscal impact of the legislation will change from the CBO score of the committee reported bill, but we are not expecting significant changes to the coverage estimates. There have been some behind the scenes discussions in the Senate on key provisions that will likely make it into their version of the AHCA, but no details have yet emerged.

Below are some highlights from the press about the past week’s developments in healthcare policy:

  • Price predicts Obamacare repeal passes Senate by August – Politico (May 12)
    “Health and Human Services Secretary Tom Price on Friday said he expects the Senate to pass its version of a bill to repeal and replace Obamacare by August. “I do,” Price told conservative radio host Hugh Hewitton Friday morning. “I believe the Senate will produce a bill this summer.” Asked if he anticipates the chamber voting on such legislation before the month-long August recess, Price said, “I believe so.””
  • Scott Gottlieb wins confirmation as FDA commissioner – Stat (May 9)
    “Dr. Scott Gottlieb is headed back to the Food and Drug Administration. By a vote of 57 to 42, the Senate on Tuesday confirmed Gottlieb, a former FDA deputy commissioner, as the agency’s next chief. A physician, investor, and consultant to the drug industry, Gottlieb drew criticism from some Democrats and consumer advocates who disapproved of his financial ties to the industry he will regulate. But his nomination also garnered much praise; supporters said his long experience working with drug makers would help him administer the FDA smartly and sensibly.”
  • Senate GOP making tax credits look more like … Obamacare – Politico (May 12)
    “Though the senators are intensely divided on other issues in the repeal package, the tax subsidies are emerging as one of the few areas of agreement within the Senate GOP as they start to write their own Obamacare repeal bill. The goal is to provide more assistance to very low-income Americans than the House did, according to several Republican lawmakers and congressional aides. Details haven’t been sketched out, but lawmakers are already downplaying any resemblances to Obamacare.”
  • 4 deal-breakers that could blow up a Senate Obamacare repeal bill – Politico (May 9)
    “Just days into the chamber’s health care debate, centrists and self-styled mavericks are testing the party’s razor-thin margin for victory and setting the stage for a series of high-profile negotiations. Those stare downs are likely to shape big parts of the legislation, since GOP leaders can only absorb two defections if Democrats and the chamber’s two independents stand unified in opposition.”
  • Decoding HHS Secretary Price’s spin on the American Health Care Act – Washington Post (May 8)
    “Price defended the American Health Care Act, the House GOP plan to overhaul health-care system, in an interview with CNN. [The article is] going to focus on two statements in particular because they are rather misleading.”
  • Senators Unsure if They Can Save Medicaid Expansion – Bloomberg BNA (May 10)
    “Altering the House’s Obamacare repeal bill to aid Medicaid expansion states may be impossible under Senate rules, lawmakers said May 9. The Senate’s version of the American Health Care Act (H.R. 1628)must cut the federal deficit to the same extent as the House bill in order to qualify for the budget reconciliation process that allows bills to pass with a simple majority, senators told reporters. This means new money for states that expanded their Medicaid programs under the Affordable Care Act would have to be paid for by new revenue or cuts elsewhere, Sen. Ron Johnson (R-Wis.) told reporters.”

May 5, 2017

This is certainly a big week for President Trump and Speaker Ryan, as the House passed the American Health Care Act (AHCA) and both houses passed the omnibus appropriations bill, which was signed by the President this afternoon.  There was an event in the Rose Garden at the White House to celebrate the accomplishment of House passage for the healthcare bill.  But there is a lot of work yet to be done in order for a bill to pass the Senate and ultimately be sent to the President for his signature.

We are hearing that listening sessions have been scheduled in the Senate to begin to get input from individual Senators.  Leadership is also meeting with the committee chairmen and twelve Senators who are not on the committees of jurisdiction but are very engaged in health care issues. The Senate must also wait a score from the Congressional Budget Office of the House passed bill.  We are told that will take at least two weeks to complete.

There are many options before the Senate in terms of how they bring up the AHCA.  We expect that Senator McConnell is likely to lead an effort to write a new bill that achieves many of the broad policy goals of the House passed bill such as reforming Medicaid, creating incentives for purchasing insurance, etc.  However, it is probably easier to start with a new bill rather than trying to do so-called cut-and-bite amendments to the House passed version of the bill which has already been subjected to five amendments since being reported from committees in the House.

The expectation is that the legislative process on the AHCA will certainly stretch through June and possibly into July depending on whether there is negotiation on the Senate changes to the bill or just a final vote in the House in the Senate passed product (assuming the Senate can find consensus).

Below are some highlights from the press about the past week’s developments in healthcare policy:

  • While House passes GOP health-care bill, Senate prepares to do its own thing – Washington Post (May 4)
    “Republican senators are signaling that their strategy will be rooted in crafting their own replacement for the Affordable Care Act. It remains unclear how closely that measure will resemble the one that narrowly passed in the House on Thursday or whether GOP senators will resolve their stark differences.”
  • Senate GOP rejects House Obamacare bill – Politico (May 4)
    “If the Senate can pass a bill it is sure to be at odds with the more conservative House. And because Republicans can lose only two votes in the Senate, they must also somehow keep in line a trio of conservative senators — Mike Lee of Utah, Ted Cruz of Texas and Rand Paul of Kentucky — while also appealing to more moderate members.”
  • American Medical Association condemns House healthcare bill passage – The Hill (May 4)
    “”The bill passed by the House today will result in millions of Americans losing access to quality, affordable health insurance and those with pre-existing health conditions face the possibility of going back to the time when insurers could charge them premiums that made access to coverage out of the question,” American Medical Association (AMA) President Andrew Gurman said in a statement.”
  • Most Americans still want Washington to do something about drug costs – Stat (May 1)
    “A majority of Americans continue to believe that lowering prescription drug costs should be a top priority for the Trump administration and Congress, and most overwhelmingly favor taking several steps — such as allowing Medicare to negotiate or importing medicines from Canada — as a potential solution.”
  • Study: Increased Insurance Coverage Didn’t Reduce Access to Care – Morning Consult (May 1)
    “More people getting health insurance under the Affordable Care Act didn’t lead to challenges in accessing care for those who were already insured, a new Health Affairs study The findings could assuage concerns about how access to doctors was affected under the ACA. They suggest that having more insured people in a geographical area does not make it more difficult for others in the same area to access preventative care and specialists.”
  • Trump signs order loosening oversight of churches’ political activities – Politico (May 4)
    “President Donald Trump signed an executive order Thursday easing the enforcement of rules barring churches and other religious groups from political activities, pitching the controversial move sought by conservatives as an effort to promote tolerance and religious liberty.”