By Kerry Young, CQ Roll Call

December 2, 2015 -- The health care law's coverage expansion and rising drug prices helped drive up medical spending by 5.3 percent last year, breaking a five-year cycle of historically low annual growth averaging 3.7 percent, according to federal data released Wednesday.

The $3 trillion in spending may add pressure on Congress to discuss ways to rein in health costs, especially drug prices. 

The Centers for Medicare and Medicaid Services' (CMS) analyses of national health spending are closely monitored by analysts.

The broadening of public and private coverage through the 2010 law helped boost spending, CMS reported.

The number of people lacking health insurance in 2014 fell by 8.7 million, a decline of 19.5 percent, CMS said. 

Medicaid enrollment grew by 7.7 million people last year, as 26 states and the District of Columbia raised income limits to allow more people to gain coverage through the federal-state program for the poor. That was an increase of 13.2 percent, compared with 1.7 percent in 2013.

The launch of new state and federal insurance marketplaces helped raise enrollment in private health plans by 2.2 million last year, CMS said. 

Private health insurance spending rose by 4.4 percent to $991.0 billion between last year and 2013. Medicaid spending rose by 11.0 percent to $495.8 billion.

The introduction of costly medicines, including Gilead Sciences Inc.'s Sovaldi hepatitis drug, stands out as a driver in national health spending last year, said Gary Claxton, director of the health care marketplace project at the Kaiser Family Foundation. Lawmakers in both parties and chambers have called for a closer look at drug pricing in recent weeks, with Sovaldi's $1,000 per pill cost cited as an example.

CMS' new research shows that spending on prescription drugs rose by 12 percent to $297.7 billion.

"That will get some scrutiny," said Claxton, who was a deputy assistant secretary for health policy at the Department of Health and Human Services in the Clinton administration.

Excluding the fiscal shock of the hepatitis drug, national health spending appears fairly stable, Claxton said. He was struck by a calculation showing that health spending last year grew only 1.2 percentage points faster than the overall economy in 2014, with nominal gross domestic product increasing 4.1 percent.

"Given that it's in the same year that you did have the drug anomaly and you had a whole bunch of new people get insurance, that's actually pretty remarkably low," Claxton said, adding that health researchers would have judged this growth rate a win in the past.

Equally surprising is how relatively constant health care's bite on the national economy has remained during the rollout of the 2010 law, Claxton said. The share of gross domestic product spent on health care was 17.5 percent last year, up from 17.3 percent in 2013.

Another major reason for the increase in medical expenses was a 12.4 percent increase in the net cost of health insurance, which rose from $173.2 billion to $194.6 billion, the report found. This includes administrative costs for running the insurance programs along with taxes and fees, according to CMS.

CMS on Wednesday also reported that:

• The insured share of the total population inched up from 86 percent in 2013 to 88.8 percent last year—the highest share since 1987.
• Medicare spending rose by 5.5 percent to $586.3 billion to $618.7 billion. Enrollment in Medicare rose by 3.1 percent last year, little changed from an increase of similar 3.2 percent in 2013.
• While Medicaid rolls expanded, the rate of spending per enrollees dropped 2 percent in 2014 after rising 4.1 percent in the previous year. Many of the new enrollees were children and people of working age, who tend to be less expensive to care for than the older and disabled people served by the program.

By Marissa Evans, CQ Roll Call

December 4, 2015 -- Newly elected governors in Kentucky and Louisiana are moving in opposite directions on the same big problem: how to expand health coverage for low-income residents in states with some of the nation's highest rates of obesity, high blood pressure, and tobacco use.

As a gubernatorial candidate in Kentucky, Republican Matt Bevin decried the long-term affordability of the state's Medicaid expansion and pledged to roll back or eliminate the program.

But as he prepares to take office Dec. 8, Bevin is walking back a bit from that stance, saying he may seek federal waivers to allow the state to redo the expansion its own way while potentially avoiding the political repercussions of taking health insurance away from 400,000 people.

Meanwhile, Democrat John Bel Edwards in Louisiana says expanding Medicaid to more than 200,000 residents is a top priority.

"We're going to do it as soon as we possibly can and as responsibly as we possibly can," Edwards was quoted as saying in the New Orleans Times-Picayune. He will be sworn in Jan. 11.

The Louisiana legislature voted in June to give the newly elected governor authority to expand Medicaid through executive action. The bill also requires hospitals to pay the state's expansion costs starting in 2017. Edwards has until April 1 to make a decision.

The 2010 health care law allowed states to expand Medicaid eligibility to individuals with incomes up to 138 percent of the poverty level starting in 2014. The cost is fully covered by the federal government until 2017, when states that expanded will have to start chipping in. By 2020, states will have to cover 10 percent of the cost. So far, 30 states and the District of Columbia have broadened their programs.

Kentucky, which expanded its Medicaid program under the outgoing Democratic governor, Steve Beshear, saw its uninsured rate drop 8.4 percentage points between 2013 and 2014, according to a Kaiser Family Foundation report.

Louisiana, which has not expanded under Republican Gov. Bobby Jindal, had its uninsured rate fall only 1.8 percentage points over the same period, the report said.

Another Kaiser report found that enrollment in Medicaid and in the Children's Health Insurance Program grew by 87 percent in Kentucky after the federal health law was implemented and just 5 percent in Louisiana.

Despite the health care law's pledge that the U.S. would cover most of the cost of Medicaid expansions, many Republican governors and state lawmakers have resisted the move.

"It's one thing to sign everybody up but it's another thing to service their care needs," says Douglas Holtz-Eakin, former director of the Congressional Budget Office and president of the American Action Forum, which describes itself as a center-right think tank. "I think [governors] are worried about that, and I think that's a genuine concern."

A problem for the states, he says, could come from underestimating how many people will sign up for the program.

Among expansion states, enrollment is projected to increase an average of 4.5 percent in fiscal 2016, according to a Kaiser Family Foundation report released in October.

During fiscal 2015, beneficiary enrollment rose by 18 percent on average and Medicaid spending increased on average by 17.7 percent in the states that had expanded.

Louisiana's Medicaid expansion is unlikely to occur in time to get the 100 percent federal cost coverage, according to Robin Rudowitz, associate director for the Kaiser Commission on Medicaid and the Uninsured. Starting in 2017, expansion states will have to pick up 5 percent of the cost. However, Rudowitz says Louisiana could still see some budget savings for uncompensated care, behavioral and mental health services and in correctional facility health care.

How Kentucky and Louisiana decide to move forward with expansion will be important to watch, says Trish Riley, executive director of the National Academy for State Health Policy.

Edwards has said he'd likely do a traditional expansion in Louisiana while Bevin has said Kentucky will look into so-called 1115 waivers, which allow states more flexibility for their Medicaid programs.

Bevin has lots of models he can follow from other states, Riley says. Arkansas, Indiana, Iowa, Michigan, Montana and New Hampshire all have used 1115 waivers for their Medicaid expansions. Common elements of a waiver include subsidies to help beneficiaries pay for insurance, requiring beneficiaries to pay premiums and reducing premiums and co-pays for healthy habits such as exercising and getting health screenings.

Even if Kentucky decides to retool its expansion program, implementing the changes could take a long time, especially if the federal Centers for Medicare and Medicaid Services won't help, according to Matt Salo, executive director for the National Association of Medicaid Directors.

"The signal we've gotten is they're willing to bend over backwards to move states from the 'no' column to the 'yes' column," Salo says.

"I don't know if they're very willing to bend over at all to keep states in the 'yes' column...They don't think the threat of pulling out is real."

By Andrew Siddons, CQ Roll Call

December 2, 2015 -- House Democrats on Wednesday held a hearing on the high-profile campaign issue of prescription drug prices, seeking to put pressure on their Republican counterparts to address the issue.

The hearing of the House Democratic Steering and Policy Committee was attended by 16 lawmakers, including House Minority Leader Nancy Pelosi, D-Calif., and Frank Pallone Jr., D-N.J., the ranking member on the House Energy and Commerce committee. Many of them noted the highly symbolic nature of the action.

"We are here today in this hearing room in large measure because we cannot be in other hearing rooms," Rep. Lloyd Doggett, R-Texas, said. "We want this to be a bipartisan issue. Republicans are affected by this also, but the representatives here in Congress have yet to join with us in a true bipartisan effort." 

The Democrats did not advocate for specific legislative actions, but Doggett called for the Obama administration to use its executive authority to make an impact.

"We need to use every part of the federal government we can to address this crisis," he said.

Rep. Donna Edwards, D-Md., hoped that drawing attention to the issue would spur drugmakers to take it upon themselves to lower prices.

"Maybe by outing each and every one of these drug companies and putting pressure on them, even shaming them, they might change their tactics," Edwards said.

Witnesses examined different aspects of the pharmaceutical industry.

"Things like high research costs, long periods of market exclusivity, insufficient competition, and drug material shortages," Lynn Quincy, the director of the Health Care Value Hub at the Consumers Union, cited as reasons for growing drug costs.

The House hearing comes amid months of congressional umbrage over the rising costs of prescription drugs and the same day that the Centers for Medicare and Medicaid Services reported that drug prices were a notable driver of national health care spending increases last year.

Next week the Senate Select Committee on Aging also will hold a hearing on the subject.

The backlash against pharmaceutical companies began after reports emerged that Turing Pharmaceuticals, shortly after acquiring the rights to manufacture Daraprim, a drug that fights parasitic infections, raised the price of that drug from $13.50 a pill to $750 a pill.

Elijah E. Cummings, D-Md., the ranking member of the House Committee on Oversight and Government reform, sent a letter on Wednesday to Turing's chief executive, Martin Shkreli.

The letter took Shkreli to task for Turing's recent announcement that it had lowered the price of the drug in some cases.

"To claim that a 50 percent discount after a 5,000 percent increase is a 'price cut' is Orwellian double-speak," the letter read.

By Melissa Attias, CQ Roll Call

December 4, 2015 -- All but two Senate Republicans joined to pass legislation late Thursday that would dismantle large swaths of the Affordable Care Act and cut off federal funding to Planned Parenthood for one year, which the House is expected to clear next week.

The Senate endorsed the package (HR 3762) in a 52-47 vote, with Republicans Susan Collins of Maine and Mark S. Kirk of Illinois breaking ranks. Only 51 votes were required for passage because Republicans moved the measure through budget reconciliation, an expedited process that allows them to bypass the usual 60 votes required to avoid a filibuster. Sen. Bernard Sanders, D-Vt., was the only senator who didn't vote.

Before advancing the package, senators adopted a substitute amendment from Majority Leader Mitch McConnell, R-Ky., that dramatically expanded the scope of the repeal of the health overhaul from the version the House passed in October. The substitute includes provisions that would scrap in 2018 the overhaul's Medicaid expansion, as well as subsidies to help individuals buy coverage through the insurance exchanges.

The Senate also rejected more than a dozen amendments to the package during a nearly seven-hour vote-a-rama, including a proposal that would have stripped out the language cutting federal funding for Planned Parenthood and others on gun control. The votes came after a mass shooting killed 14 people in San Bernardino, Calif., on Wednesday.

Although President Barack Obama has already pledged to veto the legislation, Republicans view the exercise as a way to lay the groundwork for what could be accomplished in 2017 if the GOP wins the White House and establish a clear line between the two parties ahead of the elections. Democrats have spent the week characterizing the bill as a waste of valuable time that could be spent on other issues.

"We will vote for a new beginning, we hope the House will again do the same, and then President Obama will have a choice: He can defend a status quo that's failed the middle class by vetoing the bill, or he can work toward a new beginning and better care by signing it," McConnell said on the floor.

"I hope that once this partisan bill reaches the dead end it has always been headed for, Republicans will finally drop the politics and work with us to deliver results for the families and communities we serve," countered Patty Murray of Washington, the top Democrat on the Health, Education, Labor, and Pensions Committee.

Senate passage came without any major setbacks Thursday, despite a rocky start. GOP Sens. Mike Lee of Utah, Ted Cruz of Texas, and Marco Rubio of Florida had opposed the narrower repeal of health law provisions in the House-passed bill, posing problems for Senate Republican leaders who could only afford three defections from their 54-vote majority. But the trio voted in favor of the expanded Senate plan, which also won over the conservative outside group Heritage Action for America.

The amended measure now volleys back to the House, which is expected to easily send it to Obama's desk rather than create a conference committee to work out the differences between the two versions.

Planned Parenthood Amendment

During the vote-a-rama, senators rejected, 48–52, an amendment by Collins, Kirk and Republican Lisa Murkowski of Alaska that would strike language in the bill to defund Planned Parenthood for one year. Collins argued the funding cutoff would likely result in the closure of several hundred clinics across the country and deprive millions of women's options for care.

Oklahoma Republican James Lankford urged opposition to the amendment, highlighting another provision in the package that would boost funding for community health centers. "Directing increased taxpayer dollars to community health centers provides quality health care, those options to women, without supporting the largest provider of abortion in the country," he said.

While Collins and Kirk ultimately opposed the package, the amendment vote may have given Murkowski some cover to support the legislation that more broadly takes aim at the health care law.

Senators also voted, 54–46, to table a Democratic amendment that would remove the Planned Parenthood funding prohibition and create a new fund for women's health clinic security after last week's fatal shooting at a Colorado Planned Parenthood facility.

But senators overwhelmingly endorsed a proposal from Nevada Republican Dean Heller that would permanently repeal the health law's "Cadillac" tax on high-cost employer plans that is due to take effect in 2018 instead of allowing it to be reinstated in 2025, as the package provided. The sunset was meant to prevent the provision from violating the complicated rules that govern the budget reconciliation process, which bars legislation from increasing the deficit beyond the 10-year budget window.

While the Senate adopted the amendment in a 90–10 vote, the McConnell substitute later displaced the language. In a procedural gambit, Minority Leader Harry Reid, D-Nev., sponsored an amendment to the substitute removing the sunset that was adopted by voice vote, once again making the Cadillac tax repeal permanent.

In addition to delayed repeals of the Medicaid expansion and subsidies, the substitute amendment would scrap a lengthy list of taxes included in the health law and remove the penalties used to enforce the mandates that individuals buy health coverage and large employers offer it to their workers.

Gun Proposals

Senators also turned back an amendment from West Virginia Democrat Joe Manchin III and Pennsylvania Republican Patrick J. Toomey that would expand the federal background check system to include firearms purchased at gun shows and over the Internet. The Senate rejected, 48-50, a motion to waive the Congressional Budget Act with respect to the amendment.

"Our words will offer little comfort to the victims of mass violence everywhere. It is only through our actions that these families and communities across America may find solace," Manchin said in a statement. "I am disappointed this vote failed, but I will continue to fight for common sense reforms that protect law-abiding gun owners and keep guns out of the hands of criminals and those adjudicated mentally ill."

Another Democratic amendment designed to block terrorists from buying guns also failed to advance after senators rejected, 45–54, a motion to waive the budget act for that proposal.

By Melissa Attias, CQ Roll Call

November 30, 20145 -- Congress is weighing whether to allow psychiatric hospitals to bill Medicaid for up to 20 days of care each month for adult patients, signaling a potential shift in lawmakers' views about institutionalizing people with serious mental illnesses.

The plan, outlined in a broad bill (HR 2646) to overhaul the mental health system, would loosen restrictions that have prevented the federal–state health insurance program throughout its entire 50-year existence from paying such facilities for most services. Pitched as a way to address a shortage of beds to care for patients that might otherwise end up homeless or in prison, the proposal is reviving a long-running debate over whether treatment should be administered in the community or in institutions. It also reopens the question of whether states should be allowed to shift some of the financial cost of operating psychiatric hospitals to the federal government, as they can for other medical facilities.

The biggest obstacle is cost. The Congressional Budget Office estimated that an earlier version of the policy change and another Medicaid billing adjustment in the legislation by Rep. Tim Murphy will boost federal spending between $40 billion and $60 billion over a decade.

Mindful of the estimate, the Pennsylvania Republican narrowed the scope of the change before the bill was approved by the House Energy and Commerce Health Subcommittee earlier this month. The text of the provision in question is still in brackets, indicating that it could be revised again. Murphy's plan also includes language that would make any change contingent on it not raising a state's Medicaid spending.

"There are a lot of philosophical conversations around this right now, but it really does boil down to the money," said Paul Gionfriddo, president and CEO of the nonprofit Mental Health America, which has expressed tentative support for Murphy's plan.

The billing change focuses on stand-alone institutions for mental diseases (IMDs) which are different from psychiatric wards in general hospitals. Medicaid currently won't pay IMDs with more than 16 beds for services provided to adults between the ages of 21 to 64 but will pay if treatment involves senior citizens or children. 

Mark J. Covall, president and CEO of the National Association of Psychiatric Health Systems, said funding was considered to be the state's responsibility when Medicaid was enacted in 1965, because state mental hospitals mostly provided long-term, custodial care. 

Medicaid was enacted less than two years after President John F. Kennedy signed legislation that authorized funding to build community mental health centers (PL 88-164) amid concerns about warehousing in mental institutions

As state mental hospitals have closed or downsized, however, Covall said demand for psychiatric beds has exceeded supply, creating barriers to accessing care and forcing some patients to spend more time than necessary in emergency rooms.

Rep. Eddie Bernice Johnson of Texas, the leading Democratic cosponsor of Murphy's bill, said concern about the IMD exclusion has been the key driver of her interest in developing mental health legislation. Many people end up incarcerated or on the streets, she said, and incidences are soaring.

"Without that Medicaid coverage, the low-income people will not have access to care," Johnson said in an interview. She called the language in the Murphy bill "a very good framework to start," noting that ideally it would go further but that they're "really walking a tightrope" to maintain bipartisan support.

The Centers for Medicare and Medicaid Services (CMS) cited concerns about the availability of short-term inpatient psychiatric care and the potential for delayed treatment in a recent proposal to allow limited billing for adults in IMDs through managed care organizations that administer Medicaid benefits.  

The top Democrat on House Energy and Commerce, Frank Pallone Jr. of New Jersey, added language essentially codifying the CMS plan to Murphy's bill at the subcommittee markup. Pallone's move could potentially conflict with Murphy's more liberal Medicaid billing change; Murphy doesn't think the rule fully addresses existing mental health needs. 

Treatment Alternatives

Some mental health groups oppose such changes, maintaining that the IMD billing prohibition has helped encourage community mental health services and avoided unnecessary institutionalization. They also say there are alternatives to hospitalization that, in some cases, allow professionals to intervene in crisis situations in smaller, community-based settings.

Jennifer Mathis, deputy legal director for the Judge David L. Bazelon Center for Mental Health Law in Washington, D.C., acknowledged a lack of institutional psychiatric beds in some circumstances, but said the solution is to expand community services that prevent people from having to go to the hospital in the first place. She said there aren't enough of those services available because public health systems are cash-strapped.

"If you just keep focusing on building more hospitals, you will guarantee there aren't enough community services because it's a finite pool of money," Mathis said. "It's going to come out of community services, so then you draw systems further and further backward."

Eric Buehlmann, deputy executive director for public policy at the National Disability Rights Network, similarly echoed concern that institutionalization with a new Medicaid funding stream will be perceived as an easier fix than implementing a comprehensive system of community-based services.

"It's an extremely tough issue because it's billed as the simple, easy way to solve this problem," he said. "That's what scares us."

Covall of the National Association of Psychiatric Health Systems, which backs Murphy's bill, said the IMD policy has been a symbol for deinstitutionalization, with advocates anxious not to roll back the clock. But he thinks a carefully-crafted change would be widely supported, citing "a major shift" in how people view the issue.

Parity Concerns

In addition to concerns about shortages of beds, supporters of paying the psychiatric hospitals see a disconnect between singling out IMDs for exclusion from Medicaid and a broader policy goal of ensuring parity between mental and physical health care.

"Nobody wants to go down a route to re-institutionalization," said Gionfriddo of Mental Health America. "But no one wants to deny people to get the opportunity to get care for a chronic condition because it's a chronic condition of the brain."

On Capitol Hill, the IMD language in Murphy's bill hasn't drawn as much attention from Energy and Commerce Democrats as other pieces of the mental health overhaul; it wasn't among the four provisions that drew opposition in an October letter to committee leaders.

But some lawmakers may see the move as premature, coming after Congress cleared legislation (S 599) earlier this month to extend a demonstration project that tests expanded Medicaid reimbursement for IMDs. Pallone submitted a statement for the record that said the demonstration extension through at least Sept. 30, 2016, aligns with the CMS proposal and is "the appropriate way to responsibly address the Medicaid IMD exclusion."

In the Senate, Louisiana Republican Bill Cassidy and Connecticut Democrat Christopher S. Murphy included language to create an exception to the IMD policy in their mental health overhaul (S 1945), which is similar to Rep. Murphy's bill and is awaiting committee action.

By Todd Ruger, CQ Roll Call

December 3, 2015 -- The House asked a federal judge Wednesday to quickly rule in its favor in a lawsuit against the Obama administration over the 2010 health care overhaul and the appropriations process.

In a 58-page filing in Washington D.C., the attorneys for lawmakers lay out their claim that there is no dispute about the facts in the case and that the Obama administration acted unconstitutionally. The lawsuit alleges that the secretaries of Health and Human Services and Treasury are spending $175 billion over 10 years without congressional approval.

"The legal question now before the court—the sole remaining question—is whether the billions defendants admit that they have 'drawn from the Treasury' and paid to insurers were 'in consequence of [any] appropriation made by law,' as required by the constitution," the House filing states. "The answer to that question is an unqualified no."

U.S. District Judge Rosemary M. Collyer appears ready to rule within months. Collyer, in an earlier decision that allowed the House to pursue the lawsuit, wrote that the facts were not in dispute and the case could be decided on its merits in months. She rejected Justice Department lawyers' request to appeal her decision.

The Justice Department is all but certain to appeal if Collyer rules against the administration. The government has argued that the House should not be allowed to pursue the lawsuit at all. The department's lawyers called her earlier decision to allow the lawsuit to move forward "a momentous step" that unnecessarily plunges the judiciary into a dispute between the legislative and executive branches and said it "would invite litigation over numerous other disputes between the political branches."

The House suit asks the court to declare that the president acted unconstitutionally in making payments to insurance companies under Section 1402 of the health care overhaul and to stop the payments.

The dispute focuses on two sections of the health care law. The administration said it could make Section 1402 Offset Program payments from the same account as Section 1401 Refundable Tax Credit Program payments. House Republicans say the health care law doesn't permit that.

The Obama administration, during the fiscal 2014 appropriations process, initially asked Congress for a separate line item for 1402 payments. Congress did not include money for such a line item.

The case is U.S. House of Representatives v. Sylvia Burwell, et al., Case No. 14-1967.