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January 11, 2016

Washington Health Policy Week in Review Archive a4ac37a2-4d40-4602-98b6-b5231109d33d

Newsletter Article


Pausing Obamacare Taxes Expected to Fuel More Calls for Change

By Melissa Attias, CQ Roll Call

January 4, 2016 -- President Barack Obama’s willingness to sign a year-end spending package that suspended more than $30 billion worth of taxes mandated by the health care law will energize opponents' efforts to further alter his signature legislative achievement, though the most significant changes may have to wait until after the elections.

The omnibus funding and tax package (PL 114-113) made the most significant legislative revisions yet to the law by placing a two-year moratorium on the “Cadillac” tax on high-cost employer health plans and an excise tax on medical devices and suspending a levy on insurers for one year. The revenue-raisers helped cover the cost of the insurance expansion in the Affordable Care Act.

Powerful interests created a blueprint for further efforts by rallying bipartisan opposition to the taxes and casting them as economically ruinous without gutting the central pillars of the coverage expansion. Language suspending the taxes was then folded into a must-pass bill to keep the government running without an insistence on offsets.

The White House cast the changes in budgetary terms, saying they would not alter efforts to reduce the uninsured population and that the law would continue to shrink the deficit. Suspending the three taxes was projected to cost $32 billion over a decade.

“There is no impact that the two-year suspension of the ‘Cadillac tax’ will have whatsoever on the continued strength and functioning of the marketplaces moving forward,” White House Press Secretary Josh Earnest said before the package was cleared. “Their funding streams are entirely separate.”

Still, Obama’s willingness to temporarily shut off the taxes—at least two of which the White House has openly opposed repealing—coupled with the recent enactment of other smaller changes to the law will encourage more proposed revisions.

Robert J. Blendon, a professor of health policy and political analysis at Harvard University, said even a Democratic successor to Obama will tolerate more changes, which could include further delays of the three taxes. Any immediate action is unlikely without a must-pass bill on the horizon that's on par with the omnibus, he said.

Obama's acquiescence “sends a signal that the tax and regulatory pieces of the bill are open for revision after the election,” Blendon said.

There’s already widespread skepticism over whether the device and insurance taxes will be reinstated, or if the yet-to-be-imposed Cadillac tax will ever take effect. The omnibus paused the medical device tax in 2016 and 2017 and the tax on insurers in 2017. The Cadillac tax, due to take effect in 2018, will be suspended until 2020.

Curtis S. Dubay, a research fellow in tax and economic policy at the conservative Heritage Foundation, said he would wager that the next president and Congress will suspend the device and insurance taxes again so that their next renewals would take place at the same time as the Cadillac tax, before 2020. All three could then continue to be put off on a short-term basis together.

Piece by Piece

Both Dubay and Joseph Antos, a health care and retirement policy scholar at the American Enterprise Institute, compared the scenario to the series of temporary patches Congress used to repeatedly block Medicare payment cuts to physicians until a permanent fix was enacted last year (PL 114-10).

“Everyone’s expecting that the pauses will be permanent ... We’ll be back in the SGR world again,” Antos said, referring to the old sustainable growth rate formula that dictated the cuts.

Pennsylvania Republican Joe Pitts, chairman of the House Energy and Commerce Health Subcommittee, also indicated he isn’t expecting the taxes to take effect and said lawmakers are taking a incremental strategy because of the cost of a full repeal of the taxes. “It’ll be piecemeal,” he told CQ Roll Call.

Republicans Charles Boustany Jr. of Louisiana and Erik Paulsen of Minnesota, the sponsors of House bills to completely scrap the health insurance and device taxes respectively, both expressed optimism that the levies would be permanently repealed.

Boustany called the health insurance tax suspension “a big victory in that it finally is an affirmative statement that this tax is a problem, it’s causing increases in health insurance premiums for everybody, and it’s something that should be dealt with and eliminated.”

Many Democrats, meanwhile, are eager to prevent the Cadillac tax from taking hold because of its potential effect on union and public employee health plans. Democratic presidential hopeful Hillary Clinton notably released a statement in September supporting repeal of the tax, though she said the cost should be offset.

Other Revenue

A Republican budget reconciliation package (HR 3762) that Obama has threatened to veto offers a roadmap to what other components in the health law could be targeted.

Beyond the device, health insurance and Cadillac taxes, the package would scrap penalties on individuals and employers who refuse to comply with the health law's coverage mandates, as well as repealing in 2018 the law's subsidies to help individuals buy health coverage through its insurance marketplaces and its expansion of Medicaid.

The reconciliation bill would also target an annual fee on brand name prescription drug manufacturers the Congressional Budget Office (CBO) estimates would cost nearly $30 billion over a decade to repeal. A spokesman for the Pharmaceutical Research and Manufacturers of America (PhRMA) declined to comment on whether the big industry trade group would push for relief, but health policy experts are skeptical given the growing public attention over rising drug prices.

“PhRMA is definitely trying to keep its head down,” Antos said.

Another potential target is the law’s levy on indoor tanning services, which CBO projects would cost a relatively modest $800 million over a decade to repeal.

Getting rid of the overhaul’s additional Medicare tax on high earners, meanwhile, has a much larger price tag of $123 billion over 10 years. Eliminating the health law’s tax on net investment income of individuals, estates and trusts with earnings above certain thresholds would also prompt a significant drop in revenues, with an estimated cost of nearly $223 billion over a decade.

“If you look at where the money is in the bill, those taxes are probably not going to be politically popular to get rid of,” said Washington and Lee University law professor Timothy S. Jost, who supports the overhaul.

But efforts to repeal other revenue-raisers already have generated some bipartisan interest.

The House Ways and Means Committee advanced legislation (HR 1270) with a handful of Democratic cosponsors last year to scrap the law’s restriction on using health savings accounts to pay for over-the-counter drugs. Lawmakers also introduced a bill (HR 1886) with some Democratic support to remove a requirement that insurers pay into a program that provides money to health plans that enroll high-cost individuals, though that program will phase out after 2016.

In addition, the House passed legislation (HR 1190) in June to scrap a Medicare cost-cutting board prescribed in the law that has yet to be implemented. Eleven Democrats joined Republicans in support of the measure—a count that would have been higher if the cost had not been offset by tapping the law’s funding for prevention and public health programs.

Neil Trautwein, vice president for health care policy at the National Retail Federation, said his group worked particularly hard on winning relief from the Cadillac tax and that he hopes the health law changes in the funding package are the “new normal.” Still, he predicted that attempts to stop more of the law’s taxes would receive strong pushback for the remainder of the Obama administration, especially outside of the government funding context.

“I don’t see any white flags over the White House,” Trautwein said.

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Newsletter Article


Young Adult Health Law Enrollment Touted by HHS

By Melissa Attias, CQ Roll Call

January 7, 2016 -- Department of Health and Human Services (HHS) officials on Thursday touted new figures showing that 35 percent of people who signed up for or were re-enrolled in the health care law's insurance marketplaces during the first eight weeks of open enrollment were under age 35.

Richard Frank, assistant secretary for planning and evaluation at HHS, said 3 million people were between the ages of 18 and 34 out of the total 11.3 million, while almost 4 million were under age 35.

Although past reports covered different time periods, making an exact comparison difficult, he said the portion of younger enrollees in the third open enrollment period so far is larger than at the comparable point in the last open enrollment period. The third open enrollment period began Nov. 1 and ends Jan. 31.

"I think the most impressive number from today's report is the sheer number of young people," Frank said on a call with reporters.

Frank also said the current numbers is a "very good sign for the health and the stability of the marketplace" because young people tend to wait to sign up until the end of open enrollment.

Overall, the new report from HHS found that 8.6 million people signed up for coverage in the 38 states that use the federal insurance website through Jan. 2 and 2.7 million in the 13 state-run exchanges through Dec. 26.

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Obama Vetoes Package Targeting Affordable Care Act, Planned Parenthood

By Melissa Attias, CQ Roll Call

January 8, 2016 -- President Barack Obama on Friday vetoed legislation that would dismantle the pillars of his signature health care law and restrict federal funding for Planned Parenthood for one year, sending the measure back to Congress where an override attempt is certain to come up short.

The widely anticipated veto marks the eighth of Obama's presidency and comes just days before his final State of the Union address on Jan. 12 that's likely to tout the health overhaul's benefits.

"This legislation would not only repeal parts of the Affordable Care Act, but would reverse the significant progress we have made in improving health care in America," Obama said in a veto message.

Obama noted that Republicans have attempted to repeal or undercut parts of the health care law more than 50 times.

The House agreed later Friday to vote on the veto override on Jan. 26, though Republicans lack the needed two-thirds majority to overturn it. Minority Leader Nancy Pelosi of California released a statement Thursday asserting that House Democrats are ready to sustain Obama's veto.

Still, Republicans have touted the act of finally sending legislation (HR 3762) that would undo much of the overhaul to Obama's desk as the fulfillment of a campaign promise and a preview of what could be accomplished if they sweep Congress and the White House in the 2016 elections.

"The idea that Obamacare is the law of the land for a long time is a myth," Speaker Paul D. Ryan, R-Wis., said at an enrollment ceremony Thursday surrounded by applauding GOP lawmakers. "We will see this law either collapse under its own weight, or we will see this law in the next session of Congress, as we are proving here today, be repealed and signed and replaced by a Republican president."

The largely party-line votes on the legislation show how divisive the health law continues to be nearly six years after its enactment.

Republicans moved the package through the budget reconciliation process, which allows the Senate to advance legislation with a simple majority rather than the usual 60-vote threshold required to overcome a filibuster. Democrats used the same mechanism to help enact the health care law in 2010 after losing their 60-vote Senate majority.

The overhaul established subsidies for low- and middle-income Americans to help purchase health coverage through new insurance exchanges and expanded the Medicaid program—both of which the vetoed legislation would undo in 2018. The law also requires most individuals to buy coverage and large employers to offer to their workers, but the GOP legislation would remove the penalties for enforcement.

A lengthy list of taxes used to help offset the cost of the overhaul's coverage expansion, including taxes on "Cadillac" employer-sponsored health plans, medical devices and health insurers, would also be repealed under the vetoed measure.

In addition, the bill would stop most federal funding for Planned Parenthood for one year and increase money for community health centers.

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2016 Preview: Medicaid's Slow Growth

By Marissa Evans, CQ Roll Call

January 8, 2016 -- Some Republican-led state legislatures in 2016 will continue to reconsider their initial opposition to expanding Medicaid under the Affordable Care Act, and in some of those states the rethinking will be driven by the governor.

Governors in Alabama, Louisiana, South Dakota, and Utah are all considering expansion plans, but even for Republican governors with Republican legislatures, the task won't be easy.

Matt Salo, executive director for the National Association of State Medicaid Directors, says that while Louisiana's situation is unique because the Democratic governor has executive authority to expand the program, the others will find it hard to convince anti-Obamacare legislatures to expand their Medicaid programs.

"You have a lot of other hurdles to overcome," Salo says. "You have to get the legislature on board, you have to put the meat and the bones of the proposal together and figure out what you're asking for. Are you going to get the vanilla Medicaid expansion which will get you a 'yes, please' from [the federal Centers for Medicare and Medicaid] in three seconds or—in order to get it through the legislature—will you have to craft something different?"

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.

In 2015, Alaska and Montana voted to expand their programs, bringing the total to 30 states and the District of Columbia.

Alabama Gov. Robert Bentley received a recommendation from the Alabama Health Care Improvement Task Force in November to expand the program and says he's considering his options. Democrat John Bel Edwards, the governor-elect in Louisiana, has executive authority to expand Medicaid on his own but says he doesn't want the state to rush into it.

Hoping to avoid political pushback from conservatives for choosing to take advantage of a health care law that's unpopular in Republican states—and from liberals and the health care industry, who want to go farther and faster in letting families get federal subsidies to help pay for insurance—some governors are trying to cut deals with the Centers for Medicare and Medicaid Services (CMS) to devise plans that stray from the original model. The federal agency must sign off on state Medicaid expansion plans.

Republican South Dakota Gov. Dennis Daugaard is exploring how his state can shift to the federal government the cost of serving Medicaid-eligible Indian Health Service (IHS) patients who go to non-IHS facilities.

In Arkansas, Republican Gov. Asa Hutchinson is working with his Legislative Task Force on Healthcare Reform to retool Medicaid expansion already underway in the state. Under its current program, which expires at the end of 2016, Arkansas buys private health insurance for residents who qualified for Medicaid. Hutchinson says he's hoping waivers from CMS will give the state more room to be creative in how it runs its program.

In Kentucky, new Republican Gov. Matt Bevin says the state—long lauded as a model for the federal health care law's success in getting people signed up for coverage—is looking at waivers to get more flexibility in how it serves 400,000 low-income residents insured under the Medicaid expansion.

Meanwhile, Republican Utah Gov. Gary Herbert will be working with his legislature again to come up with a middle ground on Medicaid expansion. Herbert and the GOP-led legislature have tried three times to pass expansion but to no avail,  as neither the House or Senate could agree on a plan.

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Health Care: Beyond Obamacare

By Melanie Zanona and Melissa Attias, CQ Roll Call

January 4, 2016 -- With no looming deadlines, there may be little legislative action on the health care front in 2016.

One item left on many lawmakers' wish lists is a bipartisan effort to overhaul the drug approval process at the Food and Drug Administration (FDA) and revitalize research at the National Institutes of Health. The House passed the so-called 21st Century Cures bill (HR 6) last summer on a strong bipartisan vote. Leaders of the Senate Health, Education, Labor, and Pensions (HELP) Committee hope to unveil their own draft in early 2016.

"We're in the midst of a review, first, to see if there is anything we can do to make it easier to move devices and treatments through the FDA process more rapidly — and still safely and effectively—so they can get into medicine cabinets more quickly," says HELP Chairman Lamar Alexander, a Tennessee Republican.

Advocates say the initiative could be achieved even in the divisive atmosphere of an election year because of the overwhelming support for disease research and developing new cures more quickly. Several presidential candidates have mentioned the issue on the campaign trail.

However, the legislation is still likely to be a heavy lift. The HELP panel already blew by self-imposed deadlines to release a draft and hold a markup before the end of 2015—though Alexander has long maintained that the measure wouldn't hit the floor until 2016.

Disputes over whether to create a mandatory pool of money—and how to pay for it—still need to be resolved. The House version designated $8.75 billion for the National Institutes of Health (NIH) and $550 million for the FDA over five years, mostly paid for by drawing down the Strategic Petroleum Reserve, a step that has since been used to offset the cost of the surface transportation law and budget deal. Senate committee aides have said offsets could be found elsewhere.

Still, efforts could be further complicated by the $2 billion boost NIH got in the omnibus spending bill, bringing its budget to $32 billion. Some fiscal hawks may argue that further increases should be done through the appropriations process. Ranking HELP Democrat Patty Murray of Washington has made her support contingent for the new bill on a mandatory NIH funding increase—even with the additional discretionary bump.

Majority Leader Kevin McCarthy, a California Republican, said in December that he is still "hopeful" the initiative will be enacted into law, but suggested some pieces of the bill may move separately. One slice of the nearly 400-page House package already passed on its own in late 2015: a measure (HR 639) to lift some export restrictions on U.S. companies operating abroad that manufacture drug products containing controlled substances.

"This is a place that we had strong bipartisan agreement, and it unfortunately sounds as though a lot of things pass here but slow down in the Senate," McCarthy told reporters last month. "I think part of that would probably come into law maybe through the [omnibus] and the rest we'll continue to look at and try to move forward where we can."

House GOP leaders have also expressed interest in moving ahead with mental health legislation in response to a series of mass shootings rather than wading into the gun control debate.

Both Speaker Paul D. Ryan of Wisconsin and McCarthy have highlighted a wide-reaching bill (HR 2646) spearheaded by Pennsylvania Republican Tim Murphy that the Energy and Commerce Health Subcommittee advanced mostly along party lines in November.

The measure includes provisions that would address privacy rules for people with serious mental illness, Medicaid billing for adults in psychiatric hospitals and funding for states with court-ordered community treatment programs.

"One common denominator in these tragedies is mental illness," Ryan said at a Dec. 1 news conference following a shooting at a Planned Parenthood clinic in Colorado, at which he highlighted Murphy's bill. "I'm sure that members of both parties have lots of ideas in this area, but we should make this a priority to prevent the violence and to protect our citizens."

Murphy's measure has the support of a few dozen Democrats, though most of those on the Energy and Commerce panel have expressed opposition to components they say would curtail patients' civil rights.

McCarthy told reporters that lawmakers are trying to work through concerns raised by both parties.

Across the Capitol, legislation (S 1945) similar to Murphy's bill is sponsored by Louisiana Republican Bill Cassidy and Connecticut Democrat Christopher S. Murphy. It awaits action by the HELP Committee.

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