HealthCare Roundtable e-News – July 14, 2017

GOP Health Care Proposal Lacks Votes Needed for Senate Passage

The Republican effort to replace the Patient Protection and Affordable Care Act (ACA) may be as close to failure as it has been all year.

Although GOP leaders in the Senate revised their legislation on July 13 to try to secure enough support for passage, four Republican senators have now gone on record opposing the bill, which, given that the party holds just a 52-48 advantage in the chamber, would guarantee defeat.

Sens. Jerry Moran, R-Kansas, and Mike Lee, R-Utah, on July 17 joined Sens. Susan Collins, R-Maine, and Rand Paul, R-Ky., in pledging to vote against the bill.

Republicans have struggled to devise a bill that satisfies both conservatives – such as Lee and Paul – who want to move as far away as possible from the ACA to reduce mandates and lower premiums, and moderates – such as Collins – who are wary of the projected increase in the number of uninsured people that would result from dramatic changes in government spending and regulations. Moran is a Tea Party conservative, but he has backed off the hardline stance on repeal that he previously took and recently said at a town hall, “I have concern about people with disabilities, the frail and elderly. I also know that if we want health care in rural places and across Kansas, Medicare and Medicaid need to compensate for the services they provide.”

Senate Majority Leader Mitch McConnell, R-Ky., had previously hoped to hold a vote on the bill during the week of July 17. This was pushed back when Sen. John McCain, R-Ariz., was admitted to the hospital for surgery to remove a blood clot above his left eye. Now that it is clear that the bill cannot be passed in its current form, no vote is in sight. McConnell and other Republican leaders will likely try to make more legislative revisions and deals with individual lawmakers to secure more support.

“The only way we’ll get there is with continued hard work, and that’s just what we intend to do,” McConnell said.

McConnell appears to have already alienated some senators with his efforts to sway reluctant members. Sen. Ron Johnson, R-Wisc., said that some moderate GOP colleagues told him that McConnell assured them that the proposal’s $772 billion in Medicaid spending reductions over 10 years would “never happen.”

“If our leader is basically saying, ‘Don’t worry about it. We’ve designed it so that those reforms will never take effect,’ first of all, that’s a pretty significant breach of trust, and why support the bill then,” Johnson said, according to the Green Bay Press-Gazette.

Both the legislation passed by the House in May (H.R. 1628) and the Senate proposal would, among other things, eliminate or make major changes to the ACA’s individual and employer mandates, Medicaid expansion, subsidies for the purchase of health insurance in the state-level exchanges, prohibition on setting premiums based on a person’s health status, and requirement that policies cover certain “essential health benefits,” all while cutting taxes.

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Roundtable ‘Deeply Concerned’ with Republican Health Plan

The Public Sector HealthCare Roundtable released a statement on July 17 announcing that it is “deeply concerned” about the potential impact of the health care proposals being considered by Republicans in Congress.

Republican leaders in the Senate are trying to secure enough votes to pass their answer to the “American Health Care Act” (H.R. 1628), which passed the House in May but found little support in the upper chamber.

Both bills would, among other things, eliminate or make major changes to the Patient Protection and Affordable Care Act’s (ACA) individual and employer mandates, Medicaid expansion, subsidies for the purchase of health insurance in the state-level exchanges, prohibition on setting premiums based on a person’s health status, and requirement that policies cover certain “essential health benefits,” all while cutting taxes.

The Roundtable cited concerns with “the loss of health care options, the financial harm for public sector employers, and the damage to the long-term stability of plan sponsors that will result” from the GOP plans.

“Both legislative vehicles work against the policy priorities of the Roundtable … and would have a severe deleterious impact on public sector workers, retirees, and their dependents, as well as the state and local taxpayers who fund their benefits,” the Roundtable stated.

The group noted that the bills are projected to increase the number of people without insurance by more than 20 million within a decade and, in addition, “insurance markets will be destabilized and millions would be left with insurance that does not meet their needs.”

“The current congressional health care reform proposals will undoubtedly lead to significantly higher health care costs for public employers and employees alike,” the Roundtable stated.

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CalPERS Seeks Certainty on Cost-Sharing Payments by Federal Government

The California Public Employees’ Retirement System (CalPERS), a member of the Public Sector HealthCare Roundtable, is urging the federal government to “end the uncertainty around the funding of cost-sharing reductions” in the health insurance exchanges.

The Patient Protection and Affordable Care Act (ACA) provides for about $7 billion in federal payments to insurers each year to bring down health insurance deductibles and out-of-pocket costs for lower-income beneficiaries. In 2016, a federal judge ruled, in a case filed by House Republicans, that the Obama administration’s payment of the subsidies was unconstitutional because, although they were included in the ACA, the Republican-controlled Congress had not appropriated the funds for the payments. The judge who issued the ruling, though, put it in abeyance, pending an appeal.

While President Donald Trump has hinted that the government may stop paying the subsidies in an attempt to force congressional Democrats to negotiate changes to the ACA, payments have been made as usual since he took office, and the White House has not abandoned the appeal. In May, in a joint filing with congressional Republicans, the administration asked the U.S. Court of Appeals for the District of Columbia Circuit to delay the implementation of last year’s ruling for at least 90 more days.

In a July 12 letter to Health and Human Services (HHS) Secretary Tom Price, CalPERS said that ensuring the continued payment of the cost-sharing subsidies would “immediately promote market stability and contribute to affordability.”

“Insurers across the country are currently developing their rates and deciding whether to participate in the individual marketplaces for 2018,” the letter stated. “It is critical that the federal government provide leadership to stabilize the marketplaces across the country. The continued uncertainty about the cost-sharing reduction payments is likely contributing to premium increases in, and insurer withdrawals from, the health benefit exchanges.”

CalPERS noted that, while the ACA’s tax credits would offset the loss of cost-sharing payments for people with lower incomes, those who do not qualify for the tax credits would have to pay significantly more for their insurance coverage, which could “compel individuals and families to discontinue insurance altogether.”

“An increase in the number of uninsured individuals and families could shift uncompensated care back onto states and localities, and ultimately onto CalPERS’ contracting employers and enrollees in the form of higher premiums,” the letter stated.

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House Passes FDA Bill with Provisions to Promote Generic Drug Competition

The House of Representatives passed a Food and Drug Administration (FDA) funding bill that includes a provision aimed at enhancing generic drug competition.

The “FDA Reauthorization Act” (H.R. 2430), which reauthorizes user fee programs for brand-name prescription drugs, generic drugs, biosimilars, and medical devices, was passed by a voice vote in the House on July 12. User fees account for about two-thirds of the FDA’s budget for the review of brand-name drugs and 58 percent of its budget for generic drugs.

The legislation includes a provision that would direct the FDA to prioritize the review of applications for generic drugs when there are not already more than three competing drugs. The agency would have eight months to make a decision on such an application.

In addition, the bill would provide six months of exclusive sales to a generic drug when an off-patent drug has no competition.

The legislation, House Energy and Commerce Committee Chairman Greg Walden, R-Ore., said, “will help bring lower cost generic drug alternatives and biosimilars to market faster, increasing competition and lowering drug costs.”

The user fee programs expire on Sept. 30.

The Senate is considering a reauthorization bill with similar provisions regarding generic drug competition.

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Projected Lifespan of Medicare Trust Fund Extended 1 Year

Medicare trustees extended the projected lifespan of the program’s trust fund, pushing it back one year to 2029.

The year after the trust fund for Medicare Part A, which provides hospital insurance for Medicare beneficiaries, is depleted, the program is expected to be able to cover 88 percent of expenses with annual revenues, trustees projected in their annual report.

Adequate funding for Medicare Part B (physician visits) and Part D (prescription drugs) are ensured by annual adjustments to premiums and funds provided from the federal government’s general revenue.

“The financial projections in this report indicate a need for substantial steps to address Medicare’s remaining financial challenges,” the report stated. “Consideration of further reforms should occur in the near future. The sooner solutions are enacted, the more flexible and gradual they can be.”

Over the next 75 years, the Part A deficit is projected to be 0.64 percent of taxable payroll, down from the 0.73 percent projected in last year’s report.

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