HealthCare Roundtable e-News – March 3, 2017

House GOP Releases Health Care Proposal

House Republicans on March 6 unveiled their proposal to replace major portions of the Patient Protection and Affordable Care Act (ACA). (Summary)

The GOP-controlled House voted dozens of times during the Obama administration to repeal all or part of the ACA. With Republicans controlling both the House and Senate and with Donald Trump in the White House, that goal is now within reach. However, the GOP has struggled to develop a replacement plan, and many Republican lawmakers are wary of enacting legislation that will result in 18 million people losing health insurance within the first year, with that number climbing to 32 million within a decade, according to the Congressional Budget Office (CBO).

The legislation would end the ACA’s individual mandate, employer mandate, and income-dependent subsidies for the purchase of insurance in state-based exchanges. Instead, it would, among other things:

  • Provide $2,000 to $4,000 in individual tax credits to support the purchase of insurance, with the amount based on age and with a phase-out starting at $75,000 in income for individuals, $150,000 for families
  • Freeze enrollments under the ACA’s expanded Medicaid eligibility two years after the law’s enactment
  • Cap per capita Medicaid funding to states starting in 2020 based on spending in 2016 adjusted for inflation
  • Establish the Patient and State Stability Fund to be used for, among other things, providing coverage to “high-risk” uninsured individuals; funding would be $15 billion in 2018-2019, $10 billion in 2020-2026, and formula-based after that
  • Impose a 30 percent surcharge on the premiums of anybody who went more than 63 days without continuous insurance coverage during the preceding 12 months
  • Allow insurers to charge older beneficiaries up to five times as much as younger ones; the ACA limits the ratio to 3:1.

No cost or coverage estimates have been provided for the proposal.

“With today’s legislation, we return power back to the states, strengthening Medicaid and prioritizing our nation’s most vulnerable,” House Energy and Commerce Committee Chairman Greg Walden, R-Ore., said. “We provide the American people with what they’ve asked for: greater choice, lower cost, and flexibility to choose the plan that best suits their needs.”

There had reportedly been discussions of capping the income tax exclusion for employer-provided health benefits, but the proposal contains no such provision. While the plan would not eliminate the “Cadillac tax” on high-value health plans, which is scheduled to go into effect in 2018, it would suspend the tax from 2020 to 2024.

The 30 percent surcharge is intended to discourage people from dropping coverage until they need it, since the legislation would retain the ACA’s ban on coverage denials based on pre-existing conditions, but without the individual mandate. The proposal would also keep certain other popular parts of the ACA, including the prohibition on lifetime benefit caps and the requirement that children be allowed to stay on their parents’ policies until age 26.

The House GOP leadership is trying to satisfy two opposing factions: conservatives who want to immediately get rid of the ACA and not put anything like it in its place, and others in the party who are worried about the impact, political and otherwise, of passing legislation that takes away coverage from millions of Americans. Three conservative congressmen have already denounced the bill as “Obamacare lite.”

President Donald Trump has pledged to both repeal the ACA and not take away coverage from anybody who has it. He has also promised to provide “insurance for everybody” and “much lower deductibles.”

During his Feb. 28 speech to Congress, Trump urged Congress to replace the ACA “with reforms that expand choice, increase access, lower costs, and, at the same time, provide better health care.” Though he listed five “principles” that he said should guide the legislative process, his administration has not provided any specifics on health care reform, this despite having said before his inauguration that his team was “down to the final strokes” in the development of its own health care proposal.

The legislation is structured so that it can be passed using the budget reconciliation process, which does not allow for filibusters and, thus, requires only a simple majority of votes to get through the Senate, rather than a 60-vote supermajority that would otherwise be needed. However, the plan could still face problems in that chamber, where Republicans hold 52 of the 100 seats, since four GOP senators immediately went on record opposing the bill’s Medicaid provisions.

In a letter to Senate Majority Leader Mitch McConnell, R-Ky., Sens. Rob Portman, R-Ohio, Shelley Moore Capito, R-W.V., Cory Gardner, R-Colo., and Lisa Murkowski, R-Alaska, said that, while they support repealing the ACA, “we are concerned that the February 10th draft proposal from the House of Representatives does not provide stability and certainty for individuals and families in Medicaid expansion programs or the necessary flexibility for states.”

“We believe Medicaid needs to be reformed, but reform should not come at the cost of disruption in access to health care for our country’s most vulnerable and sickest individuals,” they wrote. “Any changes made to how Medicaid is financed through the state and federal governments should be coupled with significant new flexibility so they can efficiently and effectively manage their Medicaid programs to best meet their own needs. We also believe a gradual transition is needed to ensure states have the time to successfully implement these new changes.”

In addition, the legislation would prohibit federal funding for Planned Parenthood, which could also generate opposition among moderate Republicans in the Senate.

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Senate Panel OKs CMS Administrator Nominee

A Senate panel on March 2 approved President Donald Trump’s pick to lead the Centers for Medicare & Medicaid Services (CMS), sending the nomination to a vote by the full Senate.

The Senate Finance Committee voted to support the nomination of Seema Verma to be the next CMS administrator on a 13-12 party-line vote.

“The challenges plaguing both Medicare and Medicaid require a strong partnership between the administration and Congress to improve these programs and help enact the necessary reforms to ensure their solvency for future generations,” Finance Committee Chairman Orrin Hatch, R-Utah, said. “Ms. Verma will help facilitate that partnership, and as we work to repeal and replace Obamacare, she will play a vital role in realigning the focus on patient-centered solutions.”

Democrats criticized Verma for providing what they considered to be inadequate answers to questions asked during her confirmation hearing. Finance Committee Ranking Democrat Ron Wyden of Oregon described her responses as “a lot of happy talk that didn’t amount to much substance.”

Verma’s firm, SVC, Inc., worked with several GOP gubernatorial administrations, including Vice President Mike Pence’s in Indiana, to devise ACA-related Medicaid expansion plans that required beneficiaries to pay something – sometimes just nominal amounts – for their coverage and to work or be looking for work.

The Senate is expected to approve Verma’s nomination.

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FDA Approved Record Number of Generic Drugs in 2016

The Food and Drug Administration (FDA) approved a record number of generic drugs in 2016, the agency announced.

The FDA approved more than 700 applications for generic drugs last year, and the total exceeded 800 – 824, to be exact – when tentative approvals are included. This reduced the backlog in generic drug applications from 2,962 at the start of 2016 to 2,358 at the end.

The previous annual record for approvals was 726 in 2015.

Kathleen Uhi, director of the FDA’s Office of Generic Drugs, stated in a blog post that the large number of 2016 approvals “will help generate further cost savings for American consumers, while assuring the quality of these generic products.”

Uhi credited the Generic Drug User Fee Amendments of 2012 with making last year’s performance possible by overhauling the FDA’s generic drug program and authorizing funding for additional staff. The program is up for renewal this year.

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