Washington Healthcare Update

May 30, 2017

Pardon Our Dust

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This Week:Long-awaited CBO score for House repeal bill released…Senate Republicansfind score shows how hard their job is as they begin drafting a differentbill…Administration releases full budget and it is dead on arrival…Congressleaves town for Memorial Day recess.

*Due to Memorial Day recess, the next newsletter will be released onJune 12.*

1. Congress



2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


CBO Releases Score on the American Health Care Act

On May 24, the Congressional Budget Office releasedits analysis of theAmerican Health Care Act, the legislation to repeal and replace theAffordable Care Act.

Highlights include:

Coverage Highlights:

  • 23 million more uninsured by 2026
    • Net increase in uninsured: 1 million in 2017; 19 million in 2020; 23 million in 2026
  • Effects by insurance type
    • Medicaid : 9 million fewer covered in 2020; 14 million fewer in 2026
    • Nongroup : 10 million fewer covered in 2020; 6 million fewer in 2026
    • Employer-sponsored coverage : no reported change in 2020; 3 million fewer in 2026
  • Coverage rates: 17 percent of the nonelderly population uninsured in 2020; 18 percent uninsured in 2026
    • Under the ACA, about 10 percent are uninsured over the 2017-2026 period

Budgetary Highlights:

  • 10-year NET effect on the deficit is $119 billion in savings
    • $1,111 billion reduction in direct spending
    • $992 billion reduction in revenues
  • Medicaid cuts are $834 billion over 10 years
  • JCT finds that elimination of the unearned income Medicare contribution tax costs $172 billion over 10 years
    • Some plans under the AHCA do not meet CBO’s standard for health insurance coverage. CBO counts these people as uninsured.
      • “CBO and JCT estimate that a few million people would buy policies that would not cover major medical risks.
      • “The existence of tax credits in the nongroup market would encourage a second market to emerge to sell policies priced to closely match the size of the credits.”
    • Bill hurts the low-income near-elderly. Increase in uninsurance “disproportionately larger among older people with lower income—particularly people between 50 and 64 years old with income of less than 200 percent of the federal poverty level.”
    • Difference from last score: more people with ESI, fewer with nongroup because employers see nongroup plans as “less desirable alternatives.”
  • WAIVERS: CBO expects some states will adopt MacArthur amendment waivers to eliminate EHB and pre-ex protections.
    • “About half the population resides in states that would not request waivers regarding the EHBs or community rating, CBO and JCT project.”
    • “In particular, out-of-pocket spending on maternity care and mental health and substance abuse services could increase by thousands of dollars in a given year for the nongroup enrollees who would use those services. Moreover, the ACA’s ban on annual and lifetime limits on covered benefits would no longer apply to health benefits not defined as essential in a state.”
    • “Some enrollees could see large increases in out-of-pocket spending because annual or lifetime limits would be allowed .”
    • Spillover into ESI possible but unlikely. “That decision could allow annual and lifetime limits on benefits not included in the state’s EHBs. However, large employers already have considerable flexibility in the range of the benefits they include in their plans, so CBO and JCT expect that their benefit offerings would probably not be noticeably affected by the actions of states.
  • PRE-EX:
    • “The agencies estimate that about one-sixth of the population resides in areas in which the nongroup market would start to become unstable beginning in 2020.”
    • “CBO and JCT expect that, as a consequence, the waivers in those states would have another effect: Community-rated premiums would rise over time, and people who are less healthy (including those with preexisting or newly acquired medical conditions) would ultimately be unable to purchase comprehensive nongroup health insurance at premiums comparable to those under current law, if they could purchase it at all— despite the additional funding that would be available under H.R. 1628 to help reduce premiums .”
    • In some areas, the “market would be similar to the nongroup market before the enactment of the ACA, in which premiums were underwritten and plans often included high deductibles and limits on insurers’ payments and people with high expected medical costs were often unable to obtain coverage.”
  • PREMIUMS: will depend on state action.
    • In states without waivers: “average premiums in the nongroup market would be about 4 percent lower in 2026 than under current law, mostly because a younger and healthier population would be purchasing the insurance.”
      • In a state without waivers, a 64-year-old would pay $16,100 annually in premiums NET of tax credit in 2026
    • “About one-third of the population resides in states that would make moderate changes to market regulations. In those states, CBO and JCT expect that, overall, average premiums in the nongroup market would be roughly 20 percent lower in 2026 than under current law, primarily because, on average, insurance policies would provide fewer benefits.”
      • In a state with moderate changes, a 64-year-old would pay $13,600 annually in premiums NET of tax credit in 2026
    • In dual waiver states:
      • “Average premiums would be lower than under current law because a younger and healthier population would be purchasing the insurance and because large changes to the EHB requirements would cause plans to cover a smaller percentage of expected health care costs .”
      • Less healthy people would face extremely high premiums, despite the additional funding that would be available under H.R. 1628 to help reduce premiums. Over time, it would become more difficult for less healthy people (including people with preexisting medical conditions) in those states to purchase insurance because their premiums would continue to increase rapidly.”
      • NB: CAP previously published examples of premium surcharges for pre-existing conditions.
    • Patient and State Stability Fund “grants would exert substantial downward pressure on premiums in the nongroup market and would help encourage insurers’ participation in the market.”
    • Invisible risk-sharing “program would have a small effect on premiums in 2018 and a larger effect on premiums in 2019 after insurers had time to incorporate the availability of the funds into their prices.”
    • Availability of money in the Upton fund for waiver states “would increase the number of states choosing such a waiver.”
    • “Although CBO and JCT expect that federal funding would have the intended effect of lowering premiums and out-of-pocket payments to some extent, its effect on community rated premiums would be small because the funding would not be sufficient to substantially reduce the large increases in premiums for high-cost enrollees .”

This is the third CBO score of AHCA (H.R. 1628). Before passing it,Republicans made changes to the bill that CBO didn’t have time to analyze.Those last-minute changes reduced savings by $32 billion over a decade,compared to the earlier version of the bill, and resulted in one millionfewer people losing coverage. The previous scores both estimated that 24million would lose coverage. The estimated 10-year deficit reduction fellfrom $337 billion in the first score to $150 billion in the second and to$119 billion in the May 24 score.

The estimated savings would have fallen another $68 billion had HouseRepublicans not delayed by six years repeal of the 0.9 percent Medicaresurtax on the wealthy (individuals with annual incomes of at least $200,000and families with incomes of $250,000).

House Ways and Means Committee Advances Three Obamacare Repeal Bills

On May 24, the House Ways and Means Committeeadvancedthree pieces of health care legislation that make up partof the Republicans’ larger Obamacare replacement strategy. The bills werewritten to work in conjunction with the GOP’s repeal bill, which is beingfast-tracked through the budget reconciliation process.

The VETERAN Act (H.R. 2372), approved with no Democratic support, allowsveterans to retain eligibility for Obamacare’s subsidies in the event thatthe American Health Care Act becomes law. Republicansbilled the measure as a way to provide veterans with equal treatment andensure their access to care. Democrats, however, blasted the legislation,saying it wouldn’t protect veterans with pre-existing medical conditionsunder the Republican bill to repeal Obamacare, which allows states to optout of certain coverage protections.

The Broader Options for Americans Act (H.R. 2579) would allow tax creditsavailable under the American Health Care Act to be appliedto COBRA plans. The panel approved that measure with one Democrat, Ron Kind(D-WI), voting with Republicans.

The Verify First Act (H.R. 2581), approved with no Democratic support,would require individuals to verify their income eligibility andcitizenship or legal immigration status with the Social SecurityAdministration before accessing premium tax credits.

The votes came shortly after the CBO released its score of Republicans’Obamacare repeal bill that passed the House last month. The CBO estimatedthe legislation would result in 23 million more people without healthinsurance by 2026, while trimming the deficit by $119 billion over 10years.

Congressmen Urge Congress to Keep Gun Policy Riders Out of FundingBills

A bipartisan group of 120 congressmen led by Rep. Mike Thompson (D-CA),chairman of the House Gun Violence Prevention Task Force, is asking leadersto ensure that all funding bills exclude gun policy riders.

The groupsent a letterto House Speaker Paul Ryan and Minority Leader Nancy Pelosi asking to keepsuch riders, including the Dicky Amendment that bans the CDC fromresearching gun violence, out of must-pass legislation.

“Our communities have been devastated by gun violence, and the Americanpeople have had enough,” Thompson said in a statement. “After countlessmass shootings and acts of violence in our communities, our nation iskeeping a close eye on the actions we take to address our gun policies. Anychanges to our laws should be taken seriously. Amendments should be debatedand thoroughly vetted—not tacked on to must-pass appropriations bills.Attaching harmful riders would be irresponsible and disrespectful to thosewho lost their lives to gun violence.”

For more information,click here.

Republicans Urge Trump to Fire NIH Director Over Embryonic, Stem CellResearch

Forty House Republicans are urging President Donald Trump to fire thedirector of the NIH over his support for embryonic and stem cell researchthat they say conflicts with Trump’s “pro-life direction.”

The Republican House members, in aletter led byRep. Jim Banks (R-IN), question NIH Director Francis Collins’ support forembryonic cloning and for stem cell research that involves the destructionof human embryos.

“While we deeply respect Dr. Collins’ Christian faith and commitment topublic service, the stances that Dr. Collins has taken in the pastregarding embryonic stem cell research and human cloning are notlife-affirming and directly conflict with the pro-life direction of yournew presidency,” the lawmakers wrote. “It is because of this troublingparadox that we ask you to re-consider his leadership role at NIH.”

Collins has led the NIH since 2009, when he wasunanimously confirmedby the Senate.

It has been unclear whether Trump will keep Collins, who came in at thebeginning of the Obama administration, at the helm of the biomedicalresearch institution. But Collins has wide support from both Republicansand Democrats.

The 40 Republicans argue Collins does not share in their party’s positionon embryonic research. They wrote that Collins’ stance is particularlydisturbing considering that NIH’s funding for human embryonic stem cellresearch increased from $146 million in 2012 to $180 million in 2015.


Senate Democrats Express Concern Over Delaying Tobacco Rule

Senate Democratsexpressed concernsto FDA Commissioner Scott Gottlieb over his agency’s decision to delayparts of an Obama-era regulation covering non-traditional tobacco products,including the electronic cigarette industry.

Sen. Patty Murray (D-WA), who pressed Gottlieb on the issue during hisconfirmation hearing, wrote with 10 colleagues that delaying compliancedeadlines 92 days puts children’s health at risk.

“Every day that these products stay on the market with no assessment oftheir risks, we continue to put America’s youth in harm’s way,” thelawmakers wrote. In addition to Murray, others signing the letter includedSens. Jeff Merkley, Sherrod Brown, Tom Udall, Ed Markey, SheldonWhitehouse, Jack Reed, Elizabeth Warren, Dick Durbin, Richard Blumenthaland Al Franken.

The FDA proposed and finalized a rule under which it would apply theTobacco Control Act to bring products like e-cigarettes, cigars, hookah andpipe tobacco under the agency’s purview. Public health advocates and manyDemocrats have pushed for curbs on candy and fruit flavors they saye-cigarette companies use to target children, but did not get them in thefinal rule. The e-cigarette industry argued that the regulation would killoff small producers.

2. Administration

Administration Unveils Budget Detail

The Trump administration unveiled its budget on May 23, cutting deeply intoprograms for the poor, health care, science and other areas, while boostingdefense 10 percent and spending more than $2.6 billion for border securityas well has significant tax reductions. The budget document titled “A NewFoundation for American Greatness” frames its plan as “reform the welfaresystem and replace dependence with dignity of work.”

The budget is seen as “dead on arrival” by Congress, but it serves as anoutline for the administration’s priorities.

The proposal makes no changes to Medicare, an entitlement program thatdrives a significant percentage of the nation’s debt. However, it doesreduce Medicaid spending.

The Trump administration would cap Medicaid’s federal funding for the firsttime, saving $610 billion over 10 years. States would receive fixed fundingwith new flexibility to administer their programs.

The budget also envisions saving funds—$250 billion—from Medicaid throughthe repeal of the Affordable Care Act.

In health care the budget does the following:

  1. FDA: The budget slightly increases the agency’s overall funding levels by $456 million. However it reduces taxpayer funding by about $854 million from 2017 levels. Industry user fees would be increased by more than the $1 billion drug and device manufacturers had already negotiated with Congress. It also includes $60 billion in funding previously authorized by the 21st Century Cures Act.
  2. Mental Health and Substance Abuse
  • The Substance Abuse Mental Health Services Administration would be reduced by $400 million
  • Community Mental Health Services Block Grant would be reduced by $116 million
  • State Mental Health Grants would be reduced by $136 million
  • Substance Abuse Treatment Grants for states would be reduced by $73 million
  • Public awareness programs would be reduced by $74 million
  1. National Institutes of Health funding would be reduced by almost $6 billion.
  • NIH funding is similar to the proposal the administration sent early this year, and comes weeks after Congress gave the agency a $2 billion boost in its 2017 spending bill.
  • The budget folds into NIH the Agency for Healthcare Research and Quality while maintaining the $272 million in discretionary funding for the agency’s work. It also restructures the way in which AHRQ processes grants to reduce overhead costs.
  1. Center for Disease Control and Prevention
  • The budget includes a $500 million health block grant for states to respond to public health threats.
  1. ONC budget is proposed to be reduced to $38 million.
  2. Office for Civil Rights would be reduced to $33 million though the office can generate more money for itself through aggressive HIPAA enforcement.

The budget also envisions a 3 percent growth rate in the economy. Manyeconomists believe that percentage of growth is not achievable and that 1.9percent is a more realistic figure.

FDA Hiring Freeze Lifted

The FDA is no longer subject to the hiring freeze the Trump administrationimposed in late January, Commissioner Scott Gottlieb wrote in an email toagency staff.

“Senior leadership has worked very closely with the administration over thelast several months, and just as I do, they see the critical importance ofthe FDA’s staff in achieving our mission,” Gottlieb wrote.

He added more details will be forthcoming about a new streamlined andefficient process for filling job openings. The FDA currently has about1,000 vacancies.

The hiring freeze frustrated Republicans and Democrats who passed the 21stCentury Cures legislation late last year with provisions to make it easierfor FDA to recruit and retain staff to help the agency speed more drugs anddevices to market.

OMB lifted the government-wide ban on hiring in mid-April, however HHSelected to continue the freeze. FDA was given the ability to hire for somepositions funded by industry user fee dollars.

Gottlieb Launches Panel to Study Opioid Crisis

FDA Commissioner Scott Gottlieb hasestablished a steering committee to address the opioid crisis and advise regulators onsuch steps as prescription limits.

Gottlieb, who said during his confirmation hearing that overuse ofpainkillers was his top priority, wrote in a blog post that the committeewill address whether the FDA should mandate training for healthprofessionals and work with providers to ensure the number of dosesprescribed is closely related to the condition for which a patient is beingtreated.

Gottlieb mentioned how there are few situations when a patient needs a30-day supply of opioids. The committee will also consider whether theagency’s drug review process for opioids adequately considers risk and thepotential for abuse.

The actions are the first Gottlieb has taken on opioid misuse since takingthe helm of the FDA. The steering committee will be made up of senioragency leaders and will solicit public comment. Gottlieb said the agencywill also consider additional steps.

NIH to Launch Beta Test of Precision Medicine Initiative This Week

A beta test of the Precision Medicine Initiative will launch this week, itsproject leader said at an NIH panel meeting May 25.

PMI, in the initial rollout, will recruit the first 10,000 to 15,000participants toward the eventual goal of 1 million. The beta effort will bespearheaded by the University of Pittsburgh Medical Center and will feature“real people, real protocol, and real training,” said project leader EricDishman. Only basic samples (like blood and urine) and measurements (likewaist circumference and BMI) will be collected at first.

A national rollout is planned for next year. Some parts of theinfrastructure are not ready yet. While the biobank at Mayo Clinic is closeto accommodating a beta test, it can’t yet deal with a test of nationalscale. Meanwhile, the researcher portal—which allows academics to makeinquiries of the data—isn’t ready yet either.

HHS Secretary Price Calls for Reforming World Health Organization

On May 22, while addressing the World Health Assembly, HHS Secretary TomPrice said the World Health Organization should be reformed to focus onpreventing global health crises.

A reform effort means “taking a clear-eyed view of what needs to change forit to fulfill that most important mission: ensuring a rapid and focusedresponse to potential global health crises,” he said.

WHO will elect a new director-general on Tuesday, replacing Margaret Chan,who has held the position since 2006.

3. Courts

Judge Orders HHS, OMB to Release Communications With Congress toAmerican Oversight

On May 25, a federal judge ordered the Trump administration to review morethan 13,000 pages of internal records related to Republicans’ health carelegislation and to release relevant materials to American Oversight, a501(c)(3) organization launched to scrutinize the Trump administrationthrough Freedom of Information Act requests.

In March, American Oversight sent FOIA requests to both HHS and OMB,seeking the agencies’ internal communications with Congress aboutRepublicans’ health care legislation. Because FOIA requests can take yearsto fulfill, American Oversight asked for expedited processing, which wouldhave forced HHS and OMB to turn over the documents within weeks or months.But according to American Oversight’scomplaint, the administration did not agree to expedite processing, which opened thecase up for judicial review.

Judge Emmet G. Sullivan of the U.S. District Court of the District ofColumbia agreed, and ordered HHS and OMB to review andprocess about one-third of their communications by June 30, anotherone-third by July 31 and the remaining documents by Sept. 5. The