Thoughts on Trump’s approach to Healthcare

From Diane Jones:Here is what I hear from the healthcare advocates group I connect with:
1. What changes will the Trump Administration attempt to make through rulemaking?

 

Republicans have talked about a three-pronged strategy for ACA repeal and replace: (1) enact the American Health Care Act (AHCA) through the budget reconciliation process; (2) make changes through the regulatory process; and (3) enact follow-up legislation through normal order (i.e., not through the budget reconciliation process). They have emphasized within their own caucus that they can do a lot through the second prong. According to Politico, President Trump’s budget director, Mick Mulvaney, even went so far as to present the Freedom Caucus “a letter from Trump outlining all the Obamacare regulations his administration would repeal on its own” as part of the last-ditch effort to win over its members last Thursday night.

 

Presumably, the administration will still move forward with a major portion of these planned rule changes. HHS had already begun using the rulemaking process to make change before the AHCA was even unveiled. On February 17, HHS issued a proposed rule billed by the Department as aimed at improving market stabilization, though its primary elements were in fact directed at making it more difficult for individuals to purchase coverage, opening the door to lower-value plans, and lowering the amount of federal premium tax credits. (The AFL-CIO comments on the proposed rule are attached.) The IRS also reportedly is softening enforcement of the individual shared responsibility penalty. There are many other areas the administration could pursue. Back in January, Nicholas Bagley and Adrianna McIntyre at the Incidental Economist had a good run down of potential changes: Executive Actions Trump Could Take to Change the ACA. We discuss a few potential avenues for change in the questions below.

 

2. Does the Trump Administration go along with Congress in stopping cost sharing subsidy reimbursements to insurers participating in the marketplaces?

 

It is widely recognized that a surefire way to tank the ACA individual marketplaces quickly would be to halt reimbursement of insurers for cost-sharing subsidies they are required to provide enrollees with household incomes below 250 percent of the federal poverty level. That’s why resolution of an ongoing lawsuit between congressional Republicans and the federal government over whether the government has the authority to reimburse insurers absent a congressional appropriation is so important. The Trump Administration and congressional Republicans need to decide whether to pay up or create havoc.

 

3. What will happen to Medicaid?

 

Medicaid still has a huge target on its back. The House Republican plan would have cut $839 billion Medicaid spending over 10 years, not only rolling back the ACA Medicaid expansion but also ending the half-century-old federal Medicaid funding guarantee through per capita caps (or optional block grants for some beneficiaries) among other changes. Republicans will be tempted to make another run at Medicaid in subsequent budget reconciliation legislation, since cuts to it could be used to pay for tax cuts.

 

Also, as we noted last week, HHS secretary Tom Price and CMS administrator Seema Verma recently sent a letter to governors signaling that HHS and CMS are now open for business when it comes to waivers (known as Section 1115 waivers). They would like to allow states to make significant changes to their Medicaid programs, like imposing work requirements for certain enrollees (which the failed House Republican plan would have permitted by statute).

 

4. How will HHS try to use state innovation waivers to reshape the ACA?

 

The ACA comes with a built-in tool for trying alternative approaches to achieving the ACA’s coverage and affordability goals, through state innovation waivers under Section 1332 of the Act. The Trump Administration has expressed some initial interest in using these waivers.On March 13, HHS secretary Tom Price sent a letter to governors soliciting state innovation waiver applications, with an emphasis on applications that include high-risk pools or state-operated reinsurance programs. More broadly, conservatives have expressed interest in using these waivers in combination with Medicaid Section 1115 waivers, as a way to devolve control to states. See, for example, the Manhattan Institute’s State Waivers: A Federalist Rx for Obamacare Ills. HHS likely will issue new agency guidance and possibly use the rulemaking process to give states more leeway under Section 1332.

 

5. What will happen to Value-Based Payment Models with Tom Price in charge of HHS?

 

On March 21, HHS and CMS issued an interim final rule (IFR) announcing a further delay of two mandatory bundled payment programs under Medicare for heart attack treatment and bypass surgery, a delay of the Cardiac Rehab Incentive Payment Model and a delay in the expansion of the mandatory Comprehensive Care for Joint Replacement Model. The IFR solicits comments on the delay as well as a further delay. This raises questions about the future of many of the on-going efforts to improve care and reduce costs through alternative payment models. HHS Secretary Tom Price does not support much of this work and considers the Center for Medicare and Medicaid Innovation (CMMI)—the ACA-created entity that develops new models for delivering and paying for care under certain government programs—to be an incursion into Congressional authority and oversight. This is despite CBO’s view that CMMI reduces federal spending. Questioning value-based payment models may also lead to changes under MACRA and impact physician payments under Medicare.

 

6. How will health care come up in tax reform?

 

President Trump and congressional Republicans say they soon will turn to tax reform. Health care is likely to come up in several ways. The biggest question is whether Republican tax reform plans will go after the tax exclusion for workplace health plans. Leaders like House Ways & Means Committee chairman Kevin Brady (R-TX) made it clear early in the ACA repeal and replace debate that they really would like to cap the tax exclusion. The leaked version of the House health bill capped it at the premium for the 90th percentile plan, before the drafters removed it in favor of a straight-up delay in “Cadillac tax.” Other things to keep an eye on include HSA changes (especially big increases in the contribution limits) and restoring the medical expense deductibility threshold at its pre-ACA level (7.5% of income).

 

7. What’s next for the “Cadillac tax”?

 

The excise tax on high-cost health plans is scheduled to go into effect beginning in 2020. Failure of the Republican health plan may lead Treasury and IRS to restart the regulatory process and move toward issuing a proposed rule. On the other hand, Treasury and IRS may slow walk things if they believe Congress is likely at least to delay the effective date again before it goes into effect. The last version of the House bill would have delayed the tax until 2026. As noted above, Congress may also try to replace the tax with a cap on the tax exclusion as part of comprehensive tax reform.

 

8. Will Congress try to move smaller pieces of legislation?

 

House Republicans have teed up several health care bills separate from their ACA repeal and replace plan. For example, the House passed theSmall Business Health Fairness Act (H.R. 1101) on Wednesday. (See the AFL-CIO letter opposing this bill attached to this e-mail.) At the moment, it seems unlikely this bill, which authorizes so-called association health plans, will move in the Senate, but Republicans could try to show some progress on health care with smaller pieces of legislation like this bill.

 

9. What will President Trump do, if anything, about prescription drug prices?

 

President Trump has repeatedly gone after prescription drug manufacturers because of high drug prices and has said he supports government drug price negotiating authority. However, he has sent very mixed signals about his intentions. The day before he met with Rep. Elijah Cummings (D-MD) and Rep. Peter Welch (D-VT) to discuss their draft legislation to give HHS price negotiating authority for Medicare, President Trump tweeted:

 
 

President Trump previously met with PhRMA’s leaders and struck a conciliatory tone toward drug manufacturers, indicating that he saw regulatory barriers and the slow drug approval process as the major problems. So, any action on drug prices is TBD.

 

10. Will single payer proposals or legislation building on the ACA’s basic structure, such as a public option, gain momentum now?

 

Sen. Bernie Sanders (D-VT) has announced that he soon will introduce a “Medicare for All” bill, which Rep. Peter Welch (D-VT) also will introduce in the House of Representatives. This is in addition to the Expanded and Improved Medicare for All Act (H.R. 676) that Rep. John Conyers (D-MI) has introduced in successive congresses. A Sunday Washington Postarticle quotes Sen. Jack Reed (D-RI) and Rep. Jim Langevin (D-RI) also calling for single payer, and their colleague Sen. Sheldon Whitehouse (D-RI) endorsing the public option.

 

11. Will Republicans try to engage Democrats around alternative ACA replacement ideas?

 

Legislation introduced by Sen. Bill Cassidy (R-LA) and Sen. Susan Collins (R-ME) in January, the Patient Freedom Act of 2017 (S. 191), garnered a lot of attention as something that might build a bridge for some Democratic support. That’s partly because this bill would give individual states the option of keeping some elements of the basic ACA structure (individual and employer shared responsibility requirements, marketplaces, and ACA premium tax credits and cost-sharing subsidies at somewhat lower levels), though the emphasis would be on alternatives that are heavy on block grants and state control. There are lots ofproblems with the bill, but it’s worth paying attention to whether Republicans try to engage centrist Democrats around this kind of approach

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