Health Reform WK-EDGE Will Congress deliver coal or tax reform to Oval Office for holidays?
Tuesday, December 12, 2017

Will Congress deliver coal or tax reform to Oval Office for holidays?

By Anthony H. Nguyen, J.D.

Congressional focus for December is two-fold: avoid a government shutdown, as funding expires December 8, and deliver a tax reform bill to the President before 2017 ends. Lawmakers are likely to advance a short-term budget bill to keep the government open until Christmas. The hope is this will give Congress time in December to resolve budget issues and critical policies—namely tax reform. Although the congressional recess is scheduled for mid-December, there are a number of significant health care related issues that may be addressed, as part of or apart from the tax reform bill: (1) a repeal of the individual mandate in the final tax reform bill; (2) a Children’s Health Insurance Program (CHIP) extension; (3) a Medicare extenders bill; (4) a repeal of 340B drug program cuts; and (5) Senate approval of a new HHS Secretary.

Individual mandate. On November 29, 2017, the Senate Committee on the Budget advanced along party lines on a 12-11 vote the Fiscal Year (FY) 2018 Budget Reconciliation legislation, which is a significant step for Congress towards passing a sweeping tax overhaul. Senate Republicans decided to include the repeal of the Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) individual mandate—the requirement that most people have health insurance or be penalized—into the tax bill, merging the fight over health care with the effort to cut taxes.

Some Republican Senators initially voiced misgivings about the $1.5 trillion tax bill, but offered support after last-minute deal making, including the bill’s treatment of small businesses and its effect on the deficit. Eliminating the individual mandate in the bill prompted Sen. Susan Collins (R-Me) to seek additional support for passing separate legislation aimed at stabilizing insurance markets—legislation that cannot be included in the tax bill because Senate Republicans used budget reconciliation measures, which place fiscal and procedural constraints, to avoid a filibuster from Democrats. Collins is advocating for passage of the Bipartisan Health Care Stabilization Act of 2017, sponsored by Sens. Lamar Alexander (R-Tenn) and Patty Murray (D-Wash), that would make federal payments to insurers, as well as the Reinsurance Act of 2017, a bill Collins co-sponsored with Sen. Bill Nelson (D-Fla) that would allocate additional reinsurance payments to subsidize high-cost patients.

Yet, differences still remain between the Senate and House versions of the tax bill. The Senate bill would cut the corporate tax rate to 20 percent from a top rate of 35 percent. For individuals, it would make tax cuts temporary and create seven income tax brackets, with a bottom rate of 10 percent and a top marginal rate of 38.5 percent, down from the current rate of 39.6 percent. The House plan went with four brackets: 12 percent, 25 percent, 35 percent and a top rate that stays at 39.6 percent.

A coalition of 19 patient groups, including the American Cancer Society Cancer Action Network, sent letters to Senate Republicans warning against repealing the individual mandate as part of tax reform, pointing to a Congressional Budget Office (CBO) analysisfinding that 13 million more people would be uninsured and premiums would rise 10 percent without the mandate. The groups, which also included the American Geriatrics Society, the Center for Medicare Advocacy, and the National Consumer Voice for Quality Long-Term Care, also expressed concerns that the deficit created by the bill could trigger Medicare and Medicaid cuts. In addition, the letter described the group's dismay over the "rushed and partisan process" of the legislation.

While the elimination of the individual mandate would lead to federal budget deficits reductions approximately in the neighborhood of $318 billion between 2018 and 2027, other provisions within the tax bill would lead to overall federal budget deficits increasing by $1.6 trillion during the same time period (see Significant deficit reduction would come from elimination of individual mandate penalty, November 28, 2017).

CHIP. While children's health insurance is a health policy area long considered non-controversial, Congress is currently waging a partisan fight over reauthorizing the Children’s Health Insurance Program (CHIP), which provides health insurance for children in low-income families whose income is too high to qualify for Medicaid.

In early November, the House passed the Community Health and Medical Professionals Improve Our Nation (CHAMPION) Act (H.R. 3922), which would reauthorize CHIP for an additional five years, by a largely party line vote of 242-174. The Senate also passed its own measure in early October; the Keeping Kids' Insurance Dependable and Secure (KIDS) Act (S. 1827) passed by voice vote, but its future is uncertain as it does not detail offsets to pay for the five-year extension of CHIP—projected to cost $8.2 billion.

Critics of the House bill argued that the CHIP extension, which also extended funding for community health centers, was paid for by cutting funds to the ACA’s Public Health and Prevention Fund. That fund, in turn, pays for programs such as immunizations, lead poisoning prevention, and opioid treatment. Medical and patient advocacy groups had mixed responses to the bill, supporting the CHIP extension, but warning against cuts to the ACA’s prevention funds.

States are currently struggling with how to provide access to health services for children covered by CHIP. CMS allocated $607 million in October and November to help shore up the program in 14 states and territories. More states will run out of CHIP funding beginning in January if Congress fails to act. In Virginia, for example, the state warned that it would send out letters potentially by December 1, 2017, notifying and explaining to families that CHIP coverage could be lost as funding was running out. Colorado indicated it would do the same in late November.

Medicare extenders. The House Ways and Means Committee reached a bipartisan agreement to authorize funding for several ongoing Medicare initiatives that expired in September or were set to run out at the end of the year. These Medicare extenders are provisions of Medicare that must be renewed annually by Congress. For instance, the Medicare Dependent Hospital Program and Low-Volume Adjustment Program, two provisions important to rural hospitals, expired at the end of the 2017 fiscal year on September 30, 2017. Under the House package, these programs would be extended for an additional two years.

The House package also included a repeal of Medicare Part B therapy caps and lowering of the threshold for targeted manual medical reviews for claims to $3,000 for physical therapy or speech language services and $3,000 for occupational therapy. The current threshold is $3,700. However, the package also offsets some of these extensions, including payment reductions for certain end stage renal dialysis services, modifications to home health agencies, and modifications to skilled nursing facility payment.

The Senate Finance Committee is still working on its version of an extenders bill and issued a discussion draft of it in late October. There is concern that Congress may not be able to come to an agreement before the end of the year, especially as tax reform bill discussions dominate.

340B cuts. Bipartisan legislation introduced in the House in November would overturn a CMS rule that would reduce payments to hospitals that participate in the 340B drug discount program. H.R. 4392—introduced by Reps. David McKinley (R-WVa) and Mike Thompson (D-Calif)—is the latest opposition to the cuts. Scheduled to take effect January 1, the rule would reduce payments for physician-administered 340B drugs by more than 28 percent, effectively reducing hospital and outpatient clinic payments by $1.6 billion (see CMS cut to 340B spending overshadows OPPS update; associations threaten suit, November 2, 2017). Hospitals are suing to try to block the rule (see AHA makes good on threats to sue over 340B cuts, November 14, 2017).

Other health related issues. Beyond federal health care programs that need renewals or funding, the tax reform debate occupying Congress may affect even administrative matters. Alex Azar, nominee to be HHS Secretary, had a nomination hearing before the Senate Health, Education, Labor & Pensions (HELP) Committee, but the Senate Finance Committee, which has jurisdiction over Azar’s nomination and is focused on passing tax reform, has not indicated whether it will vote on Azar’s nomination before the end of the year.

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