What Might Happen in Federal Health Policy Before the Midterm Elections

Summer is always an interesting time for political debate over health policy, and 2018 is no exception. While Congress is usually out of session in August, this year the Senate is continuing its work instead. We project that Senate efforts during the August recess will primarily focus on the Supreme Court nominee, Judge Brett Kavanaugh, along with other Presidential nominations, funding questions, the Farm Bill, and the ongoing opioid debate.

While the GOP in previous years has used the month of August to try to “repeal and replace” the Affordable Care Act (ACA), late summer efforts this year are unlikely to include extensive ACA-related actions. Many bids to repeal and replace the ACA have already failed. Bringing up the subject again could be politically costly in the lead-up to the midterm elections, and any action is unlikely to succeed given the need for 60 votes. The political cost of previous failed attempts to dismantle the ACA makes more such efforts unlikely.

That said, Kavanaugh’s appointment to the high court could shape the outcome of future ACA-related cases. As a federal appellate judge, Kavanaugh has only ruled on one item related to the national health care law: In a 2011 ruling, he wrote a dissent arguing that the courts should not consider a case regarding the ACA’s individual mandate as no one had paid the penalty yet. He wrote that Congress could fix the mandate by changing the penalty to a tax. This logic was later used in the Supreme Court ruling that upheld the mandate. Apart from this, his previous rulings and positions offer little insight into his view of the law, and his future interpretation could profoundly affect the outcome of cases that come before the court.

In addition to the Kavanaugh nomination, the Senate is actively considering more than 150 additional nominees. If confirmed, a number of these nominees would have the potential to affect the ACA’s implementation and shape a range of other health-related matters. Pending nominations likely to be considered by the Senate in August include nominations for the undersecretary of agriculture for food safety, assistant administrator for the Environmental Protection Agency, assistant secretary of labor, and a range of judicial appointments. Any judge could shape future ACA, Medicaid, Medicare, or other health-related policies.

Whatever may occur, the outcome of the midterm elections will shape health policy for years to come.

The remainder of the Senate’s time this month is likely to focus on the Farm Bill and the opioid debate. The September 30 deadline affecting much of the Farm Bill is approaching, and the House already passed a legislative package related to opioids that awaits reconciliation efforts being considered in the Senate.

Members of the House of Representatives, most of whom are running for re-election, plan to spend August in their districts. When the House returns to DC in early September, lawmakers will have just 11 working days before the September 30 deadline causes several bills to expire. For example, the Supplemental Nutrition Assistance Program (SNAP), the cornerstone of the nation’s nutritional safety net and provider of food assistance to more than 4.4 million Californians, must be renewed by that date. The House will need to focus on those expiring programs and appropriations bills to fund the government in the next fiscal year, which begins October 1.

Before leaving for the August recess, the House voted 283-132 to repeal the ACA excise tax on medical devices — a 2.3% levy on the price of medical devices sold within the US starting in 2020 that would generate more than $3 billion in annual revenue. Efforts to eliminate the medical tax have occurred since the ACA was enacted in 2010. Although almost five dozen Democrats and all but one Republican in the House supported the repeal, it’s pathway is uncertain in the Senate. We may see additional congressional efforts in the coming weeks, particularly if they are part of wider market stabilization efforts.

Appropriations funding bills are high on the Senate’s list of action items. A health care-related spending bill will be debated soon and is likely to pass. It’s less clear how that bill gets reconciled with the House version and eventually reaches the president’s desk. Congress is likely to either pass a continuing resolution to provide funding through the November elections, or the Senate version will prevail in a larger omnibus bill.

White House and Administrative Actions

The White House and federal agencies have already taken a range of administrative actions that negatively impact the ACA:

• The Centers for Medicare & Medicaid Services (CMS) has reduced navigator funding previously allocated to assist consumers using Healthcare.gov (the federal marketplace).
• The Trump administration has opted not to fund cost-sharing reductions, increasing premiums for purchasers of health plans through state or federal marketplaces.
• Risk-adjustment payments to insurers were halted and then reinstated, increasing uncertainty for insurers.
• The individual mandate is no longer being enforced by the Internal Revenue Service, thus reducing marketplace utilization and increasing premiums.
• The administration has advanced rules increasing the availability of plans that are not compliant with the ACA, such as association health plans, which offer narrower benefit packages and lower premiums than ACA-compliant plans.

On August 1, additional regulatory efforts altered the ACA. The new short-term, limited-duration insurance final rule extended the period during which short-term health plans can be offered from 3 months to 36 months. Such plans offer lower premiums but also thinner benefit coverage, and have the potential to undermine the marketplace by luring away healthier people and leaving the remaining customer base with a preponderance of complex needs and higher costs. Changing the risk pool in this way results in increases in premiums for the individuals who remain. California and several other states already have regulatory structures in place or are expected to respond to limit the expansion of short-term plans.

We also are likely to see activity related to Medicaid work requirement waivers. CMS has approved work requirement proposals from four states and proposals from seven or more additional states are currently being considered. There may also be state responses to court rulings on existing Medicaid work requirements, such as those in Kentucky. CMS opened a second public comment period regarding Kentucky’s waiver and is soliciting input through August 18.

Finally, the Trump administration intends to help state Medicaid programs address rising medication costs. Few details have been shared, but CMS Administrator Seema Verma recently highlighted her agency’s approval of Oklahoma’s plan to use value-based purchasing to negotiate supplemental price rebates with drug distributors. Under Oklahoma’s plan, if a drug fails to achieve intended clinical outcomes, the state would receive higher rebates to offset the difference. Verma also indicated that the administration hopes to work with Congress to repeal 2010 legislation that caps the Medicaid rebate levels that drugmakers can be required to pay.

We don’t have a crystal ball, of course, and much remains to be seen regarding what actions Congress, the White House, and federal agencies might take to affect the ACA in the next few months. Whatever may occur, the outcome of the midterm elections will shape health policy for years to come.

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