What to Expect in Health Policy Under a Divided Congress

The 2018 midterm elections were powered by a “blue wave” that flipped control of the House of Representatives from the GOP to the Democrats but left the Senate in Republican hands, meaning the two chambers of Congress will be divided at least until 2020. In the Senate, Republicans have a 53 to 47 majority and will continue to be led by Senator Mitch McConnell of Kentucky, while House Democrats gained a 235 to 199 majority. Democrat Nancy Pelosi of California was elected Speaker of the House for the second time — she held the gavel from 2007 to 2011.

What will this “split Congress” mean for health care? While both parties are likely to pursue legislation aligned with their health care priorities, few bills are likely to pass both houses of Congress and be signed into law by President Donald Trump. Mostly we will see “message bills” designed only to demonstrate party priorities heading into the 2020 election cycle.

Divided control will drastically slow the White House’s ability to use legislation to advance GOP goals. Regulatory approaches such as rule changes remain a viable alternative. This includes recently proposed changes to public charge, potential actions to reverse discrimination protection under the Affordable Care Act (ACA), and policies that would make it more difficult for states to waive Supplemental Nutrition Assistance Program (SNAP) work requirements.

A Few Bills Likely to Pass

Starting with what we know for sure, Congress will almost certainly renew a package of so-called “extenders,” which include Medicaid support for community health centers, additional allocations to the National Health Service Corps, a small package of Medicare items, and other policies. Funding for most of these programs expires on September 30, 2019. We expect Congress to turn its focus to them by the summer and aim to pass them before that deadline. Work could slip past that date if other more contentious issues capture lawmakers’ attention.

ACA medical device and health insurance taxes are each scheduled to take effect January 1, 2020. Congress has postponed them several times due to opposition from the affected industries, and we expect it will expend considerable energy attempting to do so again. Whether it will succeed depends more on the political environment and its capacity for bipartisanship than on the policies themselves.

It’s going to be a fairly wild year in health care legislation.

It isn’t on public display in Washington, but some bipartisan discussions are evolving regarding potential follow-ups to last year’s opioid package, which fell short of providing the funding needed to enhance prevention efforts and broaden access to treatment. The House may pass legislation for robust treatment funding that resembles the Ryan White HIV/AIDS Program, though the Senate-led response to this is at best uncertain. Because the opioid epidemic has been especially severe in “red” states, there could be bipartisan support for a third opioid-focused bill, and we project that President Trump would likely sign such a bill if it reached his desk.

Legislation addressing prescription drug prices will also be a substantial source of focus and debate. An unusual alignment exists between President Trump, congressional Democrats, and the public on this issue. All three support allowing the government to negotiate prices for drugs covered by Medicare Part D plans, though the President has waffled on this issue in the face of stalwart congressional Republican opposition. The House is likely to pass a bill authorizing the Health and Human Services secretary to engage in such negotiations — a concept that’s been around since the Medicare Part D was created in 2003 — although that legislation would be dead on arrival in the Senate. More modest measures targeting drug prices do have a reasonable chance of passing, though.

New legislation resembling the End Surprise Billing Act of 2017 (H.R. 817; S. 284) has a chance of becoming law. The bill would require hospitals to notify consumers about services provided at the facility that are not within the patient’s health plan provider network. It also would require hospitals to give the patient an estimate of out-of-pocket costs associated with out-of-network services. For emergency services, the hospital would be prohibited from charging a patient more in out-of-pocket costs than he or she would pay an in-network provider for the same services. California law already includes similar protections against surprise medical bills, requiring consumers to pay only in-network cost-sharing for emergency care or when receiving services at an in-network facility.

Continuing Battles over the ACA

Efforts to repeal and replace the ACA are likely dead, but Senate Republicans may continue trying to weaken the law by allowing broader use of plans that provide benefit packages that fall short of ACA requirements. The White House has already advanced rules to expand access to short-term plans and association health plans that do not cover maternity care, mental health coverage, prescription drugs, and other health benefits deemed essential under the ACA. There may be additional congressional action on these issues, but with a divided Congress the outcome is unclear. California law bans short-term plans and restricts the use of association health plans.

In order to fulfill campaign promises, Senate Republicans could propose legislation outlining protections for preexisting conditions. The House is unlikely to advance such a bill because House Democrats support the ACA rules already on the books, and such legislation would likely include Republican priorities that Democrats oppose.

The Trump administration has moved to destabilize ACA insurance exchanges by withholding funding for cost-sharing reductions, cutting support for navigators in states using federally facilitated marketplaces (California operates its own exchange, Covered California) by more than 75%, shortening the open enrollment period, eliminating the individual mandate’s tax penalty, and more. We expect House Democrats to put forth bills leveraging the existing law to stabilize the ACA exchanges and expand access to affordable coverage. These measures might include restoring funding for enrollment assistance and boosting advertising dollars. The House may also lift the ACA ceiling on eligibility for premium subsidies above 400% of the federal poverty level. None of these ideas is likely to pass the Senate unless leadership successfully negotiates support in exchange for backing of Senate GOP priorities as part of a larger package, a scenario we consider very unlikely. Unlike most states, Covered California pays its navigators, has its own advertising budget, and runs a longer open enrollment period.

The Case of the Potential Game-Changer

The pending lawsuit Texas v. Azar is a potential game-changer. Last month, a federal judge from the North District of Texas struck down the entire ACA because Congress repealed one provision related to tax enforcement of the individual mandate. The mandate can no longer be considered a tax, the judge ruled, and therefore violates the Constitution’s Commerce Clause. The judge’s unusual ruling went further in refusing to sever this provision from the rest of the law, which would have allowed the law to stand. Sixteen states and the District of Columbia, led by California, are defending the law and have brought the case to the Fifth Circuit US Court of Appeals. The US Supreme Court is likely to take up the matter after that. In the meantime, the ACA stands. In a recent blog post, we delved into the details regarding the recent ruling and potential future developments. Many legal scholars say the courts will allow the ACA to live on without the individual mandate penalty, and we believe the ACA is likely to continue to be the law of the land.

The 2020 campaign has started, and “Medicare for all” is a big topic of that discussion. Proposals from members of Congress and presidential hopefuls range from allowing adults reaching 50 or 55 years of age and older to buy into Medicare all the way to a full-blown national health plan that would fold employer-sponsored insurance, the individual market, Medicare, and Medicaid into one government-run program. None of these proposals is likely to become law in 2019, but groundwork on related legislation undoubtedly will continue. Working groups will be formed to explore options, and the House is likely to consider legislation in this vein. Hearings already are being scheduled.

It is going to be a fairly wild year in health care legislation. With some must-pass bills on deck, not to mention a deal necessary to raise statutory budget caps and the debt limit, some action on health care is guaranteed. Beyond that, we will see a stream of messaging and positioning that will rival the primordial days leading up to the 2009 ACA debate, with the 2020 elections determining just how much of that work could become law.

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