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The Medliminal Washington Report 5.31.18

May 31, 2018

 The Washington Monument and Tidal Basin at night in Washington, DC.

The House and Senate spent their final week in Washington before recessing until June 5 working on competing versions of legislation to address the opioid epidemic. The Senate Judiciary Committee voted to send five opioid-related bills to the floor, days after the House Energy and Commerce Committee approved a package of 30+ bills. The House also passed so-called “right to try” legislation, incorporating Senate revisions to an earlier bill that now awaits the president’s signature. Secretary of Health and Human Services Alex Azar continues to amp up his rhetoric against drug makers in advance of a June 12 Senate hearing on the president’s recently-revealed drug price proposals. The Congressional Budget Office released reports on the impact of proposed federal regulations governing association and short-term health plans, and projected exchange premiuns in 2019. We break it all down in this week’s health care review.

The Administration

HHS Secretary Will Testify before Senate on President’s Drug Price Proposal

The Senate Health, Education, Labor and Pensions (HELP) Committee has announced plans to develop legislation to address drug prices, beginning with a June 12 hearing during which HHS Secretary Alex Azar will discuss the administration's proposals. “The cost of prescription drugs is a complex problem and the Administration has laid out a comprehensive plan to help address that problem. I welcome the President’s leadership to put patients first, and look forward to hearing more about the blueprint from Secretary Azar and learning how Congress can help reduce the cost of prescription drugs,” Committee Chair Lamar Alexander (R-TN) said  in a statement.

While Senator Alexander has praised the blueprint, many Republicans have said little about the president’s plan since it was announced May 11 so the hearing will offer insights to senators’ thoughts about those proposals as much as insights into the administration’s implementation plans. The administration has begun implementing aspects of the plan that are easier to do and do not require formal legislation, such as warning plans and pharmacy benefit managers (PBMs) against “gag clauses” in pharmacy contracts that prevent pharmacists from telling patients when copays are more expensive than the cash price for drugs.

However, if the president is going to implement the entirety of the blueprint released on May 11, Congress will need to pass authorizing legislation. Two bills that might be considered this year include a bi-partisan measure to ban pharmacy gag clauses (S. 2553, Know the Lowest Price Act of 2018) and legislation to stop drugmakers from blocking access to product samples needed to develop generic alternatives (S. 974, the CREATES Act).

FDA Commissioner Announces Summit to Address Opioid Epidemic in June

On May 23, FDA Commissioner Scott Gottlieb announced a one-day summit on June 27 of   internet stakeholders, government entities, academic researchers, and advocacy groups to discuss ways to collaboratively take stronger action in combatting the opioid crisis by reducing the availability of illicit opioids online.

“Given the severity of the public health emergency we are facing, the easy availability of illicit opioids online is a major public health concern. One critical step to address this public health emergency is the adoption of a far more proactive approach by internet stakeholders to crack down on internet traffic in illicit drugs. Illegal online pharmacies, drug dealers, and other criminals are increasingly using the internet to further their illicit distribution of opioids, where their risk of detection and repercussions is significantly reduced,” FDA said in its formal announcement.

The summit will feature remarks from Gottlieb and FDA drug center Director Janet Woodcock, followed by sessions during which panelists and stakeholders will discuss current research that shows “the ease with which opioids can be purchased online” and what internet companies are doing to address the issue of opioid availability online, FDA says. There also will be a roundtable discussion by stakeholders on gaps in addressing the problem and new solutions.

FDA emphasized the role internet stakeholders play in helping to stem the opioid epidemic, citing National Association of Boards of Pharmacy data which found that “when searching online for opioids across the 3 major search engines, 91 percent of the 1st search results led users to an illegal online drug seller.” The agency also cited Carnegie Mellon University research that found that revenues from online illicit drug sales grew from between $15-17 million in 2012 to $150-180 million in 2015.               

Congress

New House Bill would Delay ACA’s Health Insurance Tax Through 2021

Four House lawmakers introduced a bipartisan bill on May 24 that would postpone the Affordable Care Act's (ACA) tax on health insurance – already on hold in 2019 – until 2021.  The Health Insurance Premium Reduction Act (HR 5963) is sponsored by Representatives Kristi Noem (R-SD), Jackie Walorski (R-IN), Kyrsten Sinema (D-AZ), and Ami Bera (D-CA).

The tax, which affects most commercial health plans, including Medicaid managed care and Medicare Advantage products, was delayed in 2016 by Congress and the Obama administration as part of a spending bill for tax year 2017, took in effect for 2018, and delayed again for 2019 as part of the tax bill enacted last year. The bipartisan bill would suspend the tax through 2021.

“Americans have been calling for more affordable coverage and care, and this bill delivers for them. Suspending the Health Insurance Tax will help to lower premiums for everyone, whether they get coverage through their jobs, buy their own coverage, or enroll in Medicare Advantage or Medicaid,” America's Health Insurance Plans (AHIP) said in a statement applauding the bill. “We encourage our leaders in Congress to build on this positive step by completely repealing the tax, sustaining those savings for millions of people.” An October 2017 report by the consulting firm Oliver Wyman found that the tax increases premiums by nearly 3 percent each year.

The health insurance tax is based on market share, and was expected to cost insurers about $14.3 billion in 2018, and cost more annually based on premium growth. The National Federation of Independent Business Research Foundation estimates that the tax will cost between 152,000 and 286,000 jobs by 2023. In a statement announcing the introduction of the bill, Representative Noem said that putting off the tax will remove “a significant burden, saving consumers hundreds of dollars annually.”

Senate Judiciary Committee Approves Opioid Bills

On May 24, the Senate Judiciary Committee voted to send five opioid-related bills to the floor, including a measure that would require the Drug Enforcement Administration (DEA) to consider diversion, abuse and other public health impacts of opioids when setting annual production quotas for manufacturers. The committee also passed measures that would provide drug manufacturers and distributors access to DEA data on opioid orders, amend the Controlled Substances Act to refine the way the DEA sets opioid manufacturing quotas each year, andreauthorize the Office of National Drug Control Policy, the National Community Anti-Drug Coalition Institute, Drug Free Communities Program and a number of other drug enforcement and education initiatives and task forces. 

Meanwhile, 22 bipartisan proposals have been introduced in the Senate Finance Committee. The bills focus on tweaks to Medicare and Medicaid, including one that would require providers to discuss the risks of addiction and pain management with Medicare beneficiaries. Another allows Medicaid coverage for health care services provided to babies with opioid dependence in residential pediatric recovery facilities as well as hospitals. A third measure requires CMS to issue guidance to increase the use of telehealth in Medicaid for substance abuse treatment, particularly among children and adults under 40. Chairman Orrin Hatch (R-Utah) said the committee will mark up the bills “in the coming weeks.”

House Majority Leader McCarthy (R-CA) has said that the House is planning to consider its expansive package of opioid-related bill during the week of June 11. The package could include over 60 separate pieces of legislation that were previously approved by the Energy and Commerce and Ways and Means Committees. The Senate is expected to take up its package of legislation later in the summer. 

House Approves 'Right-To-Try' Legislation, President Expected to Sign

The House of Representatives on May 22 voted 250-169 to pass a so-called “Right to Try” legislation (S. 204) that could give terminally ill patients a way to independently seek drugs that are still experimental and not fully approved by the FDA. The Senate approved the bill by unanimous consent in August, and the president has signaled that he will sign the bill into law. 

After a failed attempt, the House passed its own version of the bill in March after making changes to the Senate bill, which would have required the Senate to vote a second time on the changes, but House Republicans announced a change of course last week, saying they would vote on the Senate bill.

The bill gives terminally ill patients the right to seek drug treatments that remain in clinical trials and have passed Phase 1 of the FDA’s approval process, but have not been fully approved by the FDA. Advocates for the legislation say it opens a door for terminally ill people in states that haven't passed such a law. Critics argue that the legislation disempowers the FDA and won't make it easier for terminally ill people to actually access the drugs.

Health Policy

CBO Predicts 15 Percent Exchange Premium Increases, 6 Million Enrollees in Association or Short Term Health Plans

According to a May 24 report released by the Congressional Budget Office (CBO), the ACA’s insurance exchanges will remain stable in most areas, even as premiums for benchmark plans are expected to increase by about 15 percent from 2018 to 2019 and by approximately 7 percent per year through 2028.

The CBO attributes 10 percent of the premium increase to the loss of the individual mandate penalty, and predicts that the number of uninsured is expected to rise by 3 million in 2018 due to those premium increases caused by the penalty repeal. “That number rises by another 3 million over the following two years, on net, as more people adjust to the fact that they no longer face the mandate penalty,” CBO says. On average, roughly 11 percent of adults below the age of 65 are expected to be uninsured throughout 2018.

The report estimates that the federal government will spend approximately $685 billion subsidizing health care for adults under the age of 65 this year, which translates to $2,582 per American. Of the total, $82 billion will go to people under 65 who qualify for Medicare, $49 billion will go to the Affordable Care Act premium tax credit program and $4 billion will go to ACA's Basic Health Program.By 2027, 3 million fewer people than previously projected will receive federal subsidies through Obamacare marketplaces, according to CBO's estimates.  

The report also predicts that approximately 6 million Americans would enroll in either short-term or association health plans (AHPs) by 2023 if the Trump administration's proposed rules are implemented as written. CBO forecasts that 4 million would enroll in AHPs and 2 million in short-term plans, and that premiums for remaining small group and individual marketplace plans would then increase by 2 to 3 percent per year.

CBO found that 26 percent of the population lives in counties with only one exchange insurer in 2018, up from 19 percent in 2017, citing several factors playing into issuers' decision to withdraw from a market, including low enrollment, uncertainty about the mandate, and other marketplace uncertainties including the potential impact of the short-term or association health plans. “Additional withdrawals are possible in 2019--in response to lower anticipated enrollment stemming from repeal of the penalty related to the individual mandate,” CBO writes. “Still, with steady demand for insurance in the marketplaces, CBO expects the number of insurers in the exchanges to stabilize thereafter in most areas of the country.”

CDC Report Shows Uninsured Rate Holding Steady, Likely to Increase Going Forward

Approximately 29.3 million Americans were uninsured in 2017—a slight but insignificant increase from the year before, according to a new report from the Centers for Disease Control and Prevention (CDC). The overall uninsured rate was 9.1 percent in 2017, but among adults aged 18-64, 12.8 percent were uninsured, up from 12.4 percent in 2016.

Among the report’s other findings on insurance coverage and trends:

  • The uninsured rate among children remained roughly the same at 5 percent. There was an increase in the share of children (17 and under) covered by private insurance plans, jumping from 53.8 percent in 2016 to 55 percent in 2017.
  • Adults aged 25-34 still had the highest uninsured rate at 17.2 percent.
  • High-deductible health plans continued to become more prevalent, with 43.7 percent of adults enrolled in such plans in 2017, up from 39.4 percent the year before.
  • In the 18 states which didn’t expand Medicaid eligibility following passage of the ACA, 19 percent of adults aged 18-64 were uninsured, up from 17.9 percent the year before. In those states which expanded Medicaid, the uninsured rate dropped to 9.1 percent.

A January survey published by Gallup reached similar conclusions, finding that the uninsured rate among U.S. adults held steady at 12.2 percent in the fourth quarter of 2017, but up 1.3 points since the end of 2016.

CBO: President’s Budget Would Reduce Federal Health Care Spending by $1.3 Trillion

The president’s proposed fiscal year 2019 federal budget would reduce federal spending for health care by $1.3 trillion, or 8 percent, through 2028, the Congressional Budget Office (CBO) concluded in a May 24 report. 

The bulk of the savings, $954 billion between 2019 and 2028, result from the president’s proposal to phase out major provisions of the ACA by replacing federal subsidies with block grants to states. This proposal is similar to the failed health reform plan put forth by Senators Lindsay Graham (R-SC) and Bill Cassidy (R-LA) last fall, and would repeal Medicaid expansion under the ACA, establish per-capita caps and provide $120 billion for block grants to states in fiscal 2020.

CBO also estimated that the proposal similar to the Graham-Cassidy bill would reduce revenue by $143 billion over the 2019-2028 period, primarily due to changes in employment-based insurance coverage, repeal of the advance premium tax credit, and elimination of the employer mandate

In The States

Virginia Governor Vetoes Bills to Expand Non-ACA Compliant Plans

Virginia Governor Ralph Northam (D) has vetoed a slate of four bills Senate Bills 844, 934, 935, and 964) that would have expanded access to non-ACA compliant products, arguing that they would “place consumers at risk of being underinsured and fragment Virginia’s federal Marketplace risk pool, leading to rapidly increasing premiums” in a veto statement.

The four bills under consideration would have allowed short-term plans to run for 364 days, expanded access to association health plans, and let all residents enroll in catastrophic coverage regardless of age. 

“We are fortunate to have a better opportunity to expand health care to people who need it and make it more affordable for all Virginians,” Northam said, noting that expanding Medicaid would help 400,000 people get insurance and return millions to the state budget. The House and Senate remain locked in negotiations over whether to include Medicaid expansion in a state budget bill that must pass by July 1 to avoid a shutdown, but a  deal appears to be in the works that could expand Medicaid after years of resistance from the legislature.

California Healthcare Rate Setting Bill Killed in Committee

A California bill (AB 3087) that sought to curb healthcare costs by imposing price controls, was shelved in the Assembly Appropriations Committee on May 25, killing it for this year. The bill, which would have created a state commission to determine prices for healthcare services, including doctor’s visits, hospital stays and medical procedures, would have applied to the commercial health insurance market and employer-sponsored plans, but would have exempted public plans. It drew support from consumer and labor advocates, but was vehemently opposed by payers, providers and other industry stakeholders. The bill sponsor, Ash Kalra (D), promised to introduce similar legislation in 2019.

California Senate Passes Bill Banning Short-term Health Plans

By a 27-10 vote, the California State Senate passed SB 910, which would prohibit health insurers from selling short-term insurance plans in the state starting on January 1, 2019. The bill, which was introduced in response to HHS’s proposed rule to extend short-term limited duration (STLD) policies from 3 months to a year, defines STLD policies as “health insurance provided pursuant to a health insurance policy that has an expiration date that is less than 12 months after the original effective date of the coverage, including renewals.” Existing state law, which predates the ACA, limits STLD policies to 185 days with one renewal. Perhaps not surprisingly, there are a limited number of short term limited duration policies in California – approximately 2,000 policies according to the state’s Department of Managed Health Care.

The bill now moves to the Assembly for its consideration.

The Week Ahead

The U.S. House of Representatives and Senate are in recess until June 5.