Top takeaways from the week: 1) Senate Republicans are moving closer to compromise and are aiming to pass replacement legislation by the July 4 recess; 2) The Senate Budget Committee announced the Senate Parliamentarian has approved the House-passed AHCA; and 3) CMS released a Request for Information aimed at reducing regulatory burdens imposed by the ACA.

Senate Action –

This week, Senators returned from their 10-day recess initially pessimistic about the fate of their efforts to repeal and replace the Affordable Care Act (ACA). On Monday, Sen. Burr (R-NC) noted, “I don’t see a comprehensive health care plan this year, while Sen. Flake (R-AZ) commented, “There are still some saying that we’ll vote before the August break. I have a hard time believing that.”

On Tuesday, however, staffers presented Senate Republicans with a framework for legislation that had been developed over the recess. Coming out of the meeting, Senators were markedly more optimistic about moving forward with repeal and replacement. Even Sen. Cassidy (R-LA), who has been a staunch opponent of the American Health Care Act (AHCA) (H.R. 1628), commented that he was “very encouraged” by the plans, adding, “It’s very cognizant of pre-existing conditions… of course it’s not everything I want, but that’s life.”

Senators have since said they plan to pass the legislation by the July 4 recess. However, this aggressive timeline means the Senate will need to send legislative text to the Congressional Budget Office (CBO) about two weeks prior to their vote, as reconciliation rules require the CBO to review the legislation to ensure it achieves at least the $133 billion in savings as was found in the House-passed version.

Legislative text has not yet been released, and several significant policy issues are still being worked out, but some details of the framework have emerged.

  • Medicaid Expansion – The bill is expected to provide a longer phase-out of the Medicaid expansion, though the exact timeline is still under discussion. Sens. Portman (R-OH) and Capito (R-WV) have proposed a seven-year phase-out of enhanced federal funding, which would end in 2027. Sen. Heller (R-NV) also indicated his support for the seven-year so-called “glide-path” proposal. Senator Majority Leader McConnell (R-KY) has proposed a shorter, three-year phase-out that would end in 2023. In contrast, the House-passed AHCA would end enhanced federal expansion funding for those not continually enrolled, and would block funding for new enrollees, beginning in 2020.
  • Market Stabilization – The bill is expected to provide more money for insurance market stabilization, such as high-risk pools and reinsurance mechanisms, than the House bill.
  • Insurance Tax Credits – The bill is also expected to authorize more generous tax credits for lower-income consumers and for those aged 50 to 64.
  • ACA Taxes – In order to pay for longer funding for Medicaid expansion, as well as increased spending on tax credits and market stabilization, Senators are considering retaining certain tax provisions.

Additionally, the Senate Budget Committee on Tuesday announced that the House-passed AHCA has received approval from the Senate Parliamentarian, allowing it to overcome a major barrier to moving forward through the Reconciliation process. Democrats have argued that certain pieces of the legislation would not qualify under Senate Reconciliation rules, including the waivers for essential health benefits. Press release from the Senate Budget Committee:

Meanwhile, Sens. Feinstein (D-CA), Leahy (D-VT), Warren (D-MA), Baldwin (R-WI), Harris (D-CA) and Hassan (D-NH) introduced S. 1307, which would amend the Internal Revenue Code of 1986 to expand eligibility to receive refundable tax credits for coverage under a qualified health plan. The bill would cap the proportion of monthly income consumers of any income level are expected to pay for premiums at 9.69 percent, rather than cutting off subsidies at 400 percent of the federal poverty level, as under current law. Press release:

House Action –

Notably, during a House Ways & Means hearing on the President’s FY 2018 Proposed Budget today, Committee Chair Brady (R-TX) argued that Congress should earmark funding for cost-sharing reduction payments, noting, “We should act within our constitutional authority now to temporarily and legally fund cost-sharing reduction payments as we move away from Obamacare. Insurers have made clear the lack of certainty is causing 2018 proposed premiums to rise significantly.” HHS Secretary Price, who was testifying at the hearing, refused to say whether the Administration would continue making the monthly payments.

Administration Action –

Last week, CMS released guidance providing an enforcement safe harbor for product discontinuation notices, providing issuers with flexibility from the requirement that they provide 90-day notice to consumers that a product will be discontinued. The guidance will affect products offered in the upcoming 2018 open enrollment period for the individual market. Guidance:

Today, CMS released a Request for Information (RFI) “seeking recommendations and input from the public on how to create a more flexible, streamlined approach to the regulatory structure of the individual and small group markets.” Responses are due in 30 days. Press release: RFI: