Though President Trump has continued to call for action on repeal and replace in the wake of the Senate’s failed vote at the end of July, congressional Republicans have been fairly muted about possible next steps, a sign of conflicting views of whether it is time to move on to other priorities and smaller fixes to stabilize the Affordable Care Act (ACA) or continue the push for repeal and replace. Now that both the House and Senate have left for August recess, advancing healthcare legislation will wait until September. With congressional action and repeal of the ACA paused at least for now, attention has shifted to how the Administration will administer the law going forward.
Regardless of the path repeal and replace takes next, there are a number of healthcare issues that will need to be addressed in the coming months. Below is a recap of the most pressing issues that Congress and the Administration will need to tackle.
CSR Funding Decisions. President Trump continues to threaten termination of cost-sharing reduction (CSR) payments, but pushback is growing from both Congress and states as more states find the rate impact of the projected elimination of CSRs to be in the 10-20% range. In addition, the President’s authority to unilaterally terminate CSRs has been circumscribed but not eliminated by an August 1 decision by the D.C. Court of Appeals. The decision comes from the three-judge panel reviewing the CSR matter and allows 17 state attorneys general to intervene in the case on behalf of the state interest in continuing the CSRs. Because of this ruling, the President could still carry out his threat, but no longer could claim that he is simply following a court order and would certainly face legal challenges to such action. What remains unclear is how quickly the courts or Congress might react to a presidential decision to end the payments, and how insurers and others would respond in the meantime.
CHIP Reauthorization. The September 30 deadline for reauthorizing federal funding for the Children’s Health Insurance Program (CHIP) is fast approaching. Although CHIP generally enjoys bipartisan support, the reauthorization has been delayed amid repeal and replace discussions and hearings are not scheduled to begin until Congress returns in September. Though many will likely advocate for a “clean” CHIP extension, the highly charged political environment in the wake of the past few weeks’ events could make that complicated. CHIP funding extension will likely come down to the wire in September, with significant debate about whether to maintain current enhanced funding levels, how long to reauthorize funding and whether the CHIP bill will be used to address other aspects of healthcare reform.
FY 2018 Budget. While attention has been focused on the Senate’s repeal and replace efforts, the House Budget Committee considered and passed its FY 2018 budget resolution, which could be voted on by the full House in early September. The Senate Budget Committee has not yet approved its budget. Passing a joint congressional budget resolution is the first step in the annual budget process, which sets spending targets for the upcoming fiscal year. The House Budget Committee proposal includes $5.8 trillion in non-defense budget cuts through 2027; of that amount, $1.5 trillion is based on the Committee’s assumption that the House Republican repeal and replace legislation would be enacted, along with savings from the Medicaid work requirement proposed in the budget. The House budget also includes two sets of reconciliation instructions: (1) budget-neutral reconciliation instructions to facilitate consideration of tax reform legislation and (2) reconciliation instructions to achieve at least $203 billion in mandatory savings and reforms from a range of committees.
Tax Reform. Although it is assumed that the House and Senate will agree to tax reconciliation instructions in the FY 2018 budget resolution, most experts believe moving forward on the FY 2018 budget effectively shuts down the 2017 health reconciliation instructions. Notably, the House FY 2018 budget includes reconciliation instructions for deficit-neutral tax reform; this may be more difficult to achieve if taxes in the ACA remain in place.
State Waivers. With repeal and replace stalled in Congress for the time being, states are expected to ramp up development of proposals to test new program approaches in Medicaid and stabilize their individual markets. We expect an increase in both 1115 (Medicaid) and 1332 (individual market) waivers in the coming months. In particular, state policy makers will be closely watching and waiting for the Administration’s actions on Medicaid waiver proposals from Arkansas, Indiana, Kentucky, Maine, Massachusetts and Wisconsin, and 1332 waiver proposals from Minnesota, Oklahoma, Maine and Oregon.