The October 12, 2017 “Executive Order Promoting Healthcare Choice and Competition Across the United States” gets things rolling, but this ball will have to roll up hill for months before it can roll downhill.  Here’s why.

The meat of this matter is in § 2 of the Order:

Sec. 2. Expanded Access to Association Health Plans. Within 60 days of the date of this order, the Secretary of Labor shall consider proposing regulations or revising guidance, consistent with law, to expand access to health coverage by allowing more employers to form AHPs. To the extent permitted by law and supported by sound policy, the Secretary should consider expanding the conditions that satisfy the commonality‑of-interest requirements under current Department of Labor advisory opinions interpreting the definition of an “employer” under section 3(5) of the Employee Retirement Income Security Act of 1974. The Secretary of Labor should also consider ways to promote AHP formation on the basis of common geography or industry.

The referenced ERISA provision (29 U.S.C. § 1002(5)) says that “’employer’ means any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan; and includes a group or association of employers acting for an employer in such capacity.”

Historically, DOL has taken the view that a controlled group of corporations may have a group health plan that’s regulated in the same way as a plan sponsored by a single business entity, but that plans sponsored by multiple employers (and self-employed individuals) not commonly controlled must comply with relatively stringent and punitive rules for “multiple employer welfare arrangements.”  So-called “MEWA’s” are subject to both ERISA and to state health care insurance regulations, even if they are self-insured by the sponsoring employer group, unless the participating employers are contributing to the plan under contracts with a labor union.  Union-created multi-employer plans are favored in ERISA and in DOL rules.  See 29 CFR § 2510.3-40 and § 2570.151.

Here is an unofficial DOL summary of the dilemma.

[…]  [T]he Department has taken the position that a bona fide group or association of employers would constitute an “employer” within the meaning of ERISA Section 3(5) for purposes of having established or maintained an employee benefit plan. (See: page 8).

However, unlike the specified treatment of a control group of employers as a single employer, there is no indication in Section 3(40), or the legislative history accompanying the MEWA provisions, that Congress intended that such groups or associations be treated as “single employers” for purposes of determining the status of such arrangements as a MEWA. Moreover, while a bona fide group or association of employers may constitute an “employer” within the meaning of ERISA Section 3(5), the individuals typically covered by the group or association sponsored plan are not “employed” by the group or association and, therefore, are not “employees” of the group or association. Rather, the covered individuals are “employees” of the employer-members of the group or association. Accordingly, to the extent that a plan sponsored by a group or association of employers provides benefits to the employees of two or more employer-members (and such employer-members are not part of a control group of employers), the plan would constitute a MEWA within the meaning of Section 3(40).

Multiple Employer Welfare Arrangements under the Employee Retirement Income Security Act (EISA): A Guide to Federal and State Regulation,” p. 22 (U.S. Department of Labor, Employee Benefits Security Administration, Rev. August 2013).

State-by-state MEWA regulation makes operation across state lines quite difficult.  That’s the main problem that we think the President has told DOL to fix.  Our guess is based partly on statements made by Senator Rand Paul (R-KY), the prime mover in this situation.  His October 12, 2017 article published by Breitbart began: “President Trump will today legalize and allow individuals to form Health Associations and purchase insurance across state lines.”  But “today,” “legalize” and “allow” may be premature.

This disruptive executive action will draw heavy, sustained fire.  Opponents may argue that current DOL opinion is the only reasonable reading of ERISA’s relevant provisions, and that any change requires ERISA amendment by Congress.  They may say that enough of the current policy is found in formal rules so that the problem can be fixed only through formal rule-making, subject to judicial review after completion (in 2019, maybe). They will search for and play-up adverse collateral consequences of the policy change contemplated by the Executive Order.  A wise DOL Secretary won’t rush into this dark alley and it’s not clear who would bear the expense and take the risk of Association Health Plan roll-out before all such legal disputes are resolved.  Penalties for flagrant violations of MEWA rules can include jail time.

We’ll be watching this, but we won’t be holding our breath.

 

As you have read here, the Senate’s finest hours were not those spent in July 26, 2017 health care policy debate, which resumed July 27 at 10:00 am EDT.  The bipartisan demagoguery did not diminish, but some Senators on each side rose above that fray and, in the end, Democrats won the narrowest possible victory in a fashion reminiscent of Auburn’s “kick six” win over Alabama.

The presiding officer noted the scheduled 2:15 pm EDT vote on the “Medicare for all” amendment offered by Senator Daines (R-Montana).  Senator McConnell (D-Kentucky) portrayed the Daines amendment as offering Democrats an opportunity to vote for a single payer system.  It didn’t sound like a peace offer; it sounded like a double-dog dare.  Silence fell for a half hour.  As our mothers told us all, “if you don’t have anything nice to say to someone, don’t say anything at all.”

Senator Carper (D-Delaware) broke the ice with a polite presentation noting broad agreement on goals of better insurance coverage of more people for less money, so that this has been, since 1993, an argument about means and methods. He then repeated and expanded on his history lesson from the prior day’s debate, which was one of that day’s few edifying performances.  In 2008, when Japan spent 8% of GDP on healthcare, we spent 18%, he said.  Acknowledging that every American can get emergency health care regardless of insurance or income, he critiqued the associated public costs and noted the cost savings achieved by widely available preventive care.  This wound up being a plea to recommit H.R. 1628 to committee for “regular order” proceedings, despite the lack of a pending motion of that nature.

Senator Schumer (D-New York) took the floor moments before 11:00 am, daring Republicans to offer a bill for final passage, even if that should be the “skinny repeal” bill rumored in the press.  However, he said, should “skinny repeal” be offered, Democrats will offer so many amendments that the extended debate on H.R. 1628 will significantly delay consideration of the National Defense Authorization Act, H.R. 2810.  Senator Schumer signaled that Democrats would not support the “Medicare for all” Daines amendment, because they regarded it as campaign bait.  Again, silence fell for a quarter hour.

Senator McCain (R-Arizona) and Senator Schumer then debated the wisdom of holding the National Defense Authorization Act hostage to the health care debate.  Senator McCain warned of the precedent of blocking a non-partisan defense bill due to dispute over a partisan bill, asking for a two hour interruption of health care debate to pass the NDAA.  Senator Schumer was unyielding in demanding that H.R. 1628 be recommitted as the price of floor action on H.R. 2810 in the foreseeable future.  After Senator McConnell declined that offer, Senators resumed health care discussion.

Senator Lamar Alexander (R-Tennessee), H.E.L.P Committee chair, explained why “repeal” and “replace” should be done in one bill. He forecast a “skinny bill” vote late in the day, conceding that any such bill will just be a vehicle to get to a House-Senate conference committee, where something more complex will be prepared for an up-or-down vote in each chamber.

Beginning around 11:35 am, Senator Peters (D-Michigan) described how insurance made available by the ACA gave a named constituent access to life-saving health care, briefly making a case for health care as a government-guaranteed right.

Senator Sanders (D-Vermont) rose at 11:45, reviving the prior day’s apocalyptic, sarcastic tone of debate, shouting that Republican proposals would cause thousands to be “thrown out of their nursing homes.” He predicted that defunding Planned Parenthood would lead to deaths of “thousands and thousands of Americans every year.”  Only the “top 1%” getting tax cuts would benefit from “throwing disabled children off of health insurance” under “this absurd Republican proposal.”  And the beat went on.  At length, Senator Sanders facetiously congratulated Senator Daines for offering a Medicare-for-all proposal and dared him to vote in favor.  Senator Sanders committed only to vote for his own Medicare-for-all proposal and thanked President Trump for admitting that Australia’s single-payer health care system is superior to ours.  Nearing the end of his time, Senator Sanders advocated federal prescription drug price controls, shamed health insurers for “outlandish” profits and CEO compensation and blamed our “bureaucratic, complicated system” of insurance on the multiplicity of insurers and policy terms.  Senator Sanders asked rhetorically whether Wall Street or drug company executives are “greedier” and personally attacked the Koch brothers for their wealth, showing enlarged photos of a $90,000,000 yacht and a billionaire’s mansion.

At 12:30 pm, Senator Moran (R-Kansas) turned the discussion to the “VA Choice” program that he said will fail within days unless new funding is authorized.  This, according to Senator Moran, is in the stack of legislation waiting for floor action after the health care debate.

Senator Flake (R-Arizona) took the floor at 12:44 pm to ask for immediate passage of H.R. 3298, to facilitate the receipt of public contributions to fund the medical expenses of officers wounded in the recent attempted assassination of Congressional Republicans.  Without objection, it was approved.

Senator Murray (D-Washington) then came to the well to decry a purported Republican plan to pass a “secret bill,” “in the dark of night,” to reach their goal “to kick tens of millions of people off their coverage,” in order to “give a massive tax break to the wealthy.”  Strong letter to follow, we supposed.

Shortly before 1:00 pm, Senator Sasse (R-Nebraska) remarked the unfortunate tendency of every dispute to become a “blood feud” and predicted that demographic and cost trends soon will force a binary choice between government rationing of entitlement medicine and a “disruptive, innovative,” “portable, affordable,” market-driven system.  Senator Sasse lamented that his choice will not be on the floor this week.  This was the Republican version of Senator Carper’s assessment – polite and perceptive.

There followed a “regular order” appeal by Senator Udall (D-New Mexico), who yielded to Senator Heinrich (D-New Mexico), who accused Republicans of a “shockingly rushed and secretive effort” to produce a “secret Trumpcare bill,” in order “to give a massive tax break to the wealthiest among us.”  Mentally ill people will lose their stabilizing medications, grandmothers will be thrown out of closing nursing homes, etc., due to “this appalling legislation.”  In closing, he referred to “real bipartisan solutions,” but identified none.

Senator Bennet (D-Colorado) picked-up on and expounded a point made by Senator Sasse: most uninsured people are uninsured only during short times between jobs, so insurance portability is key to minimizing the number of uninsured, but that is not a subject currently under discussion.  Further, he complained, the health care squabble is preventing agreement on even more pressing problems like infrastructure.  His solution: recommit H.R. 1628 to committee for regular order proceedings.

About 30 minutes before the scheduled vote on the Daines amendment, Senator Sullivan (R-Alaska) addressed the importance of “repealing, replacing and repairing” (emphasis ours) the current healthcare system, predicting that “we will probably be debating all night.”  He then denounced the National Defense Authorization Act hostage situation, noting that the NDAA won unanimous committee approval.

Well before 2:00 pm, the Senate entered a periodic hush, with few Senators on the floor, provoking a quorum call.  In four hours of debate, only Senator Sanders and Senator Sasse seemed to have taken seriously the single payer topic of the Daines amendment.  Finally, Senator Daines took the floor to explain his purpose – i.e., to focus attention on where the current system is heading without basic revision.  To do this, he copied and pasted Rep. Conyers’ (D-Michigan) entire House bill, H.R. 676, to create his H.R. 1628 amendment.  The Conyers bill, Daines said, has 115 House Democrat co-sponsors, and forbids private insurers to sell insurance policies in competition with its “Medicare for all” insurance.  Senator Daines invited Democrats to vote for his amendment or to acknowledge that they do not want to go where the current system is heading.

Another quorum call commenced at 2:18 pm, but was suspended when Senator Sanders rose again to congratulate Senator Daines again, offering to vote for the amendment if “five or six” Republicans also would vote in favor.  Otherwise, said Senator Sanders, Democrats would vote “present.”  As chuckles spread around the chamber, the Clerk began to call the roll.  No Senator voted for the Daines amendment.  All 52 Republicans plus Senators Heitkamp (D-North Dakota), King (I-Maine), Manchin (D-West Virginia), Nelson (D-Florida) and Tester (D-Montana) cast the 57  “no” votes.  The other 43 voted “present.”

At about 3:00 pm, the chair called-up the Strange (R-Alabama) amendment to block tax-funded abortion under the ACA.  However, most Senators had left the floor, none rose to speak, and so mics were muted again.  After about ten minutes, Senator Cornyn (R-Texas) resumed the debate.  Medicaid spending would rise by $71 billion over ten years under H.R. 1628, but that growth rate would be sustainable, unlike the current growth rate, he claimed.  After reciting Republican ACA talking points, Senator Cornyn yielded the floor to Senator Kennedy (R-Louisiana), who began by crediting Democrats with only good intentions when they passed the ACA.  However, he noted, doctors once bled their patients, with solely good intentions. When they learned it didn’t help, they stopped doing it.  ACA supporters are in the same situation, Senator Kennedy claimed.  He called the basic Healthcare.gov policy, “a bus ticket without a bus” and predicted days of remaining debate before a majority solution could be found.

Senator Wyden (D-Oregon) took the floor to claim that the majority’s unseen, rumored “skinny repeal” amendment was written during a just-concluded Republican lunch.  Nevertheless, he predicted severe Medicaid cuts based on a CBO score of a Democrat guess of what might be in a “skinny repeal” bill.  And, he announced a just-released Senate Parliamentarian decision that reconciliation may not be used to pass a “Trumpcare” provision permitting the states to redefine ACA “essential health benefits” and “affordability.”  Senator Wyden invited such states to seek ACA § 1332 waivers from HHS and offered Republicans “bipartisan cooperation” if reconciliation proceedings are abandoned.  Unlike prior speakers, Senator Wyden proposed a specific object of such cooperation: increasing payments to insurers to stabilize individual insurance markets.

Starting at 4:00 pm EDT, Senator Toomey (R-Pennsylvania) gave the Republican response to Senator Wyden, focusing on Medicaid’s need for reform, as part of the fiscal imperative of entitlement reform.  Medicare, Medicaid and Social Security comprise almost all of entitlement spending.  Only Medicaid has no associated, dedicated revenue stream and Medicaid is the fastest growing expenditure, growing much faster than the economy.  Senator Toomey recalled President Clinton’s proposal to cap Medicaid spending and read from Senator Murray’s 1995 letter pledging the support of all Senate Democrats.  The main difference between the 1995 proposal and today’s Republican proposal, said Senator Toomey, is that Republicans propose to impose the caps more gradually than did Senate Democrats in 1995.  Using a series of charts, Senator Toomey then critiqued the CBO scores of the BCRA and of H.R. 1628.

Senator Wyden offered, in rebuttal, to explore Medicaid cost restraint cooperation if the pending bill should be recommitted to the Finance Committee.

Up next, Senator Grassley (R-Iowa) complained of Democrat “hyperbole and fear-mongering,” designed to produce insurance market failure and adoption of single payer healthcare, he said.  Senator Grassley quoted at length from what Senator Daniel Patrick Moynihan said about the need for welfare reform in the mid-1990s, and read the dire, incorrect, predictions of those who opposed reform.  Unusually for Republican speakers thus far, Senator Grassley was as vociferous as any Democrat.

At 4:40 pm EDT, Senator Enzi (R-Wyoming) requested and received approval to hold the Strange amendment vote at 5:00 pm, with a brief interlude then to vote on unrelated H.R. 3364, before resuming debate on H.R. 1628.  Speaking to the ACA generally, Senator Enzi likened it to a 1970’s novelty gift, the Pet Rock, which had great marketing and packaging that did nothing to improve the quality of the rock but greatly increased its cost.

Beginning just minutes before the vote, Senator Strange quickly explained his proposal to extend the Hyde Amendment to ACA Exchange insurance purchase subsidies, so that, starting in 2019, 90% of such subsidies would be covered by the Hyde Amendment.  Senator Schatz (D-Hawaii) then made the expected process objection, Senator Strange requested the needed waiver, and Senators repeated the sort of supermajority vote taken on the Cruz and Heller amendments, with the same result – no waiver.

A round 6:30 pm EDT, Senator Enzi called-up Senator Heller’s amendment to repeal the excise tax on so-called “Cadillac” health insurance plans.  As usual, speakers seemed to ignore the change of tune and kept dancing their preferred dances.  Senator Blount (R-Missouri) explained his view that the individual and employer mandates are unconstitutional.  Senator Lankford (R-Oklahoma) read from constituent letters about the pain inflicted by the individual mandate and rising health care premiums and deductibles, calling the individual mandate a “poverty tax.”  He predicted no bipartisan solution because Democrats will not change or eliminate either mandate.  The “skinny repeal” idea, he said, is necessary because the CBO takes weeks to score each new proposal and can’t keep up with a wider floor amendment process.  He reminded Senators that the skinny plan does not alter pre-existing conditions protections or rules about annual limits, lifetime limits or kids on parents’ plans to age 26.

The big news of the 8:00 hour was the defeat (57-43) of Senator Schumer’s motion to recommit H.R. 1628 to the Senate H.E.L.P Committee with instructions to do something about the Cadillac plan tax.  Senator Heller (D-Nevada) then explained his amendment to kill that tax permanently, with the support of many groups normally aligned with Democrats and the ACA.  The roll call vote on his amendment consumed most of the 9:00 hour, and resulted in passage (52-48).

At 9:52 pm EDT, Senator McConnell offered a strike-all amendment dubbed the “Healthcare Freedom Act of 2017,” which had been released to the public about an hour earlier.  This was the long-awaited “skinny repeal plan.” It zeroed the individual and employer mandate taxes accrued after 2015, repealed the Medical Device Tax for three years, shifted one year of Planned Parenthood funding to community health centers, raised HSA limits and offered states $2B of funding for ACA § 1332 waiver requests and programs.  As soon as Senator McConnell finished speaking, Senator Murray (D-Washington) moved to recommit the “skinny repeal” plan to the H.E.L.P. committee, calling it “Trumpcare.”  Following that lead, Senator Murphy (D-Connecticut) called skinny repeal, “nuclear bonkers” and “health care arson,” designed to protect, “the freedom to go bankrupt” and the “freedom to die early.”

Senator Tester (D-Montana) took a more measured tone, expressing his worry about the consequences of skinny repeal for small rural hospitals.  Senator Brown (D-Ohio) then picked up where Senator Murphy had left off, accusing Senator McConnell of letting drug company and insurance company lobbyists write the amendment in his office.

Senator Manchin (D-West Virginia) renewed his plea that Senate leaders turn this policy debate over to members who had been state governors.

Senator Whitehouse (D-Rhode Island) then accused Republicans of being “beholden to a small handful of creepy billionaires,” and Senator Sanders again reviled the “absurd” process.

Senator Durbin (D-Illinois), using a copy of the amendment as a prop, cited a comment by Senator Graham (R-South Carolina) to the effect that skinny repeal is a fraud.  About 20 minutes later, Senator Kaine (D-Virginia) spoke to the same effect, with the Graham comment printed on a foam core enlargement.

Senator Booker (D-New Jersey) said that the debate had made him physically ill and warned that, “When health insurance rates go down, mortality rates go up.”

Senator Hirono (D-Hawaii) asked Republicans to show for ACA beneficiaries the same compassion that they had shown for her after her cancer diagnosis.  That exhausted the Democrats’ share of the debate time.

Senator Enzi took the floor at 11:09 pm EDT and ran out the clock on the Republicans’ allotted time, rebuffing eight attempts by Democrats to interject comments and questions.  Mostly, Senator Enzi read from and commented on the book, “Demystifying ObamaCare: How to Achieve Healthcare Reform,” by David G. Brown.  At one point of particular frustration with the interruptions, Senator Enzi reflected on former Senator Phil Graham’s warning that Democrats on healthcare “don’t care who drives the train, as long as it wrecks.”

By 12:07 am EDT, July 28, leaders had made a deal to give Democrats ten more minutes and Republicans five more minutes of rebuttal.  Senator Wyden (D-Oregon) predicted that “skinny repeal would be the gateway to full Trumpcare” and Senator Schumer promised that Democrats had “learned our lesson” and wanted to start over.  Senator Cornyn then reminisced about the partisan, secretive process Democrats used to pass the ACA and noted that the only specific cooperation offered by Democrats was to markedly raise payments to health insurers to subsidize their unsustainable losses.

The vote on Senator Murray’s motion to recommit began at 12:20 am and failed, 52-48, but there was obvious tension rising between Senator McConnell and Senator McCain.  The roll call on adoption of the “skinny repeal” amendment to H.R. 1628 began at 1:24 am EDT, with Senator McCain off the floor.  During the vote, Senator McCain re-entered and, standing near (but not facing) Senator McConnell, Senator McCain signaled his “no” vote, to a standing ovation from Democrats.  Senators Collins (R-Maine) and Murkowski (R-Alaska) also voted against the amendment, so that it failed, 51-49.

At 1:39 am EDT, Senator McConnell pulled H.R. 1628 from the floor and spoke words that communicated surrender, in a tone suggesting anything but.

In short, the ACA remains federal law to the same extent as before the November 2016 elections, except that we’re now months closer to IRS enforcement actions.

 

 

Senate floor activity has made this the ACA’s biggest news week not involving Justice Roberts, but whatever news you have read, rest assured that it wasn’t really that simple.  Let us preach on it.

Shortly after noon EDT on July 25, Senator McConnell announced a vote on a motion to proceed to debate the National Defense Authorization Act (H.R. 2810), which actually proved to be a vote on a motion to proceed to debate the House-passed American Health Care Act, H.R. 1628.  With the Vice President providing the tie-breaking vote, that motion passed and debate commenced.

Shortly thereafter, Senator Cruz (R-Texas) offered what’s been called a “skinny plan” amendment that would allow sellers of ACA-compliant plans to sell cheaper alternatives lacking some of the coverages mandated by the ACA.  However, since that amendment, standing alone, would not be filibuster-proof, Senator Cruz needed a waiver of the related budget reconciliation rules.  The motion to waive those rules needed 67 votes, but got just 43.  The roll call showed nine Republicans voting with all Democrats to deny the waiver.

Senator Donnelly (D-Indiana) then moved to send H.R. 1628 back to the Senate Finance Committee (not the Budget Committee) with Medicaid-protective instructions.  The Senate recessed until 9:30 am EDT July 26, then to resume debate, with a vote on the Donnelly motion set for 11:30 am July 26.

This would be the most edgy health care vote taken since March 2010.  Should Senator Donnelly succeed, Democrats would keep the bill alive, at the risk that committee Republicans might get their act together and come up with something that could attract 60 votes later.  Don’t laugh.  It could happen.  Old dogs can and do learn new tricks.  By defeating the motion, Republicans would tee-up a reconciliation rules vote on something yet unseen that might fall short of even 50 votes, thus wasting a one-shot, filibuster-proof process that could have been used to pass tax reform or infrastructure spending, or both.  Indeed, that specter might have motivated some of the nine votes against the Cruz amendment rules waiver.

We watched every minute of hours of persistent, partisan hyperbole that commenced as scheduled on Wednesday morning.  For clarity, consistency and calm reason, the remarks of Senator Rand Paul (R-Kentucky) stood out, except that he was lauding the bill as he would amend it, stripping all the “replace” and leaving only the “repeal.”  At 12:13 pm, Senator Mike Enzi (R-Wyoming) successfully sought to waive a quorum call and to delay the scheduled 11:30 vote until 3:30 EDT, then debate resumed.  The future of healthcare was earnestly guaranteed to be Utopian or Hellish, depending on how fellow Senators voted. Would that Mark Twain, H.L. Mencken, and P.J. O’Rourke had live-tweeted it.

At 12:50 pm, Senator Thune (R-South Dakota) hopefully forecast that keeping the bill on the floor for amendment would lead to final passage … days later.  In a lucid interval from 1:07 until 1:20 pm, Senator Donnelly tried to redirect the debate to the motion actually before the chamber but he, too, succumbed to the tragedian temptation and the next speaker (Senator Chris Van Hollen, D-Maryland) reviled the “nasty DNA” of all Republican “wealth care” proposals, urging Senators to “kill the bill, don’t kill us.”  Nothing is more common than regression to the mean.

Beginning about 2:00 pm, Senator Cornyn (R-Texas) first turned the discussion to the specifics of H.R. 1628 but then returned to the ACA’s evils, Democrat “single payer” desires and associated, asserted motives for obstruction.  Senator Shaheen (D-New Hampshire) responded with an offer of bipartisanship, in the future, with regard to some unspecified but “common sense” solution, if Republicans would first surrender their “harsh, unsustainable” ideas.  Senator Durbin (D-Illinois) made an eloquent appeal for a return to “regular order,” reading from the recent floor speech given by Sen. McCain (R-Arizona).  But, starting at the bottom of the hour, Senator Wyden (D-Oregon) raced back to the bottom, targeting President Trump and “Trumpcare.”  Not to be outdone, Senator Blumenthal (D-Connecticut) then called H.R. 1628 a “shameful, deceitful mockery of democracy,” before closing with a call for mutual respect and civility.  That took us to 2:42 pm, when your humble correspondent mumbled, semi-consciously, “Sharknado, take me now.”

Senator Johnson (R-Wisconsin) rose to offer amendments, one of which would require members of Congress to obtain ACA-compliant health insurance through ACA exchanges.  Each amendment related to the text of H.R. 1628, not to the motion being debated.  Senator Enzi took the floor again at 3:05.  He reviewed how the same partisan reconciliation process was used to pass the ACA in 2010, how many material changes were made by the prior Administration’s “executive actions,” and how premiums soon will “surge” if Congress fails to make other needed changes now. Again, nothing about Senator  Donnelly’s pending motion.  After a quarter hour of muted-mic floor silence, Senator Strange (R-Alabama) made a short plea for consensus opposition to tax-funded abortions.

Fortunately, all things must come to an end, as this seemed to do, starting with a quorum call at 3:32, followed by a roll call vote … on Senator Paul’s amendment, which was defeated, 55 – 45.  Starting at 4:14 pm, the Clerk finally called the roll for the vote on Senator Donnelly’s motion to recommit H.R. 1628 to the Finance Committee.  On that one, Republicans stuck together and prevailed, 52 – 48.  Game on.

You thought we were done for the day?  Rookie.  Seconds after the Donnelly motion’s defeat, Senator Casey (D-Pennsylvania) moved to send H.R. 1628 back to the Finance Committee with instructions to protect in the bill all those protected by the Americans with Disabilities Act, using in his speech an enlarged photo of a disabled constituent and accusing “obscene,” “repeal and decimate” Republicans of seeking to institutionalize people with disabilities.  Because, apparently, when “they” take the low road, “we” tunnel.

Senator Cassidy (R-Louisiana), like Rand Paul a physician,  ignored that bait and added a new Republican talking point: 37% of all ACA Medicaid expansion funds have been spent in just three states – California, Massachusetts and New York.  He then announced a forthcoming “Graham – Cassidy Amendment” to spread that wealth around.  In the best WWF tradition, Senator Cassidy then tagged Senator Graham (R-South Carolina), who used foam-core charts and an easel to explain that “we’re leaving the taxes on wealthier Americans in place,” in order to have the funds to convert Medicaid to state block grants boosting underfunded states without excessive cuts to overfunded states.  West Virginia, he said, would get a 43% Medicaid raise.  Montana Medicaid funding would double.   There was no ad hominem argument, no name calling – just observations and proposed solutions.  Apparently filling time, Senator Inhofe (R-Oklahoma) took the floor for a few minutes to praise President Trump and “my hero Jeff Sessions.”  Senator Enzi then announced that the next votes would be on the Heller Amendment (not yet described) and the Casey motion.

Senator Carper (D-Delaware) spoke at length on the recent history of federally-funded health care, noting that the Heritage Foundation originally conceived several solutions adopted by the ACA, including health insurance exchanges, as an alternative to the single-payer system proposed by Hillary Clinton in 1992-93.  “Romneycare” was prominently mentioned. If Republicans winced, they weren’t on camera.

After two more Democrats denounced “Trumpcare” and the vote-a-rama process, Senator Heller (R-Nevada) was recognized to tout the Heller Amendment.  However, he discussed only the desirability of Medicaid expansion protection, offering no details of his proposal.

Senator Duckworth (D-Illinois) then related a sympathetic story about a quadriplegic constituent and accused Republicans and President Trump of “threatening her life.”

Senator Casey rose again to try again to explain why ACA Medicaid expansion is needed to protect the rights created by the ADA, calling the Heller Amendment mere “sentimentality,” without any binding effect.

At 6:10 pm EDT, the Clerk began to call the roll on Senator Casey’s motion to recommit H.R. 1628 to the Finance Committee.  Republicans prevailed, 51-48, whereupon Senator Heller summarized his amendment, expressing the sense of the Senate that the bill is not intended to reduce Medicaid eligibility, benefits or coverage.  Senator Sanders (D-Vermont) interposed a procedural objection and Senator Heller sought a waiver, just as Senator Cruz had done, but won only 10 votes.

At 7:10 pm, Senator McConnell called-up an amendment proposed by Senator Daines (R-Montana).  Senator Schumer (D-New York) then announced that Democrats would offer no further amendment unless and until Republicans put on the floor a final bill offered for passage.

On the heels of that ultimatum, Senator Reed (D-Rhode Island) renewed the bipartisan cooperation offer made earlier by Senator Shaheen, then yielded the floor to Senator Franken (D-Minnesota), who decried the Republicans’ “reckless, irresponsible” plan to “gut Medicaid,” so as to deprive a named, autistic child of the “therapy he needs to thrive.”  Other examples followed.  Republican health care philosophy, he said, is “survival of the fittest.”  In closing, he urged his colleagues to “stand up to the lies.”

Following Senator Franken, we were treated to a speech by Senator Whitehouse (D-Rhode Island) on the merits of a carbon tax.

Finally, just before 8:00 pm, Senator Enzi announced that debate on H.R. 1628 would resume at 10:00 am EDT July 27, with a vote on the Daines amendment set for 2:15 pm.  Who knew health care could be so complicated?

The hero has disappeared in a cloud of suspicion and is presumed dead, so much so that supposed friends are found to be celebrating his passing.  This is just as it should be at the end of Act II.  Remember when Republicans rejoiced over the apparent abandonment of H.R. 3200 in October 2009?  It furnished the foundation for H.R. 3590, which became Public Law 111-148 (one of the two statutes that comprise the ACA) in March 2010.  Capitol Hill is short on many things, but there are plenty of plot devices available to move this story forward before the elections in November 2018.  Passing the 2015 partial repeal bill again soon probably is a long shot.  But ACA subsidies may seem less sacrosanct after ACA taxes really begin to bite in early 2018, and ACA architects may rue their decision to give the HHS Secretary such wide discretion to grant § 1332 waivers.

When lawyers talk about “waivers,” we normally have in mind contracts to surrender certain legal rights in exchange for something else deemed more desirable.  Section 1332 waivers are something entirely different.  Codified as 42 U.S.C. § 18052, this ACA text empowers the Secretary to approve state plans to alter, and perhaps dispense with, these ACA provisions, for up to five years:

  • ACA § 1301-1304 (including “essential health benefits” and “qualified health plan” definitions);
  • ACA § 1311-1313 (state-operated ACA Exchanges);
  • ACA § 1402 (cost-sharing subsidies); and
  • Code § § 36B (premium subsidies), 4980H (employer mandate) and 5000A (individual mandate).

The Secretary may grant a state’s waiver request only after finding that it would achieve at least equivalent coverage and cost-sharing protections without increasing the federal deficit.  But the ACA also required the former Administration to do things that it didn’t do, and to enforce things it didn’t enforce.  Employer mandate taxes were to accrue beginning in 2014.  There was no “transition relief.”  The ACA killed so-called “grandmothered plans” outright.  Those and many other politically problematic dictates were delayed, ignored or amended administratively, sometimes very informally. We won’t be surprised if this Administration uses § 1332 waivers to allow states to “fix” perceived ACA problems that can’t or won’t be fixed by Congress.

Of course, facile findings made to facilitate waivers would provoke years of litigation ending with Supreme Court pronouncements… after November 2018 …maybe after November 2020.  So maybe we should discount that possibility.  [Insert your preferred emoji here.]

Update:  Well, that accelerated quickly.  The Senate Budget Committee web site now features a link to an 18-page draft bill called The Obamacare Repeal Reconciliation Act of 2017.  Here are highlights of what seems clear on first reading.  The bill appears to –

  • Uncap the recapture of excess premium tax credit payments;
  • Terminate at the end of 2019 the ACA’s small business tax credits, premium tax credits and cost sharing payments, while expressly authoring cost-sharing payments to be made through 2019;
  • Set the individual mandate and employer mandate taxes at $0, retroactive to January 1, 2016;
  • Defund Planned Parenthood for one year, offset by boosting Community Health Center funding by $422M;
  • Phase-out Medicaid expansion;
  • Repeal DSH payment reductions;
  • Suspend Cadillac plan taxes until 2026;
  • Repeal taxes on over-the-counter medications, repeal the prescription medicine tax, repeal the medical device tax, the tanning tax and the health insurance tax beginning January 1, 2018;
  • Repeal the net investment tax retroactive to January 1, 2017;
  • Repeal FSA contribution limits beginning January 1, 2018;
  • Authorize $1.5B of new anti-addiction spending in FY2018-19.

This is the simplest, skinniest health care “repeal” bill you are likely to read, so you should.

 

The pundits and political partisans apparently stopped reading before the heading on page 9 of the CBO’s June 26 report on the Better Care Reconciliation Act (BCRA) Discussion Draft, “Uncertainty Surrounding the Estimates,” which the CBO conceded to be “inherently inexact,” given the complexity of possible reactions to BCRA passage.  Going further, the CBO disclosed that its estimates are based on a March 2016 baseline that materially overstated ACA Exchange enrollment and underestimated average subsidy payments per enrollee. In short, the CBO is confident of the direction that BCRA would push health care markets, but not of the magnitude of any move in any market.   So if you read or hear that BCRA “will” do this or that, rest your eyes or ears.  Here’s what we found interesting in the CBO report.

Turn all the way back to Table 4, three pages from the end. By the end of 2018, compared to the ACA projection (using the 2016 baseline analysis) about seven million fewer will have individual policies if BCRA passes.  The report cites two main reasons:  many who don’t want to buy insurance won’t buy it once the individual mandate vanishes and some who do want it won’t be able to afford it because subsidies will be less generous for those just above the Medicaid eligibility line and we mature Americans will pay more of our true cost.  Medicaid rolls will be slimmer by about four million people, mainly due to the lack of new states expected (in 2016) to adopt Medical expansion and the reduced federal funding of expansion.  Employers will drop coverage for about four million, because there will be no employer mandate.  The aggregate spread, fifteen million, is projected to rise to twenty-two million people by 2026, with Medicaid restraint accounting for fifteen million and individual policy purchases accounting for seven million of the spread. Between 2018 and 2026, the total under-65 population will rise from 274 million to 280 million (2.5%), with the uninsured population rising from 26 million (9.5%) to 49 million (17.5%).  The newly uninsured would be concentrated among those not yet eligible for Medicare and not poor enough for Medicaid.  However, the analysis ignores insurance that would not qualify for sale on an ACA Exchange today.  Some number of the “uninsured” would purchase hospital indemnity plans, catastrophic coverage, skinny med plans, etc.

The report acknowledges that BCRA imposes a six month waiting period for individual market applicants who have allowed coverage to lapse, but it’s not clear how, if at all, CBO considered that to offset the consequences of individual mandate elimination.

According to the CBO, BCRA would free-up about $321 billion of budgetary capacity. The report does not consider the extent to which job gains incident to related tax reform could boost employer-provided coverage.

What insureds pay would rise in the short term, CBO predicts, largely because the demise of the individual mandate would allow relatively healthy people to leave the market without tax penalty. Other factors could include states using § 1332 waivers to drop expensive treatments from Essential Health Benefits. But by 2020, that trend would reverse, and insureds would pay less than under the ACA, left unchanged.

There’s much more worth reading; it’s quite educational, but maybe not prophetic.

Many other things being equal, the longer the sail boat, the faster it can go before its bow wave defeats further speed increase.  However, as any boat approaches its “hull speed,” an increasing amount of energy is required to add each new increment of speed.   And so it is with health insurance.

When all parties in a debate cite the same figures, don’t bother arguing with the numbers.  So let’s assume that about forty cents of each health care dollar goes to care for people with multiple, chronic conditions and that about 5% of the insured population accounts for about 50% of health care costs.  If the insured population’s median age is rising then, other things being equal, those numbers will not improve in the near term.

In a fully free market, many mature Americans (like your humble correspondent) would be uninsurable.  That being politically unpalatable, the federal government since HIPAA has made it increasingly difficult to exclude us from insurance pools.  The ACA virtually outlawed it. But, like a boat approaching its hull speed, a scheme of health care financing that transfers dollars from the healthy to the unhealthy will need an increasing number of dollars for each added increment of coverage of the increasingly unhealthy.  The ACA approach is minimum standard coverage for all at any cost.  Any sincere attempt to stabilize insurance markets and lower premiums and deductibles for the 95% would have to exclude some of the 5% from those markets.

So what does the Senate bill do?  Not much.  The term “pre-existing” does not appear in the bill.  No health status discrimination prohibition is repealed and a new one is added, to prevent Small Business Health Plans from paying eligible bad risks to enroll in individual coverage.  Simply put, the Senate decided to punt.  So did the House, but the House punted to the states, which were given a bigger role in striking this balance.  Those express, direct provisions are missing from the Senate bill, so the question is what it allows implicitly and indirectly.

Section 106 appropriates $50B for 2018 through 2021 for CMS to use to, among other things, assist participating health insurers and states to “provide financial assistance to high-risk individuals … who do not have access to health insurance coverage offered through an employer, enroll in health insurance coverage under a plan offered in the individual market ….”  There is an overlapping appropriation of $62B from 2019 through 2026 for “long term state stability and innovation allotments,” with no state match required until 2022.

Section 206 makes ACA § 1332 waivers (42 U.S.C. § 18052) more attractive to states.  Each application must state how the state’s proposed plan would “take the place of the requirements described in paragraph (2) that are waived … and provide for alternative means of, and requirements for, increasing access to comprehensive coverage, reducing average premiums, and increasing enrollment ….”  This seems to grant CMS discretion to approve waivers of any paragraph (2) requirement.  That paragraph reads:

The requirements described in this paragraph with respect to health insurance coverage within the State for plan years beginning on or after January 1, 2014, are as follows:

(A) Part A of this subchapter.

(B) Part B of this subchapter.

(C) Section 18071 of this title.

(D) Sections 36B, 4980H, and 5000A of title 26.

Section 18071 describes the current ACA cost-sharing reduction program for individuals enrolled in ACA Exchange coverage.  Code § 36B describes the premium tax credit program for those enrollees.  Code § 4980H imposes the large employer mandate to offer affordable, minimum value, minimum essential coverage to at least 95% of full-time employees and their dependents.  Code § 5000A imposes the individual mandate to enroll in minimum essential coverage.  The Senate bill zeroes the individual and employer mandates and term limits the coverage subsidies.  There would seem to be no incentive to seek a waiver from those.

ACA § 1332 is found in Chapter 157, Subchapter III of Title 42.  Part A consists of sections 18021 through 18024.  Part B holds sections 18031 through 18033.  Here are the section headings.

  • 18021. Qualified health plan defined
  • 18022. Essential health benefits requirements
  • 18023. Special rules
  • 18024. Related definitions
  • 18031. Affordable choices of health benefit plans
  • 18032. Consumer choice
  • 18033. Financial integrity

Section 18021 describes the sort of plans that may be sold on ACA Exchanges. Section 18023 relates to funding of coverage for abortions.  Section 18024 defines large and small employers and group markets.  Sections 18031 – 33 relate to state exchanges.  The meat of this matter, apparently, is that CMS may permit states to define § 18022 “essential health benefits” so as to reduce the cost of insurance for those who prefer to buy relatively limited coverage.

Codgers like your correspondent are unlikely to buy that cheaper coverage but our young, healthy children and grandchildren may line up to buy it.  That could reduce the wealth transfer effect of the ACA’s protection of those with pre-existing conditions, but only marginally and indirectly.

That seems to be about it.  The Senate bill does not repeal ACA, ADA or HIPAA protections for those with pre-existing conditions.  It adds spending to help insurers bear the cost of our bad risks and allows states to expand cheaper insurance options for those who don’t want to swim in the same risk pools with us.

The “Discussion Draft” released June 22, 2017 by the Senate Budget Committee carries the House Bill number (H.R. 1628) of the American Health Care Act, and kills taxes like the House bill, but there are major differences, too.  At 142 pages, the Discussion Draft is less than one-sixth the heft of the ACA but it’s a brutal read.  Here are a few of the highlights that can be explained simply in this format, as we prepare for a likely vote-a-rama sometime before July 4.

It’s been re-named the “Better Care Reconciliation Act of 2017.” There’s a message in that moniker.  No Senate Republican will consider this the best they can do.  The hope is that 50 will consider it better than the status quo and therefore good enough for government work.

The premium tax credit subsidies for individual policies purchased through an ACA Exchange survive, though trimmed a bit. The household income eligibility limit drops from 400% to 350% of the federal poverty level.  If excess subsidies are paid, the feds will be allowed to recover the full amount of the excess payments and can add a 25% (up from 20%) penalty for materially incorrect credit applications. Also, the credits will be based on the premium for a “median cost benchmark plan” rather than the second lowest cost silver plan, and the new benchmark plan can have an actuarial value as low as 58%.  Similarly, it may become harder to qualify for the premium subsidy based on the high premium or low value of an employer coverage offer based on how Code § 36B affordability and value are redefined.

BCRA expressly funds ACA § 1402 cost-sharing reductions through 2019 but repeals the program at the end of that year.

Community rating survives but states may elect an age ratio as high as 5 to 1 beginning in 2020. Also starting in 2020, states may take control of medical loss ratio and rebate rules.

The small employer tax credits under Code § 45R disappear after 2019.

The individual and employer mandate taxes stay on the books but the rates and amounts are set at ZERO after 2015. This permits the IRS to assess and collect 2015 taxes.

These taxes are eliminated, with these conditions:

  • The Cadillac plan tax of Code § 4980I disappears from 2019 through 2025 but reappears in 2026;
  • The $2,500 annual FSA contribution limit ends this year;
  • The ACA § 9008 prescription drug tax also expires this year, along with the medical device tax in Code § 4191, the tanning tax of Code Chapter 49 and the health insurance tax of ACA § 9010;
  • The net investment tax is repealed retroactive to January 1, 2017;
  • The Medicare tax of Code § 3101 is cut back beginning in 2023.

HSA contribution limits will match out-of-pocket plan maximums and both spouses will be allowed to make HSA catch-up contributions.

Beginning one year after enactment, BCRA also creates a new legal entity – the fully-insured, single sponsor, multi-employer/member “Small Business Health Plan,” regulation of which is primarily federal, with broad ERISA pre-emption of state regulation. A federally-registered SBHP may issue coverage across state lines with just limited exposure to regulation by its “home” state.  However, the approved plan must forbid participating employers to fund individual market coverage for otherwise eligible employees based on the health status of those employees.

You have just read a very high-level summary of about 40% of the text of this Discussion Draft. The remaining 60% proposes significant changes to Medicaid, DSH payments and state health care program funding and administration.  Those are so complex that we’ll await an actual bill to review.

In the wee hours of May 5, 2017, a state governor awoke, startled.  Late on May 4, he or she had been briefed on the Patient and State Stability Fund and the Federal Invisible Risk Sharing Program described in § 132 of the American Health Care Act.    The reptilian brain was working, as always, in the background until it brought the body bolt upright in bed.  Our governor mumbled, “Billions would flow annually to states and insurers to fix the problems that Washington couldn’t fix.  The governor who succeeds will be the next President.”

Our hypothetical governor wasn’t dreaming.  If the AHCA becomes law, beginning in 2018, over $15B annually will be spent on this experiment.  Most of that money will fund state waiver programs that will be auto-approved, from 2018 through 2026, unless affirmatively rejected by CMS within 60 days of filing.  See AHCA § 132, adding to the Social Security Act new § 2203.

Of course, strings will be attached.  Applications for 2018 funding must be submitted within 45 days of AHCA enactment, in a form and manner yet to be prescribed by CMS.  Each application must certify, “that the State will make, from non-Federal Funds, expenditures for such purposes in an amount that is not less than the State percentage required for the year under section 2204(e)(1).” And, CMS will have to decide what to do if different state officials submit competing state plans, because the statute does not address that issue.  If no 2018 plan is received, or if the state plan is rejected, then CMS will coordinate a Default Federal Safeguard program with the state’s insurance commissioner.

This isn’t Medicaid expansion by another name.  The use of funds permitted by new § 2202 is broader, including assistance to high risk individuals, individual and small group market stabilization, facilitating access to preventive services, and payments directly to providers.  Plainly, the AHCA seeks to encourage local innovation.

Somewhere, perhaps soon, some governor will study this with staff, come up with something others consider crazy, and repeat these words famously spoken by Dr. Frederick Fonkensteen – “IT . . . COULD . . . WORK!”

____________

*See New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting)

 

Watching from afar the Scouts attempting to earn their orienteering merit badges, we could see it on the boys’ faces.  They were lost; they were scared.  They should have reached their destination an hour ago.  Soon, these woods would be dark.   The compass holder, the map marker and the step counter resumed their running argument. We wondered whether to intervene.  Then, the class clown smiled . . . and pointed . . . at a rusted, single-wide trailer they had seen before, very near their departure point.  In five hours, they had come full circle.  They had done a lot wrong and were glad just to know how to get back to our campfire. Success could wait.

And so it is with ACA repeal.  A better-planned, better-executed effort may be mounted, but probably not soon.  Between now and then, 2015 employer mandate taxes will be assessed and collected, and perhaps 2016 taxes, too.  OSHA will investigate the retaliation complaints of employees discharged after triggering those tax assessments by seeking ACA Marketplace subsidies.  Form 1094-C / Form 1095-C reporting penalties will be imposed.  Group health plans will be audited for ACA compliance.  Temp staffing and employee leasing arrangements will be disrupted by those developments.  Consequently, we now return you to our regularly scheduled program.  If ACA compliance has been sidelined or forgotten in your organization, now would be a good time to tune-in.

Here are the highlights we took (quickly) from this afternoon’s Congressional Budget Office Cost Estimate for the American Health Care Act.

The AHCA “would reduce federal deficits by $337 billion over the 2017-2026 period.”

In 2018, “14 million more people would be uninsured under the [AHCA] than under current law. Most of that increase would stem from repealing the penalties associated with the individual mandate.”  Mostly due to reduced Medicaid rolls, that number would rise to 21 million by 2020 and then to 24 million by 2025.

“[T]he [individual health insurance] market would probably be stable in most areas under either current law or the [new] legislation.”

“Even though the new tax credits would be structured differently from the current subsidies and would generally be less generous for those receiving subsidies under current law, the other changes would, in the agencies’ view, lower average premiums enough to attract a sufficient number of relatively healthy people to stabilize the market.”

“The [AHCA] would tend to increase average premiums in the [individual health insurance] market prior to 2020 and lower average premiums thereafter, relative to projections under current law.”

“Under the [AHCA], insurers would be allowed to generally charge five times more for older enrollees than younger ones rather than three times more as under current law, substantially reducing premiums for young adults and substantially raising premiums for older people.”

“With less federal reimbursement for Medicaid, states would need to decide whether to commit more of their own resources to finance the program at current-law levels or whether to reduce spending by cutting payments to health care providers and health plans, eliminating optional services, restricting eligibility for enrollment, or (to the extent feasible) arriving at more efficient methods for delivering services.”

“Beginning in 2020, the [AHCA] would repeal [ACA actuarial value] requirements, potentially allowing plans to have an actuarial value below 60 percent. However, plans would still be required to cover 10 categories of health benefits that are defined as “essential” under current law, and the total annual out-of-pocket costs for an enrollee would remain capped. [C]omplying with those two requirements would significantly limit the ability of insurers to design plans with an actuarial value much below 60 percent.”

CBO expects that, “businesses that decided not to offer insurance coverage under the [AHCA] would have, on average, younger and higher-income workforces than businesses that choose not to offer insurance under current law.”

“The [AHCA] would eliminate [the ACA’s DSH] cuts for states that have not expanded Medicaid under the ACA starting in 2018 and for the remaining states starting in 2020, boosting outlays by $31 billion over the next 10 years.”

“The [AHCA] would provide $2 billion in funding in each year from 2018 to 2021 to states that did not expand Medicaid eligibility under the ACA. Those states could use the funding, within limits, to supplement payments to providers that treat Medicaid enrollees.”

“The [AHCA] would make a number of additional changes to the Medicaid program, including these:

  • Requiring states to treat lottery winnings and certain other income as income for purposes of determining eligibility;
  • Decreasing the period when Medicaid benefits may be covered retroactively from up to three months before a recipient’s application to the first of the month in which a recipient makes an application;
  • Eliminating federal payments to states for Medicaid services provided to applicants who did not provide satisfactory evidence of citizenship or nationality during a reasonable opportunity period; and
  • Eliminating states’ option to increase the amount of allowable home equity from $500,000 to $750,000 for individuals applying for Medicaid coverage of long-term services and supports.”