Election Results Bring Change in Health Priorities

The 2018 midterm elections changed the balance of power in Washington, DC, with important implications for health policy.  In the House of Representatives, Democrats picked up at least 28 seats (with several races still too close to call when this article was published), gaining control of the chamber. In the Senate, Republicans held their majority, with at least 51 Senate seats going to Republicans.

At the state level, Democrats picked up seven governorships, which could have important implications for the future of Medicaid and implementing the Administration’s agenda.

The article below examines the effect of the election on a number of high priority issues for health care stakeholders.  Overall, we expect a fair amount of gridlock in Washington and a significant ramp of House Democrats’ oversight activity aimed at the Trump administration.  However, there are a few areas of potential compromise that could emerge.

ACA REPEAL AND REPLACE

Issue: In 2017 and 2018, Republicans pursued a variety of approaches aimed at reshaping the Affordable Care Act (ACA). While congressional Republicans succeeded only in repealing the tax penalty associated with the individual mandate, the Trump administration reshaped a number of ACA policies, including offering coverage alternatives, such as short-term, limited duration plans; association health plans; and reforms to health reimbursement accounts. The past year also brought numerous legal challenges, including a lawsuit still pending in a federal district court in Texas challenging the ACA’s constitutionality that put pre-existing conditions protections back in the spotlight, and formed a central campaign theme for Democrats.

Analysis: The Administration likely will continue its efforts to redesign the ACA, as illustrated by another ACA-related waiver rule issued by the Centers for Medicare and Medicaid Services (CMS) the day after the midterms. Democrats will internalize the priorities expressed by voters in newly-won districts, and emphasize support for the ACA.  Expect Democrats to use their victory in the House to continue to make health care coverage and patient protections a central issue in the lead-up to the 2020 presidential election. House Democrats will use their oversight authority to challenge the administration’s efforts to reform ACA coverage and to push coverage expansion legislation, including some version of Medicare for All, a Medicare buy-in or a public plan option. Even if such a plan could get through the House, these proposals almost certainly would fail in the Senate or be met by  a presidential veto. Nonetheless, these proposals and efforts will shape the Democrats’ agenda heading into 2020, so stakeholders should take note of which ACA support and coverage expansion proposals emerge to better forecast potential policy directions two years hence.

Wild Card: The Texas case and other ACA-related lawsuits will continue to make their way through the court system, challenging the legality of new coverage options and the constitutionality of the ACA. Expect appeals to draw these challenges out over the next year and possibly longer, but to potentially create critical need for congressional or administrative intervention should a court fundamentally undermine the ACA.

MEDICAID

Issue: The ACA’s option for states to expand Medicaid coverage has become a hot button political issue, with a sharp divide in approach among red and blue states. In general, most Democratic-leaning states have expanded Medicaid, while most Republican-leaning states have not. There are some notable exceptions given the Trump administration’s flexibility allowing states to add work requirements through a looser waiver process. Democrats in Congress have introduced legislation to give states the option to further expand Medicaid coverage using a so-called Medicaid Buy-in.

Analysis: Democrats may attempt to limit the administration’s authority as it relates to restrictions on eligibility and enrollment (e.g., work requirements). In addition, in states where Democrats picked up control of governor’s mansions and/or state houses, (e.g., Kansas, Maine, Wisconsin), or where the electorate approved ballot measures expanding Medicaid passed (e.g., Idaho, Nebraska and Utah), Medicaid expansion could be pursued.

Wild Card: As Democrats evolve their thinking on single payer, Medicaid buy-in has emerged as a potential alternative or complementary policy strategy. With more states potentially embracing Medicaid expansion, House Democrats could lead an effort to move a Medicaid buy-in option through Congress.  These efforts would primarily be about defining the party for 2020, as these kinds of proposals would not be likely to pass the Senate or garner support from President Trump.

PRESCRIPTION PRICING

Issue: On the 2016 campaign trail, then-candidate Trump promised to lower the cost of prescription drugs. As President, Mr. Trump has made prescription drug costs a top health policy priority. In May 2018, the Trump administration released the American Patients First Blueprint, a plan to lower drug prices and reduce beneficiary out-of-pocket spending on drugs. Congress held hearings on the topic, and the Administration released requests for information, proposed rules and notices to implement aspects of the Blueprint. Just before the midterms, the Administration released an advanced notice of intent to regulation using an International Price Index (IPI) model, intended to reduce the price Medicare pays for certain Part B drugs by using the prices other countries pay as a proxy and ceiling.

Analysis: Expect the pressure on prescription drug pricing to continue. The Trump administration will continue to roll out policies included in its Blueprint and other related policies. While it is unclear whether the IPI model can withstand the political pressure that ultimately tanked a similar proposal from the Obama administration, additional proposals are expected. Prescription drug pricing is one of a handful of areas of potential bipartisan agreement, since both parties agree on a common goal – lowering prescription drug costs – if not on specific policies to achieve that goal. Expect House Democrats to use oversight authority to draw more attention to this issue, with a particular focus on how manufacturers determine initial cost and make decisions to increase the price (e.g., EpiPen).

Wild Card: Senior Democrats on the House Energy and Commerce Committee have long sought changes to give the Secretary of Health and Human Services negotiating power under Medicare Part D—changes that President Trump supported in the past, signaling that this could be an area of bipartisan action.

340B

Issue: Within the broader prescription drug pricing debate, the Administration and Republican-led Congress set their sights on the 340B program as an area for potential cuts and reforms. The Republicans held numerous hearings this past year scrutinizing the 340B program. These hearings highlighted, among other things, the lack of consensus among lawmakers on what changes may be necessary. While Congress continues its examination of the program, the administration has systematically changed the value proposition of 340B through various payment-related changes.

Analysis: With Republicans holding the Senate, expect the Senate Health, Education, Labor & Pensions (HELP) Committee to continue its inquiry under the health care cost umbrella. The House, now under Democratic control, may shift focus away from the 340B program and toward more broadly lowering the costs of prescription drugs.

Wild Card: If the Senate makes progress on bipartisan legislation, House Democrats may seriously engage and advance legislation.