The Washington PostDemocracy Dies in Darkness

The Health 202: Obamacare's centerpiece is hanging by a thread


with Paulina Firozi


The centerpiece of the Affordable Care Act — its infamous requirement to buy health coverage — is really, truly in hospice care, eight years after its birth.

As Senate Republicans aim to pass their tax overhaul despite a big bump last night, some significant health-care pieces are also in play. Not only is the GOP still desperate to repeal some part of Obamacare, but health care is also a major expense for the government via its big insurance programs and various tax breaks.

The most controversial health-related piece at stake in the Senate tax plan — and also the most likely to stay in a final tax agreement with the House  — is repeal of the ACA’s individual mandate to buy coverage or pay a fine.

But the final tax bill could also open the door to annual Medicare cuts if Democrats refuse to join Republicans in waiving what’s known as “paygo” rules. And it may also erase or whittle down two tax breaks that help people with steep medical expenses and incentivize drugmakers to develop treatments for rare diseases that might be less profitable to treat.

Some of these elements are contained only in the tax bill the House passed two weeks ago, while other components are only in the Senate version that the chamber is struggling to pass right now. Last night, the fast-moving bill unexpectedly stalled as several conservatives demanded that it not drive up the nation's debt, forcing leadership to consider ways to alleviate those concerns in order to get the 50 votes they need to pass it.

"Now, Republican leaders may have to brace for an intraparty battle over how far to go to accommodate deficit concerns," my colleagues Damian Paletta, Erica Werner and Mike DeBonis report. "Other Republicans are arguing strongly against reducing the size of the bill’s tax cut, as may now be necessary to satisfy the deficit hawks."

Assuming senators ultimately pull their package across the finish line -- and as things stand now, it's a big "if" -- lawmakers from both chambers would then have to merge the two versions in a conference committee. Let’s look at the major health-related elements in the tax debate, and their likelihood of actually becoming law:

1. Individual mandate repeal.

If the Senate manages to pass its tax bill with repeal of the mandate, even over the concerns of some moderates, it’s hard to see how mandate repeal won't make it into a final bill, too. It’s safe to say that a majority of House members are pretty gung-ho about getting rid of the least-popular part of Obamacare.

In Republicans’ minds, this is a win-win strategy.

One, it gives them hundreds of billions more dollars ($338 billion over a decade, according to the Congressional Budget Office to fund tax cuts. Two, repealing the mandate makes passing a future health-care bill potentially easier: It disposes of a major reason previous GOP measures were projected to result in fewer Americans with coverage. If the mandate is repealed, future GOP health-care bills would compare more favorably to current law.

2. The potential for Medicare cuts.

Let’s assume for a moment that Congress passes — and President Trump signs — a final tax overhaul that raises deficit spending (a Joint Committee on Taxation report released late yesterday showed the measure would add at least $1 trillion to the deficit over 10 years, even after economic growth is accounted for). If lawmakers don’t waive a 2010 rule known as “paygo,” aimed at keeping government spending in check, that deficit spending would trigger automatic cuts to mandatory spending.

That’s where Medicare cuts come in. Although the mandatory cuts are limited to 4 percent of the program, that still translates to a hefty sum of $25 billion in cuts to future Medicare spending starting next year, because the health insurance program for seniors is so big. 

Sen. Susan Collins (R-Maine), who generally opposes cuts to entitlement programs, has said that Senate Majority Leader Mitch McConnell (R-Ky.) has promised her the cuts won’t happen, because Congress will waive "paygo" rules. But such a decision is beyond McConnell’s ability to control. Waiving "paygo“ requires 60 votes in the Senate, and it’s not at all clear that Democrats would be willing to help Republicans save themselves from mandatory cuts.

3. Repeal of the medical expenses deduction.

The House bill fully repeals this tax break, which allows people to deduct from their taxes qualified medical expenses that exceed 10 percent of their income (for seniors, the threshold is 7.5 percent of their income). The credit was created during World War II, intended to give Americans a form of tax relief during wartime.

But the Senate version leaves the popular tax break intact, and lobbyists say a final bill probably will, too, given the pushback from seniors and disability rights groups.

4. Repeal of the orphan drug tax credit.

Repeal of this tax break seems more likely to stay in a final tax agreement, according to those tuned into deliberations on Capitol Hill. Right now, the breakdown in the chambers is the same as for the medical expenses deduction; the House version repeals it and the Senate version leaves it alone.

The credit benefits makers of treatments for “orphan diseases,” which affect fewer than 200,000 people. Congress passed it in 1983 as part of a bucket of incentives for pharmaceutical companies to develop drugs needed by much smaller patient populations. Pharma doesn’t want to see it go, but the industry might be willing to swallow a repeal, lobbyists say. So, a repeal could end up in the final package.


--The three GOP senators who sank the Senate's health-care bill back in July now appear to be on board with the GOP tax overhaul, even though it would repeal the ACA's individual mandate. Sens. John McCain of Arizona and Lisa Murkowski of Alaska say they're backing the measure, and Sen. Susan Collins of Maine has indicated she's close to signing on. Both Collins and Murkowski have partially justified their support for the tax bill by noting that the health-care bill would have repealed much more of the ACA and defunded Planned Parenthood.

“The skinny repeal bill had many other provisions in it,” Collins told the Washington Examiner. “It repealed the employer mandate, eliminated funding for Planned Parenthood and had many other provisions and so it is not comparable at all [to mandate repeal].”

But here's a wild card with the potential to swing Collins's vote: that bipartisan measure from Sens. Lamar Alexander (Tenn.) and Patty Murray (Wash.) to fund extra Obamacare subsidy payments. Collins  said she's been promised a vote on that measure by Senate Majority Leader Mitch McConnell (R-Ky.). But the measure's prospects seems awfully shaky; the Senate is focused right now on the tax overhaul; yesterday House conservatives told The Hill they wouldn't support it (they've labeled it an "insurer bailout"); and, as conservative policy wonk Chris Jacobs writes over at The Federalist, even if the payments are included in a year-end spending bill, they might not ever get made due to mandatory sequester cuts.

(Do you need some Christmas cookies after that last graf? I do.)

Here's the interesting question at play over the next few weeks: Will Congress make two changes to the ACA marketplaces that are contrary to each other? Repealing the mandate undermines the marketplaces by ultimately weakening their risk pools (some healthy people drop coverage without the mandate). Making the subsidy payments (known as cost-sharing reductions) helps lower marketplace premiums, but it's kind of moot if you've already removed the key requirement underpinning the whole ACA. Just another day in Congress, in other words.


AHH: Want to participate in Apple's first-ever medical study? There's an app for that. The new app, rolled out yesterday, works with the Apple Watch's heart-rate monitor to check for irregular heart rates as part of a study the company is running with Stanford University. "While others have used Apple's software and devices in medical studies, this is the first time that it’s actually sponsored one itself," The Post's Hayley Tsukayama reports. "The move is another sign that Apple is moving deeper into the health space."

“Working alongside the medical community, not only can we inform people of certain health conditions, we also hope to advance discoveries in heart science,” said Apple chief operating officer Jeff Williams, in a statement.

"Health and fitness have been a key focus for Apple, especially since launching the Apple Watch two years ago," Hayley writes. "That has allowed the company to tap the $3 billion health care market and, analysts say, find new audiences for its products and services. Apple already employs a small staff of medical professionals to develop its health products...The new study takes all of that a step further: Now Apple itself will be running a study and submitting data to the Food and Drug Administration. The heart-rate researcher will look specifically at atrial fibrillation — or afib — which refers to an irregular heart rate and is a leading cause of stroke and other heart conditions."

OOF: CVS Health Corp. could announce a deal as soon as Monday to buy major health insurer Aetna for more than $66 billion in cash and stock, creating a health-care giant selling everything from drugs to insurance, the Wall Street Journal reports. The company is in the advanced stages of negotiating the deal, likely valued at between $200 and $205 per Aetna share, WSJ writes. By merging with Aetna, CVS could gain more leverage in its drug price negotiations with pharmaceutical makers. It's just the latest in a trend toward consolidation in the industry, as insurers and pharmacies face increasing pressure to tamp down soaring medical spending.

OUCH: The small networks in Obamacare plans are getting even narrower, according to an analysis released yesterday by Avalere. The percentage of marketplace plans with severely limited networks of doctors and hospitals have been on an upward trajectory; they comprised 54 percent of plans in 2015, 68 percent in 2017 and, next year, 73 percent of plans will feature narrow networks, the firm found.

“We continue to see insurers focusing on narrow network exchange products that enable them to offer competitive premiums and manage medical costs,” said Caroline Pearson, Avalere senior vice president. “These narrow network plans may come at a lower price tag for consumers, but they may also limit consumer choice and access to specialist care.” 

Deductibles are also going up for the most popular "silver" level plans, averaging $3,937 in 2018, up from an average of $3,703 in 2015. Gold-plan deductibles are rising, too, but average bronze and platinum deductibles are dropping from 2017 rates. Avalere also notes that consumers earning less than 250 percent of the federal poverty level can get cost-sharing discounts that typically result in cheaper deductibles.

--A few more good reads from The Post and beyond:

Exclusive: U.S. health regulator Verma eyes new methods for drug pricing (Reuters)


Health nominee Azar is no stranger to management controversy (AP)

Trump to donate part of his salary to combat opioid addiction (CNN)


Md. physician accused of writing illegal prescriptions for Hooters waitresses (Lynh Bui)


National science panel calls for aggressive steps to control drug prices (LA Times)


Lawsuit seeks to block Illinois abortion coverage expansion (Reuters)



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