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The Health 202: It's a happy holiday for medical tax breaks, but not Obamacare's individual mandate

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with Paulina Firozi


Some medical-related tax breaks originally headed for the trash heap appear mostly safe in Republicans’ latest tax overhaul plan. But lawmakers are still planning to incinerate Obamacare’s centerpiece.

Hospitals and some others in the health-care industry heaved a partial sigh of relief at the tax conference report the House and Senate GOP released Friday. It preserves a deduction for steep medical expenses, ditches a proposed tax on graduate students’ tuition waivers and halves the orphan drug tax credit instead of erasing it.

As with Republicans’ other proposed changes to the tax code, these revisions are aimed at simplifying the system and getting rid of tax breaks that cost the federal government lots of money every year. Yet backers of medical research and patient advocates had warned they could disproportionately harm low- and middle-income families and stifle the development of new treatments.

Congress is hoping to pass a final tax overhaul early this week, with each chamber approving a merged version of separate House and Senate bills. The agreement — which would lower the corporate tax rate to 21 percent and cut the top tax rate for families and individuals from 39.6 percent to at least 37 percent — would be the biggest change to the tax code in three decades and represents the largest legislative achievement of Trump’s presidency so far, my colleagues Damian Paletta and Erica Werner report.

Its chances are looking good — with vows of support from critical Sens. Marco Rubio (R-Fla.) and Bob Corker (R-Tenn.) — although a few wild cards are still in play. Sen. Susan Collins (R-Maine) would have to cast a vote on the tax bill without absolute certainty that leadership will honor a commitment for a subsequent, separate vote on bills to stabilize the Affordable Care Act marketplaces (Erica reports more on that here).

And according to reports, Sen. John McCain (R-Ariz.) won’t be returning to Capitol Hill for the final vote this week. Yesterday he traveled home after spending several days in a Maryland hospital recovering from the side effects of chemotherapy for the brain cancer he’s fighting.


From Post conservative blogger Jennifer Rubin:

Despite some evidence Republicans listened to health-care advocates’ concerns as they drew up their final measure, the tax compromise is still a mixed bag for the industry, which isn’t terribly enthused that it repeals the ACA’s requirement to buy insurance. Although the individual mandate, which is accompanied by fines, hasn’t been as effective as expected, it would still result in 13 million fewer insured Americans a decade from now, the Congressional Budget Office has estimated.

Rep. Doug Lamborn (R-Colo.):

The final measure has “mixed results for the hospitals and health systems we represent and the patients we are privileged to care for,” Rick Pollack, president of the American Hospital Association, said in a statement Friday.

“We are concerned about the inclusion of the individual mandate repeal and the consequences that this would pose to our patients,” Pollack said. “It is unfortunate that the important task of overhauling the tax code will erode health coverage for many.”

Patient advocates are particularly pleased the measure retains the medical expense deduction, which allows taxpayers to deduct medical expenses that exceed 10 percent of their income. The overhaul would for one year lower the threshold to 7.5 percent, where it used to be, and return it to 10 percent in 2019.

The tax plan also cuts in half a tax credit for developers of drugs for rare diseases, known as “orphan drugs.” Pharmaceutical companies will be able to get a tax credit for 25 percent of qualified clinical trial costs (it’s 50 percent currently). The House bill would have completely eliminated this credit, which has been highly successful in motivating the drug industry to develop medicines needed by patients with rare but serious illnesses (I wrote a lot more about the orphan drug credit in this Health 202).

The National Organization for Rare Disorders would prefer the orphan drug tax credit be left as is:

The Association of American Medical Colleges applauded the bill for forgoing a proposed tax on tuition waivers, which would have resulted in graduate students engaged in research paying thousands more dollars in taxes.

The way things stand now — and how they’ll probably stay — universities waive tuition for grad students while they’re researching, thus ensuring that hundreds of scientific studies can be carried out each year. That waived tuition would have been treated as taxable income under the original House tax bill.

AAMC President Darrell Kirch said scrapping the plans for a tax “will help keep medical education and biomedical research training within the reach of all who wish to pursue those paths.” But the inclusion of the ACA mandate repeal is unfortunate, he said.

“While these actions will allow our members to continue to provide for the health of all, repealing the individual mandate will put the health of many of the patients who come through our doors at risk,” Kirch said.


AHH: Open enrollment in the majority of states using officially ended on Friday, although the Department of Health and Human Services is allowing some leeway for shoppers who weren't able to get help from the call center because of the crush of last-minute calls. Callers were invited to leave their names if they couldn't get through to a representative; when they get a call back, they'll still be able to enroll for coverage that begins Jan. 1, per a tweet from the account:

"Consumers jammed call centers and enrollment offices in the final sprint toward the Friday deadline in most of the country to get Affordable Care Act health plans for 2018, defying months of naysaying by President Trump about the law’s insurance marketplaces," The Post's Amy Goldstein reports. "In several states, enrollment helpers reported a crush of interest in recent days. Some navigator organizations, which help people sign up, received more requests for appointments than they could accommodate — a consequence of an enrollment season that is half as long as the past three years’ time frame and large cuts by federal officials in grants to those groups."

Officials at the Centers for Medicare and Medicaid Services didn't release any final enrollment figures over the weekend, but we're expecting figures this week. To meet last year's sign-up levels of 9.2 million in the states using, the volume of enrollments late last week would have to be massive.

OOF: Back in 2014, DEA investigators were ready to move on the biggest opioid distribution case in U.S. history, involving the nation's largest drug company, McKesson. The company was under investigation for failing to report suspicious orders involving millions of highly addictive painkillers, some of which went to corrupt pharmacies that supplied drug rings. Instead, the DEA struck a deal with McKesson, The Washington Post's Lenny Bernstein and Scott Higham report in a joint investigation with "60 Minutes.”

“Top attorneys at the DEA and the Justice Department struck a deal earlier this year with the corporation and its powerful lawyers, an agreement that was far more lenient than the field division wanted, according to interviews and internal government documents,” Lenny and Scott write. “Although the agents and investigators said they had plenty of evidence and wanted criminal charges, they were unable to convince the U.S. attorney in Denver that they had enough to bring a case.”

“The result illustrates the long-standing conflict between drug investigators, who have taken an aggressive approach to a prescription opioid epidemic that killed nearly 200,000 people between 2000 and 2016, and the government attorneys who handle those cases at the DEA and the Justice Department,” they continue. “None of McKesson’s warehouses would lose their DEA registrations. The company, a second-time offender, had promised in 2008 to be more diligent about the diversion of its pills to the street. It ultimately agreed to temporarily suspend controlled substance shipments at four distribution centers and pay a $150 million fine.”

The Trump administration is prohibiting HHS agencies from using certain words and phrases in official documents being prepared for the 2018 budget. (Video: Monica Akhtar, Juliet Eilperin, Lena Sun/The Washington Post)

OUCH: Not the seven deadly sins, but the seven deadly words? The Trump administration is prohibiting CDC analysts from using a list of seven words or phrases -- including "fetus" and "science-based" -- in official documents being prepared for next year's budget proposal, The Post's Lena H. Sun and Juliet Eilperin report. The other "forbidden" words are “vulnerable,” “entitlement,” “diversity,” “transgender" and “evidence-based," according to a CDC analyst who was present at a 90-minute Thursday meeting with senior agency officials who oversee the budget.

In some instances, the analysts were given alternative phrases, Lena and Juliet write. Instead of 'science-based' or ­'evidence-based,' the suggested phrase is 'CDC bases its recommendations on science in consideration with community standards and wishes.' In other cases, no replacement words were immediately offered.

Asked about the banned words, Health and Human Services spokesman Matt Lloyd said the agency “will continue to use the best scientific evidence available to improve the health of all Americans." “HHS also strongly encourages the use of outcome and evidence data in program evaluations and budget decisions," Lloyd added.

"The question of how to address such issues as sexual orientation, gender identity and abortion rights — all of which received significant visibility under the Obama administration — has surfaced repeatedly in federal agencies since President Trump took office," Lena and Juliet write. "Several key departments — including HHS, as well as Justice, Education, and Housing and Urban Development — have changed some federal policies and how they collect government information about lesbian, gay, bisexual and transgender Americans."

At the CDC, the meeting about the banned words was led by Alison Kelly, a senior leader in the agency’s Office of Financial Services. Kelly didn't say why the words are being banned --- according to the analyst who spoke anonymously with Lena and Juliet -- and told the group that she was merely relaying the information. Other CDC officials confirmed the existence of a list of forbidden words. 

Over the weekend, CDC Director Brenda Fitzgerald denied that there are banned words at her agency:


--Late last week, a federal judge temporarily blocked the Trump administration's rule dramatically expanding exemptions from the "contraception mandate" by allowing virtually any business to cite religious or moral objections, my colleague Sandhya Somashekhar reports.

In a 44-page opinion, U.S. District Judge Wendy Beetlestone sided with the state of Pennsylvania, which argued that the rule change was harmful to working women and would force the state to shoulder the costs of their birth control and unplanned pregnancies. Under the current rules, issued by the Obama administration, employers must cover all types of FDA-approved contraception for workers at no extra cost.

“The Commonwealth’s concern is . . . women will either forgo contraception entirely or choose cheaper but less effective methods — individual choices which will result in an increase in unintended pregnancies,” Beetlestone wrote, calling the potential harm to women there and nationwide “enormous and irreversible.”

Beetlestone said the rule could give employers a doorway to drive women away from their company. "It will allow an employer with a sincerely held moral conviction that women do not have a place in the workplace to simply stop providing contraceptive coverage,” she wrote. “It is difficult to comprehend a rule that does more to undermine the Contraceptive Mandate or that intrudes more into the lives of women.”

Reproductive-rights advocates hailed Beetlestone's ruling:

Pennsylvania Attorney General Josh Shapiro:

From the Planned Parenthood Action Fund:

Sen. Patty Murray (D-Wash.):

Rep. Diana DeGette (D-Colo.):

But religious-liberty groups, which have lauded Trump’s efforts to protect people of faith, said they were confident the latest judicial ruling would not withstand scrutiny by other courts. Conservatives have objected to the rule, saying it forces employers to pay for a product they may be morally opposed to. Some view certain types of birth control, such as IUDs and the morning-after pill, as akin to abortion because they may halt a pregnancy after the egg has been fertilized.

A statement from Lori Windham, senior counsel at the Becket Fund for Religious Liberty:

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


How the oldest Senate ever is taking a toll on the business of Washington (Paul Kane)


Why CVS-Aetna may be bad for your health (Steven Pearlstein)


Watchdog report finds moldy food, mistreatment in immigrant detention centers (Maria Sacchetti)

Convicted of a marijuana crime in California? It might go away, thanks to legal pot. (Rob Kuznia and Katie Zezima)

Va. Republican House leader backs expanded family leave as party seeks to rebrand (Laura Vozzella)

How blue states might save Obamacare's markets (Politico)


Cancer clinical trials exclude many desperate patients. Should that change? (Aimee Swartz)

In Opioid Battle, Cherokee Want Their Day in Tribal Court (New York Times)


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