Editor’s note: The last paragraph in the section of this post on Tom Price has been edited to more accurately reflect his views on Medicare and Medicaid.
As has been widely reported, President-elect Donald Trump has put forward the names of Tom Price for Secretary of Health and Human Services and Seema Verma for Administrator of the Centers for Medicare and Medicaid Services. Price is a six-term Republican congressman from Georgia and chair of the House Budget Committee. Verma is a health policy consultant from Indiana who has assisted Indiana and a number of other states in crafting Medicaid waiver requests to allow them to implement the Affordable Care Act’s Medicaid expansions applying their own conservative political philosophies.
As HHS Secretary, Price would have overall responsibility for the Medicare and Medicaid programs, as well as the ACA insurance reform and financial assistance programs. He will also head up many other HHS programs, including the Food and Drug Administration, Centers for Disease Control, and National Institutes of Health, to cite some of the best known.
Congressman Price is an orthopedic surgeon with a longstanding interest in health policy. He served on the task force that developed the House Republican “Better Way” health care reform proposal. He is also one of the few members of Congress to have actually submitted legislative language for a bill to repeal and partially replace the Affordable Care Act. His 2015 Empowering Patients First Act (section-by-section analysis) would repeal the entire Patient Protection and Affordable Care Act and all health care related provisions of the Health Care and Education Reconciliation Act and replace them with 242 pages of new law.
A number of Price’s bill’s provisions are common to other repeal and replace bills, including proposals for fixed-dollar, age-adjusted premium tax credits to take the place of the ACA’s means-tested tax credits; a dramatic expansion of health savings accounts; a requirement to maintain continuous coverage to avoid preexisting condition exclusions; federal subsidies for state high-risk pools to cover high-risk populations; authorization of the sale of insurance across state lines; and association health plans. Other provisions of the proposed legislation are more idiosyncratic, including a number of provisions favorable to doctors. A series of proposals, for example, would make medical negligence litigation nearly impossible while other provisions would allow doctors to contract for balance billing under Medicare and to collectively bargain with insurers, a practice now prohibited by the antitrust laws.
The Empowering Patients First Act would cap the tax exclusion for employer-sponsored coverage. The bill also has a number of provisions directed at increasing transparency of health care prices and insurance claim information. The pseudonymous Richard Mayhew has analyzed the distributional consequences of Price’s legislation; in general, he finds, young healthy males would be better off than under the ACA; older, sicker, and poorer people would be worse off. Wealthier people could reap substantial tax benefits by investing in HSAs; poorer people would likely lack resources to save and would receive fewer tax benefits if they did so.
Price’s Empowering Patients bill would allow Medicare recipients to opt for the age-adjusted tax credit in lieu of Medicare coverage. The 2017 House Republican budget resolution drafted by the Budget Committee Price chairs proposes moving Medicare to a premium support model. Price’s prior statements about Medicare on his website, however, either offer general admonitions to keep the program financially sustainable or proposals affecting specific program elements, like durable medical equipment purchasing. He has also had little to say in the past about Medicaid, although his Empowering Patients bill would allow also Medicaid recipients to opt for the tax credit in lieu of Medicaid coverage, and his 2017 House Republican budget proposes block grants or per-capita caps for Medicaid.
If confirmed as CMS administrator, Seema Verma will be in charge of a budget of over one trillion dollars, larger than the gross domestic product of all but fifteen of the world’s countries and accounting for almost 90 percent of total HHS expenditures. Ms. Verma played a major role in shaping the Healthy Indiana Medicaid waiver program under Vice President-elect Pence and under Mitch Daniels, his predecessor as Indiana’s governor. She has also worked on Medicaid waiver programs for Iowa, Kentucky, Tennessee, and Michigan and helped develop a position paper on Medicaid reform for the Republican Governors Public Policy Committee.
The waiver programs she has drafted focus on individual responsibility, requiring contributions to HSA-like accounts. Recipients who fall behind on their payments are locked out of coverage for six months or transferred to a more limited coverage option that charges copayments for services. Verma asserts that the Indiana program has been a success, with participants having higher rates of using preventive and primary care and fewer emergency room visits and expressing high levels of satisfaction. But the Center on Budget and Policy Priorities claims that the programs’ complexities have caused confusion and loss of coverage and that enrollment has been smaller than predicted.
Ms. Verma, who has spent years trying to convince CMS officials to grant Medicaid waivers, will now be a position to grant waivers herself. Whether or not Congress adopts changes to the Medicaid statute, the program is likely to change significantly under Ms. Verma’s leadership. To my knowledge, Ms. Verma has had far less involvement with the Medicare program and with the ACA marketplaces, but she will presumably bring to the management of these programs the same philosophy that has grounded her approach to the Medicaid program.
A Second Open Enrollment Snapshot
On November 30, 2016, CMS released its second biweekly snapshot of enrollment in the Healthcare.gov for the 2017 open enrollment period. As of November 26, 2.1 million individuals had selected plans in the 39 states served by Healthcare.gov, including over 519,492 new consumers and 1.6 million consumers renewing coverage. The enrollment numbers do not yet include any state marketplace enrollment numbers or auto-enrollments (which will come later), and the biggest enrollment rush is yet to come as coverage deadlines near. Plan selections are 97,000 ahead of last year, even though the measuring period had two fewer days this year than last year (although one more state is included this year in Healthcare.gov). Given the promise of the incoming administration to repeal the ACA, it is notable that so many Americans are choosing to enroll in ACA coverage.
Judge Denies Government Request To Stay Risk Corridor Litigation
On November 28, 2016, Judge Thomas Wheeler of the Court of Federal Claims denied a motion by the United States to indefinitely stay proceedings in Moda Health Plan v. United States. This is one of about a dozen cases in the Court of Claims challenging the government’s failure to pay out the full amount allegedly owing under the ACA’s risk corridor program for 2014.
The government had argued that the legal issues raised by the Moda case had already been decided in one risk corridor case and that other cases are fully briefed. It requested that the Moda case be held in abeyance pending resolution of these other cases. Judge Wheeler denied the government’s motion, noting that the Federal Court of Appeals, which will hear the appeals in these cases, would benefit from the viewpoints of a number of lower court judges. He also noted that Moda would suffer from continuing uncertainty were the case continued indefinitely. Judge Wheeler did grant the government one extra week to file its brief.