Congress moves forward on key healthcare appointments; the Administration takes steps to shore up the Marketplaces; and Governors prepare to gather in Washington as new reports document the ACA's impacts on states.

FEDERAL HEALTH REFORM ACTIVITY:

House Republicans Release New Repeal and Replace Plan

House Republican leadership released the outline of their new repeal and replace plan, which would provide age-rated tax credits for individuals without access to employer-sponsored coverage, repeal the Medicaid expansion in its current form, implement capped financing in Medicaid, eliminate ACA taxes and mandates, expand access to health savings accounts, and prohibit the use of tax credits on any plan that covers abortion services. The plan is very similar to Speaker Paul Ryan's (R) 2016 "Better Way" proposal.

Verma Testifies Before Senate Finance Committee; Mulvaney Confirmed as OMB Director

President Trump's nominee for CMS Administrator Seema Verma testified before the Senate Finance Committee on Thursday; a full Senate confirmation vote is expected in the coming weeks. Verma is a healthcare consultant who helped develop alternative Medicaid expansion waivers in Indiana and Kentucky. Separately, Mick Mulvaney was confirmed as Director of the Office of Management and Budget.

Trump Administration and House Republicans Ask Court to Continue Hold on Cost-Sharing Reduction Suit

House Republicans and the Justice Department have filed a joint motion asking the D.C. Circuit Court of Appeals to continue a temporary hold on the House v. Price suit to allow more time for a legislative resolution to the case. House v. Price (formerly House v. Burwell) was brought by House Republicans against the Obama Administration in 2014, alleging that the Administration was illegally making cost-sharing subsidies available without an appropriation from Congress.

Proposed Market Stabilization Rule Released; QHP Certification and Rate Filing Deadlines Extended

CMS released a proposed rule, intended to stabilize the individual market, that would shorten the annual open enrollment period, tighten special enrollment period requirements, and allow insurers to require payment of past‐due premiums as a condition of enrollment. The rule would also loosen the actuarial value and network adequacy standards insurers use in plan design. The rule was silent in several key areas where changes were anticipated, including age rating, third-party payments to insurers, essential health benefits, reinsurance, risk corridors, and cost-sharing reductions. CMS also decided to give plans more time to decide whether to offer Marketplace plans in 2018. Insurers are generally pleased with the rule, though some stakeholders have criticized it for reducing the value of tax credits for consumers.

Healthcare Reform on the Agenda for National Governors Association Meeting

The National Governors Association's (NGA) 2017 Winter Meeting (February 24-27) will include several healthcare-related activities, including a governors-only session on healthcare reform, an exhibition from the NGA Center for Best Practices Health Division, and briefings on healthcare reform with Congressional Republicans and Democrats.

FEDERAL AND STATE REPORTS ON HEALTH SPENDING AND REFORM:

National Health Spending Projected to Grow 6% Annually Between 2016 and 2025

CMS's Office of the Actuary projects annual health spending will increase an average of 5.6% between 2016 and 2025—1.2 percentage points faster than GDP—driven primarily by economic growth and an aging population. Growth in overall health spending slowed between 2015 and 2016, due to slower growth in Medicaid and prescription drug spending. Medicaid spending growth is expected to remain low (3.7%) for both 2016 and 2017. The report, which does not account for potential health policy changes, also estimates that health spending as a total share of the economy will grow from 17.8% to 19.9% between 2015 and 2025.

Medicaid Has Lowest Projected Growth Rate Among Means-Tested Healthcare Programs, CBO Report Finds

A CBO analysis of January 2017 baseline spending projections for 2018-2027 found that the projected annual growth rate for means-tested programs, including Medicaid, CHIP, and the Marketplace subsidies, is lower than the projected annual growth rate for non-means-tested programs such as Social Security and Medicare (4.3% versus 6%). Medicaid had the lowest projected growth rate among means-tested healthcare programs at 5.3%.

ACA Had No Impact on Employment Rates and Hours Worked, Report Finds

An Urban Institute report found the ACA had little to no effect on employment rates or total hours worked per week, indicating that few employers have switched full-time employees to part-time status to avoid paying penalties under the ACA's employer mandate. The study found employer-induced part-time employment has been 17% lower than predicted since 2013, while levels of voluntary part-time employment have been 10% higher than expected since 2014.

Stronger Collaboration Between Medicaid Agencies and Insurance Departments Would Improve the Coverage Continuum

A new Commonwealth Fund brief, prepared by Manatt Health, identifies competing priorities and cultural differences between state Medicaid agencies and insurance departments as a potential barrier to continuity of coverage. To increase coordination between Medicaid and Marketplace plans, the authors recommend that state Medicaid agencies and insurance departments collaborate on delivery system reform efforts and better align regulatory oversight of benefits, provider networks, and rate reviews.

Changes to Essential Health Benefits Possible Under New Administration

A Health Affairs blog post written by Manatt Health explores potential changes to the essential health benefits (EHBs) requirement that Congress and the Trump Administration might pursue, including eliminating the requirement to cover maternity care, treatment for mental health and substance use disorders, and habilitative services.

Kaiser Publishes Issue Briefs on Children's Insurance Coverage, Medicaid-Medicare Enrollees, and the Future of 1115 Waivers

A new issue brief from the Kaiser Family Foundation reviews the state of health insurance coverage for children and the potential implications if the ACA is repealed and Medicaid funding is capped. The brief notes that funding for the Children's Health Insurance Program (CHIP) beyond September 2017 will require Congressional approval. Kaiser also published briefs in recent days on the role of Medicaid for the 10 million Medicare enrollees that receive Medicaid benefits, and the current landscape and key considerations for 1115 waivers under the new Administration.

State-Specific Studies Examine Impact and Benefits of the ACA

Several new studies were released this week on the state-specific impacts of the ACA, and the Commonwealth Fund separately released a series of state-specific fact sheets highlighting the impact of Medicaid and the ACA, including effects on enrollment levels, access to care, patient-reported experiences, and job growth.

• California. The California Association of Public Hospitals and Health Systems found that repealing Medicaid expansion could cost the State's 21 public hospitals and health systems $2.2 billion a year in revenue and cause the uninsured rate to double to more than 17%.
• Colorado. The uninsured rate fell from 14.3% in 2013 to 6.7% in 2015 in Colorado, according to a Colorado Health Institute report on the ACA's impact on coverage. The report is the first in a series on how "rebuilding federal health policy" will impact Coloradans.
• Louisiana. The uninsured rate has decreased by nearly half, from 21.7% in 2013 to 12.5% in 2016, and more than 400,600 Louisianans are now covered under the State's Medicaid expansion, which was implemented in mid-2016.
• Oregon. An Oregon Health Authority report found that hospital charity care declined by 37% between 2014 and 2015 due to the State's Medicaid expansion.

STATE MEDICAID EXPANSION UPDATES:

Arizona: Appeals Court Hears Arguments in Medicaid Expansion Lawsuit

A three-judge State Appeals Court panel heard an appeal of the Maricopa County Superior Court's decision that Arizona's Medicaid expansion plan was passed legally, reports the Arizona Republic. The initial lawsuit, brought by the Goldwater Institute on behalf of Republican State lawmakers, contends that the hospital assessment used to fund expansion is a tax, requiring a two-thirds supermajority vote in the Legislature.

Maine: Measure to Expand Medicaid Qualifies for November 2017 Ballot

A voter petition effort to expand Medicaid in Maine successfully submitted 66,434 valid signatures, qualifying for placement on the November 2017 referendum ballot. The Maine Legislature will now consider Medicaid expansion legislation as directed by the petition, and can pass it into law without any amendments or send the question to voters in November.

New Jersey and Ohio: Governors Support Continuation of Medicaid Expansion

New Jersey Governor Chris Christie (R) and Ohio Governor John Kasich (R) have expressed their support for continuing coverage of the Medicaid expansion population, regardless of ACA repeal. Governor Christie said that "there can be lots of ways to make sure" individuals can maintain coverage, though he continues to support ACA repeal. Governor Kasich similarly voiced support for continued coverage for the Medicaid expansion population, while calling for simultaneous ACA repeal and replacement.

STATE MEDICAID AND HEALTH REFORM ACTIVITY:

Idaho: Lawmakers Considering Measure to Provide Limited Coverage to Some Uninsured Residents

The House Health and Welfare Committee voted unanimously to introduce legislation that would create a "Health Care Assistance Program" to provide limited primary care and some prescription drug coverage to 78,000 adults earning below the poverty level. The State would provide $10 million from its tobacco settlement fund to cover the costs of the State-funded program in its first year. Enrollment would be capped based on available funding. The House is expected to hold a hearing on the bill next week. A similar bill has been introduced in the Senate.

Massachusetts: Commission Makes Recommendations in Response to Missed Healthcare Spending Benchmark

In its annual report, the Massachusetts Health Policy Commission recommended measures to reduce healthcare spending in response to the State's failure to meet its goal of keeping per capita healthcare spending growth across all payers at or below 3.6% between 2014 and 2015. Spending on Medicaid beneficiaries declined by 1.9%, but spending on commercially-insured residents is about 6% above the national average. The primary drivers of increased spending are prescription drug costs and hospital spending, and recommendations include enhancing drug price transparency and bolstering partnerships between the healthcare delivery system and community-based organizations to reduce unnecessary hospital utilization.

Oregon: Legislature Considering Medicaid Coverage for Undocumented Children

The House Health Care Committee held a hearing on Monday to discuss HB 2726, which would extend Medicaid coverage to an estimated 17,600 undocumented children and has the support of Governor Kate Brown (D), House Speaker Tina Kotek (D), other Republican and Democratic legislators and healthcare providers. This coverage expansion would be funded entirely by the State, as Medicaid cannot be used to provide non-emergency coverage to undocumented individuals.

STATE STAFFING UPDATES:

Rhode Island: Former Medicaid Director Appointed Interim Secretary of Health and Human Services Agency

Former Medicaid Director, Ana Rader Wallack was appointed Acting Secretary of the Executive Office of Health and Human Services following Elizabeth Roberts's resignation. Wallack will be tasked with resolving challenges with the Unified Health Infrastructure Project, the State's new health and human services eligibility software system.