Legislative Update

From National Family Voices: IN CONGRESS Tax Bill Passed - Repeal of ACA's Individual Mandate and More The Tax Cuts and Jobs Act (H.R. 1) has passed both chambers of Congress and is on its way to the president's desk to be signed into law. The House passed the bill along mostly partisan lines, with 12 Republicans joining all Democrats in opposition. The Senate passed the bill on a strictly partisan basis with a vote of 51-48. (Senator McCain, R-AZ, was absent.)   A few of the provisions of special interest to families whose children have special health care needs are:  Deduction of medical expenses: The final bill includes the Senate provision, proposed by Senator Collins (R-ME), which would allow more people to take the deduction in 2018 and 2019 by lowering the threshold for taking the deduction from 10 to 7.5 percent of adjusted gross income. After 2019, the threshold will be ten percent, as it would have been under current law. The House bill would have eliminated the deduction. Orphan drug tax credit: The final bill will reduce this credit from 50 to 25 percent of clinical-testing expenses incurred by drug companies in developing drugs for rare diseases. The House bill would have eliminated the deduction; the Senate bill would have reduced it to 27.5 percent of eligible expenses. Individual mandate: Like the Senate bill, the final bill eliminates the penalty for failing to have qualified health insurance, effectively eliminating the "individual mandate" to have insurance coverage. The House bill would not have changed current law. Repealing the ACA's individual mandate does NOT affect other ACA provisions,such as protections for people with pre-existing conditions, the prohibition on coverage limits, and the ability to cover children on parents' plans until age 26. The Congressional Budget Office (CBO) estimates, however, that repeal of the mandate will lead to higher premiums in the individual market (10 percent more per year) and more people without insurance (13 million more uninsured by 2027, about 5 million of whom would have qualified for Medicaid had they sought insurance). Those likely to be most negatively affected by the mandate repeal are those purchasing insurance in the individual market who do not qualify for subsidies. See Obamacare will survive (Vox, 12/20/17); The Tax Bill and the Individual Mandate: What Happened, And What Does It Mean?  (Health Affairs, 12/20/17); Actuaries Warn Of Premium Increases From Repealing Obamacare Mandate (The Hill, 12/12/17).  Medicare or Other Entitlement Cuts?  Some critics of the tax bill have mentioned that it will require cuts in Medicare. It is true that the bill's deficit spending triggers automatic cuts in Medicare and some other entitlement programs, but Congress can waive that requirement and has done so in the past. As of this writing, whether they will do so in this instance has not been determined. As a separate issue, advocates are concerned that the large deficit increase created by the tax bill ($1.5 trillion) will prompt efforts to cut entitlement spending. In fact, House Speaker Ryan and others have announced their intention to pursue legislation in the new year to cut spending for entitlement programs such as Medicaid, Medicare, SSI, and food stamps (SNAP). See GOP Eyes Post-Tax-Cut Changes to Welfare, Medicare, and Social Security (Washington Post, 12/1/17).   For more information on the tax bill, see the Ways & Means Committee Majority (Republican) outline of the bill; analyses from the Tax Policy Center.

OUTSTANDING HEALTH CARE POLICY ISSUES   The spending bill that must be enacted before the end of this week to keep the government funded (the "continuing resolution" or CR) could serve as a "vehicle" on which to attach legislation addressing time-sensitive issues. At this point, however, it appears that most of these issues will not be addressed until next year.   CHIP Federal CHIP funding ran out on September 30. Reportedly, the House and Senate have negotiated a bipartisan, five-year extension of CHIP funding along with the "offsets" needed to pay for it. But, for various political reasons, that agreement has not been taken up in either body. Advocates are pushing Congress to include the five-year CHIP extension in this week's CR, but the likelihood of this is unclear. Alternatively, Congress may provide a short-term (several-month) extension of the program, or at the very least, allow the administration to continue reallocating CHIP funds to the states needing it most urgently (as it did in the last CR).   States with CHIP incorporated into their Medicaid programs must keep kids covered, but will receive less funding than they do now to cover the CHIP population. States with free-standing CHIP programs could close or cut back their CHIP programs. At least one state (Alabama) has already informed families that their children may lose coverage as of January 1. See Congress Has 11 Days Before the CHIP Nightmare Gets Very Real (Vox, 12/20/17).   This morning, the Georgetown Center for Children and Families released a report finding that 25 states are set to run out of funds by the end of January, resulting in an estimated 1.9 million children in separate CHIP programs that would lose coverage. An additional 1 million children would also be at risk of losing coverage by the end of February. See New Report on CHIP Funding Delay Shows Nearly 2 Million Kids May Lose Coverage in January.   See also Frequently Asked Questions about the Children's Health Insurance Program (CHIP) (National Academy for State Health Policy, updated 12/8/17; a very clear explanations of what states can do if CHIP funds run out); Extending the Children's Health Insurance Program: High Stakes for Families and States (The Commonwealth Fund, Sept. 2017; good overview of the CHIP program and consequences of not funding it); State Plans for CHIP as Federal CHIP Funds Run Out (Kaiser Family Foundation, 12/6/17).   COST-SHARING REDUCTIONS AND REINSURANCE In exchange for supporting the tax bill, Senator Susan Collins (R-ME) secured a commitment from Majority Leader Mitch McConnell (R-KY) that two other bills to shore up the individual insurance market would be enacted. Initially Senator Collins anticipated that the bills would be enacted before the tax bill - which she did vote for - but now this legislation will not be taken up until January. Some House conservatives object to the bills; today the White House expressed support for the legislation. See Senate GOP pushes off ObamaCare bills until January.