President Trump’s FY18 Budget: What Does It Mean For Health Centers?

By NACHC Federal Affairs Staff

On Tuesday, President Trump released his FY18 budget proposal, which reflects the administration’s priorities for federal spending in the upcoming fiscal year. The President’s budget is a blueprint for national priorities, which is then submitted to Congress. Ultimately, it will be Congress that makes the final budget decisions during the appropriations process.

Based on NACHC’s preliminary review, below is a brief summary of the major provisions of the President’s FY18 budget that could directly impact health centers. We will continue to update the blog as the budget process progresses.

Primary Care Funding Cliff

The FY18 budget calls for a two-year fix to the “health center funding cliff” and extensions of key primary workforce programs. Specifically, the budget includes:

  • $5.1 billion in total funding for the Health Centers Program in FY2018 – the same top-line funding level as FY17, made up of $1.5 billion in discretionary funding and $3.6 billion in mandatory funding
  • An additional year of mandatory funding, also at $3.6 billion, for Fiscal Year 2019
  • $60 million annually for two years for the Teaching Health Centers Graduate Medical Education Program (THCGME). This represents level funding compared to FY2017, but less than is needed to fully fund existing residency slots and programs
  • $310 million annually for two years the National Health Service Corps (NHSC), which is level funding from FY17

While the President’s support for health centers in the FY18 budget is an important boost to efforts to avert the health center funding cliff in Congress, NACHC continues to advocate that all three primary care programs be extended on a longer-term basis to ensure stability and predictability of funding.

Medicaid

The President’s budget would make dramatic changes to the Medicaid program that would transform the underlying structure of the program and cut at least $610 billion in federal funding – largely by capping federal Medicaid contributions to states. The proposed budget cuts are meant to be layered on top of the cuts to the program that have already been passed by the House of Representatives as a part of the American Health Care Act.

Cuts of this magnitude would inevitably lead to reductions in provider payments, narrower eligibility requirements, and restricted benefits for enrollees — all of which would limit health centers’ ability to maintain current service levels and severely inhibit efforts to expand treatment and access for patients or respond to urgent public health crises.

Taken together, these actions would make it more difficult for health center patients to access health care across the safety net, and also put extreme stress on health centers’ budgets as state Medicaid programs face growing shortfalls.

Children’s Health Insurance Program (CHIP)

Funding for the Children’s Health Insurance Program is set to expire at the same time the funding cliff would kick in – September 30, 2017. As with Health Centers, the budget proposes a two-year extension of CHIP through 2019, but also reduces funding for the program by $5.8 billion.

These funding reductions are achieved by eliminating key provisions of the Affordable Care Act that bolstered the program, including a “primary care bump” which provided a 23-point increase in state CHIP matching rates and the maintenance of effort (MOE) requirement that states maintain current eligibility and benefits for children.

The budget would further change CHIP eligibility by capping it at 250% of the Federal Poverty Level (FPL) while also giving states the option to move certain children below 138% FPL from Medicaid back to CHIP.

340B

The FY18 budget includes level funding of $10.2M for the Office of Pharmacy Affairs at HRSA to administer the 340B Program. Of note, the budget includes a new provision this year which directs HHS to work with Congress to develop a legislative proposal “to improve 340B integrity and ensure that the benefits derived from the program are used to benefits patients, especially low-income and uninsured populations.” The legislative proposal is also expected to include new regulatory authority for HRSA to administer the program, a priority of the previous administration.

In addition, the budget calls on HRSA to continue strengthening 340B program compliance by expanding oversight activities, educating covered entities and prospective sites on the statutory requirements of the program and conducting audits of manufacturers. Lastly, some additional priorities that carry forward from the previous year include the development of the 340B pricing system and a facilitated process for refunds and credits to entities who were overcharged.

Conclusion

The President’s proposed budget calls for deep cuts and disinvestment in America’s safety net programs – most of all in Medicaid, which covers more than 70 million Americans and half of health center patients. This is of great concern to all of us who work to address the needs of low-income and vulnerable populations. While the nation struggles to put its fiscal house in order, we will continue our work with Congress on solutions to protect the health, well-being and stability of America’s communities.

In dramatic fashion, House leaders pull ACA Repeal and Replace Bill

What a week it was last week. Even as our staff here at NACHC has been pulling together the finishing touches for the 2017 Policy and Issues Forum (sure to be our best yet, by the way) last week was a roller coaster in terms of the future of major health reform legislation that was working its way through the House.

  • On Monday, it was clear that the bill House Republicans had initially introduced on March 6th didn’t seem to have the votes necessary for passage. Side deals with individual members were being cut, most notably the so-called “Buffalo Buyout,” championed by Rep. Chris Collins of New York, which was a direct appeal to win support from several members of upstate New York. Additional changes included the addition of an optional block grant and work requirement for states in the Medicaid program.
  • On Tuesday, the horse-trading continued in private meetings between the administration and Congressional members, with President Trump warning Congressional Republicans about the electoral ramifications of a failure to pass the bill by the target date of Thursday the 23rd – a symbolically important day for the President and the Leadership, as it marked 7 years to the day since the signing of the ACA.
  • On Wednesday evening, the drama heightened as members of the conservative House Freedom Caucus made a late deal with the administration to add additional changes to the bill – most notably provisions to repeal the so-called “Essential Health Benefits” provisions from the ACA, which outlined those services all individual market plans must cover under the law. The House Rules Committee met for 13 hours to prepare the bill to move to the floor.
  • Yet by Thursday it had become clear that even those last-minute changes were not enough to sway the votes of all members of the Freedom Caucus, many of whom continued to proclaim their opposition to the bill, and demand even further changes to the ACA. At the same time, more moderate House Republicans, most notably Charlie Dent of Pennsylvania, chair of the so-called “Tuesday Group” of moderates, were announcing their own opposition in light of the last minute changes. It became clear by mid-afternoon that the anniversary date would not be met, and the leadership decided to hold the bill until Friday.
  • Thursday night, President Trump issued an ultimatum to House members, saying that negotiations had ended, the bill would go to a vote, and if it failed, the administration was prepared to leave the ACA in place and move on.
  • Despite some last minute signals of new support, by mid-afternoon Friday the outcome was becoming clear -and at 4pm, Speaker Paul Ryan stepped to a podium and announced that the bill was being withdrawn, not having found the votes to pass it successfully.

As advocates are aware, NACHC had expressed some major concerns with the legislation, both in the form of a public statement and action alert, and in direct conversations with members and staff on the Hill. Yet while the provisions – mostly dealing with Medicaid changes – that gave us greatest concern will likely not be moving forward legislatively in the near future, it’s critical that all health center advocates know that we’ve only just begun the nationwide fight to make sure our centers and our patients can survive and thrive in this new environment.

That will be a theme that those 2,500+ advocates who are travelling to DC this week for the Policy and Issues Forum will hear over and over. Our policy and advocacy work must extend beyond Capitol Hill, into the new administration, state legislatures, governor’s offices and beyond. The opportunities health centers face – and the threats – are making themselves clear at EVERY level of government, and true advocacy success will mean being engaged at each of these levels.

 

First Look: House Releases ACA “Repeal and Replace” Bill

Last night around 6pm, the Congressional effort to repeal and replace the Affordable Care Act entered a new phase, as House Republicans released the draft legislative text of their proposal. The legislation will be considered this week by the two primary committees with jurisdiction over health care – the Energy and Commerce Committee and the Ways and Means Committee. The draft text and section-by-section summaries are linked below.

In the coming days, NACHC will have more in-depth analysis and public statements regarding the bill and the effect it may have on health centers and our patients. As discussed on past webinars and in our materials and talking points, a major focus of that analysis will be on proposed changes the bill makes to the Medicaid program, which covers nearly half of all health center patients and is a crucial source of revenue that supports ongoing operations. In the meantime, however, we wanted to provide advocates with a basic summary of what the bill contains.

One note of caution – we expect the language of this legislation to continue changing throughout the process, both as amendments are added in Committee and as the Congressional Budget Office (CBO) and others release analysis of what the bill would mean. That said, here are some of the basics:

Medicaid

  • The ACA Medicaid expansion, which has been adopted in 31 states and Washington, D.C., would end on December 31, 2019. At that point, expansion beneficiaries would remain enrolled, but would become ineligible if they drop out of the program for 30 days.
  • Beyond the changes to the expansion population, the bill also proposes a major overhaul of how Medicaid is structured and financed. Instead of the current open-ended federal entitlement, states would get capped payments based on the number of Medicaid enrollees in different categories (Elderly, Blind, Disabled, Children, Expansion Adults, Non-expansion Adults), which would grow over time but not necessarily as fast as the cost of delivering care.
  • The bill allocates $10 billion over 5 years to be used to raise payments to Medicaid providers in non-expansion states.
  • The bill does not propose any change to the current FQHC Prospective Payment System (PPS) or the required FQHC services under Medicaid. Indeed, because of some of the parliamentary rules surrounding the bill, very little of the “state flexibility” sought by governors and others is included in the proposal.

Private Insurance/Exchanges

  • The bill would create age-based tax credits for the purchase of insurance, ranging from $2,000 to $4,000, replacing the Affordable Care Act’s income-based subsidies. Credits for a single household would be limited at $14,000. Subsidies would be phased out for higher-income Americans – for individuals earning $75,000 and at $150,000 for families.
  • The bill would end the penalty for both individuals who don’t have health insurance (the “individual mandate”) and employers who don’t offer it (the employer mandate).
  • Even though the individual mandate is effectively eliminated, the bill does contain a new requirement that individuals maintain continuous coverage or face a financial penalty the next time they obtain insurance. A person whose coverage lapses would have to pay a 30 percent surcharge on premiums for a year when they sign up again.
  • Starting in 2018, the proposed bill would eliminate many of Obamacare’s taxes, including those on prescription and over-the-counter drugs, tanning services and health savings accounts.
  • The bill also includes $100 billion for state grants aimed at stabilizing the individual market over 10 years. States could use this money to create reinsurance programs or high-risk pools to cover the costs of the sickest, most expensive customers.
  • The House plan would also let insurers charger older customers more, while dropping costs for younger customers. Currently, insurers can charge their oldest customers no more than three times as much as younger enrollees, but the House plan increases that to a five-to-one ratio.

Again, we’ll plan to have more analysis, detail and reaction as the process unfolds. At this stage, despite now having more detail than we’ve had up until this point, key questions remain unanswered – questions that will shape and determine the outcome of the legislation. First, how much does the bill cost and what impact will it have on the number of people with insurance? That information will be determined by the CBO, and Congressional leaders have pledged to have those questions answered by the time the bill moves to the floor. Second, does it have the votes needed to pass? Both House conservatives and Senate moderates expressed their concerns about the bill yesterday. Margins are very close in both chambers, and no Democrats are expected to support this effort – meaning Congressional leaders can only afford a small handful of “no” votes on their side for the bill to stand a chance of passage.

Want to watch the legislative process in action? Both Energy and Commerce and Ways and Means will webcast their legislative markups on their respective Committee websites, starting Wednesday at 10:30 AM.

As Congress Returns, Leaks, Rumors and Disagreements Dominate the ACA Debate

By Oliver Spurgeon and John Sawyer, NACHC Federal Affairs Team

Normally, a Congressional recess, where Members travel home to hold meetings with constituents in their districts, is a relatively quiet time for those of us in Washington. Staffers on the Hill don jeans in lieu of suits, and may pull back to working 8 or 10-hour days, rather than the typical 12+. For those of us following the health care debate in Washington closely, however, last week’s recess was anything but boring.

Friday morning, a leaked and dated draft of House Republicans’ budget reconciliation bill ‒ their initial ideas to repeal the Affordable Care Act (ACA) ‒ landed in inboxes across Washington as lobbyists and staffers were finishing their morning coffee. Judging by the crooked pages, missing page numbers, and numerous pen scribbles throughout the document, the effort is far from complete. Yet after almost 7 years of Congressional pledges to “repeal and replace” the Affordable Care Act (ACA), and roughly two months of relative inaction on Capitol Hill, the draft bill does provide more detailed insight into thinking amongst House leaders than had previously been available. The bill would roll back the ACA Medicaid expansion, replace the ACA premium subsidies (which are determined based on income) with tax credits based on age, make funds available to States to create high-risk pools or other “innovations,” and would attempt a major structural change to the Medicaid program – shifting away from the current entitlement structure to one where federal contributions are capped. A good summary of the provisions is available on Health Affairs’ blog here.

Yet the leaked draft was also quite dated, with a date-stamp indicating it was current thinking as of February 10th. Two weeks is a lifetime in politics, as they say – and the same goes for complex legislation. This rule of thumb definitely applies as bills get more complex, and can often result in first drafts and final products that are miles apart in terms of content and outcomes. The 2009-2010 effort to pass the ACA is a testament to that rule. Remember, after 15 months of debate ‒ passing a major bill through Congress was and still is a slow and tedious process ‒ the House’s initial draft of the ACA and the version signed into law looked nothing alike.

Friday also marked the beginning of the annual meeting of the National Governors Association here in Washington. Considering how intertwined the ACA is with state-level policy and politics, the nation’s Governors are expected to be among the most important voices as Congress considers health policy this year. So what emerged from the Governors discussions? More disagreements, even among the majority Republican governors, and more leaks.

Medicaid seems to be the main flashpoint, understandably, for the governors. Specifically, documents leaked to vox.com and subsequent reports suggest that Republican governors are still in very different places from one another when it comes to the Medicaid expansion question, and the details of proposed structural changes like a per-capita cap or block grant. Disagreement among governors tends to make especially Senators very hesitant, since mostly Senators don’t like to go against their own state’s governor – especially when they come from the same party.

On the eve of Congress’ return, more disagreements came into the open. On Monday night, Rep. Mark Walker (R-NC), Chair of the conservative House Republican Study Committee, and Rep. Mark Meadows (R-NC), Chair of the even more conservative House Freedom Caucus, both announced that they could not support the House bill if it resembles the leaked draft. Together, Walker and Meadows represent well over 100 members of the House Republican Conference. So, without Democratic support, no bill is likely to pass if either of these groups is opposed, much less if both of them are.

All of this taken together suggests that Congress is actually quite a bit further from resolving the “repeal/replace” issue than anyone initially thought. If you need further proof that Congress remains in the starting blocks on healthcare reform, just look at of all the organizations still providing ideas to Republicans and Democrats in the House and Senate. Doctors and hospitals continue to beat the drum of patient access, and insurers, drugmakers and governors are all amongst those visiting with the Trump administration over the last couple of weeks. And of course, health centers are still weighing in with everyone involved in this process to highlight and promote the value and impact of our national system of care.

Bottom line? While we need all advocates to stay engaged in the debate (check out our fabulous new advocacy website, www.hcadvocacy.org for any number of ways to do so), it’s also vital that we stay focused on the health center message, and that we not bet the farm on leaks, rumors, or innuendo. In the meantime, the Federal Affairs team here at NACHC will continue to monitor developments on the Hill, and ensure that the voices of health centers are represented at the negotiating table. Continue to follow Health Centers on the Hill for future updates, plan to join us for the next monthly Policy and Advocacy Webinar on March 21st, and most important, come make the case in person during the 2017 NACHC Policy and Issues Forum.

If you have any additional questions, comments, or concerns, or just want to learn a little more about buzzwords like “per capita caps” and “block grants,” please feel free to contact us at federalaffairs@nachc.org.

 

Senate takes first (of many) steps toward ACA repeal

Early this morning, after a 7-hour marathon of votes on amendments, the U.S. Senate approved S.Con.Res 3, the Budget Resolution for the current federal fiscal year, FY2017, on a vote of 51-48. While Senate leadership referred to the bill as the “Obamacare Repeal Resolution,” it’s important for advocates to know that this bill itself does not make any changes to the law. That said, when (as is expected by the end of the week) the House passes an identical resolution, it puts Congress one step closer to eventual consideration of ACA repeal legislation.

So why does the process start here? As we noted in a blog post last week, this first step is what allows the Congress to use a process called Budget Reconciliation, a fast-track procedure that allows certain kinds of bills to pass the Senate with a simple majority of 51 votes, rather than the 60 votes usually necessary to overcome a Senate filibuster. The next step will be for both House and Senate to draft and debate the actual repeal legislation, find common ground enough to pass the bill through both chambers, and send it to soon-to-be-President Donald Trump for his signature or veto.

Increasingly, however, the strategy around ACA repeal is beginning to shift. A greater and greater number of Members, especially in the Senate, are expressing concern about the potential for passing a repeal bill without a clear plan in place for what a replacement for the ACA would look like. Health Center advocates heard that concern repeatedly in meetings this week, as our State Legislative Coordinators and certain Key Contacts flew in to DC and held meetings with Members on the Hill. In his press conference this week, the President-elect seemed to endorse the idea that a replacement must come simultaneously, saying:

“It will be essentially simultaneously. It will be various segments, you understand, but will most likely be on the same day or the same week but probably the same day. Could be the same hour. We’re going to do repeal and replace. Very complicated stuff.”

So while one step has been taken, many more remain. We’ll be keeping track here at Health Centers on the Hill, and reporting regularly. In the meantime, make sure you are making your voice heard with the new Congress and weighing in about the importance of health centers in 2017!