Shutdown Update
The partial government shutdown is now in its third week as President Trump and Democratic leaders have failed to come to an agreement on funding for border security. The President is requesting more than $5 billion for construction of a border wall, while Democrats have offered about $1.3 billion – an extension of existing funding levels. House Democrats have begun pressuring Republicans by advancing individual appropriations bills to reopen portions of the government, but the Administration will not accept a piecemeal reopening without border wall funding. Further, Senate Republicans are declining to take up any legislation that is not supported by the President.
With no end to the impasse in sight, it seems likely that this shutdown could break the record for the longest ever at 21 days (during the Clinton Administration). While the Department of Health and Human Services (HHS) has full-year funding through September 30, 2019, a number of other departments have been affected by the shutdown, including Agriculture, Commerce, Homeland Security, Housing and Urban Development, Interior, Justice, and the Treasury. The shuttered agencies employ about 800,000 federal workers who will go without pay until the shutdown ends.
The 2010 “pay-as-you-go” or “PAYGO” law requires spending increases or tax cuts to be offset with cuts to programs or additional revenue to avoid increasing the deficit. If the shutdown lingers through January 24, current law would require the Administration to cut about $839 million from nonexempt federal benefit programs to avoid increasing the deficit. About 90 percent of the cuts, or $753 million, would come from Medicare, which is the largest nonexempt benefit program. A senior OMB official indicated that the documentation to trigger the cuts is on hold during the shutdown, however, so the Administration would not immediately release a sequestration order.
Meanwhile, the President has floated the idea of declaring a national emergency in order to build a border wall using Department of Defense funding without explicit authorization from Congress, though he declined to do so during his televised address to the nation on January 8. Such a move would almost certainly be challenged in federal court, although the courts historically have been deferential to the Executive Branch in matters of national security. Rep. Mac Thornberry (R-TX), Ranking Member on the House Armed Services Committee, also has seriously questioned the use of Department of Defense funding for non-defense purposes.
Congressional Committee Update
The House Energy and Commerce Committee announced that it will hold hearings this month to examine the ACA court case and its impact, as well as a hearing on the Trump Administration's family separation policy. Rep. Frank Pallone (D-NJ) will chair the House Energy and Commerce Committee, while Rep. Greg Walden (R-OR) now is the Ranking Member. Rep. Anna Eshoo (D-CA) is expected to lead the Health Subcommittee. The House Democratic Steering and Policy Committee has recommended that the following Members be added to the Committee: Rep. Nanette Barragan (D-CA), Rep. Robin Kelly (D-IL), Rep. Marc Veasey (D-TX), Rep. Tom O’Halleran (D-AZ), Rep. Darren Soto (D-FL), Rep. Don McEachin (D-VA), Rep. Lisa Blunt Rochester (D-DE), and Rep. Ann McLane Kuster (D-NH).
Rep. Richie Neal (D-MA) and Rep. Kevin Brady (R-TX) will lead the House Ways and Means Committee. The House Democratic Steering and Policy Committee has recommended that the following Members be added to the Ways and Means Committees: Rep. Stephanie Murphy (D-FL), Rep. Brad Schneider (D-IL), Rep., Gwen Moore (D-WI), Rep. Dan Kildee (D-MI), Rep. Don Beyer (D-VA) , Rep. Steven Horsford (D-NV), Rep. Brendan Boyle (D-PA), Rep. Jimmy Panetta (D-CA), Rep. Tom Suozzi (D-NY), and Rep. Dwight Evans (D-PA). Chairman Neal is pushing to move a tax extenders package in the near future which may include a repeal of the medical device excise tax.
Senate Finance Committee Chairman Chuck Grassley (R-IA) recently laid out his policy priorities, which include consideration of drug pricing proposals and an examination of waste, fraud and abuse in Medicare and Medicaid, including improper payments. Chairman Grassley has a long history of using his oversight power in the health care space, and he noted his concerns with the quality and staffing of nursing homes and his interest in looking at how anti-competitive consolidations affect Medicare and Medicaid payments.
Texas v. Azar Update
On December 14, Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas ruled in Texas v. Azar that the ACA’s individual mandate is unconstitutional because Congress repealed the penalty for noncompliance with the mandate in the 2017 tax reform law. Judge O’Connor reasoned that, because the 2012 Supreme Court ruling upholding the individual mandate’s constitutionality hinged on it being a valid exercise of Congress’s taxation authority, the removal of the “tax” (i.e., the penalty for noncompliance) left no constitutional leg on which the mandate could stand.
Judge O’Connor further concluded that the individual mandate is “essential” to, and therefore inseverable from, the ACA and declared the entire statute invalid. The White House issued a statement shortly after the decision was released indicating that the law will remain in place pending appeal. The Centers for Medicare and Medicaid Services (CMS) also said that the agency will continue to implement the ACA and specifically noted that the work of the Center for Medicare & Medicaid Innovation (CMMI), which was authorized and funded by the ACA, will not be affected. To remove all doubt, on December 30, 2018, Judge O’Connor issued an order staying the effect of the prior order pending appeal.
The appeal to the Fifth Circuit Court of Appeals is being led by California Attorney General Xavier Becerra and several other state Democratic Attorneys General. Whatever the Fifth Circuit decides, the case ultimately could make its way to the U.S. Supreme Court, raising the possibility of a ruling in 2020 during the presidential campaign. The Supreme Court’s rulings often apply a presumption of severability, meaning that when the Court finds a portion of a law unconstitutional, it tries to preserve the rest of the law as much as possible.
The outlook for legislative action in the 116th Congress is unclear at present. The President was quick to declare victory soon after the decision, describing the ACA an “unconstitutional disaster” and calling for Congress to pass a new health care law to replace it. Senate Minority Leader Chuck Schumer (D-NY), meanwhile, said the ruling was “based on faulty legal reasoning,” while Speaker Pelosi has called the district court’s ruling “absurd” and an “assault on people with pre-existing conditions and Americans’ access to affordable health care.”
CMS Staff Changes
CMS has announced several staffing changes that may be of interest to TAHC&H. Chris Traylor will serve as Acting Director of the Center for Medicaid and CHIP Services. He previously served as Deputy Administrator for Strategic Initiatives in the Office of the Administrator, following 26 years of public sector service in Texas. He served as Executive Commissioner of the Texas Health and Human Services Commission (HHSC) until 2016 and was the state’s Medicaid director for over three years.
Additionally, Alec Aramanda will serve as Director of Stakeholder Engagement in the Office of the Administrator. He previously served as deputy Assistant Secretary for Legislation. Before that he served as a health staffer in the office of Sen. Ted Cruz (R-TX).