Employer-Focused Reforms Absent From Budget Deal

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Employer-Focused Reforms Absent From Budget Deal
Calendar14 February 2018

The massive budget deal (HR 1892) signed into law Feb. 9 raises caps on government spending for the remainder of fiscal 2018 and 2019 and includes a broad range of health policy provisions directed at public programs. These include a slew of Medicare changes, new monies for the opioid crisis and mental health treatment, and an extension of funding for the Children's Health Insurance Program (CHIP). Legislation to stabilize the individual insurance market and make employer-focused reforms was left out, though the new law sets up the need for more targeted spending legislation under the higher caps in late March that could be a vehicle for these initiatives.

Medicare changes. The Bipartisan Budget Act of 2018 repeals an Independent Payment Advisory Board (IPAB) included in the Affordable Care Act (ACA). The IPAB, which was never established, would have been charged with reducing Medicare spending. Other Medicare revisions include expanded use of telehealth services, increased Part B and D premiums for certain high-income beneficiaries, and coinsurance changes for beneficiaries who have reached Part D's drug coverage gap (the so-called donut hole). Lawmakers also added language aimed at encouraging more providers to participate in recently created Medicare payment systems designed to reward quality of care.

Extended CHIP funding. CHIP funding is extended for an additional four years beyond the previous six-year extension provided in stopgap spending legislation enacted in January, or through FY 2027. Congressional efforts to extend CHIP had stalled after it expired at the end of September 2017 because of disputes over possible offsets to fund the program.

Market stabilization changes left out. The new law gives Congress until March 23 to flesh out specific funding levels for fiscal 2018 under the newly lifted caps. That detailed 2018 spending bill could carry other health care items, including legislation aimed at stabilizing the individual insurance market.
Lawmakers are focusing on proposals to restore funding for the ACA's cost-sharing reduction subsidies that the Trump administration stopped paying to insurers in October 2017, give more flexibility to states to pursue their own reforms under the law’s “Section 1332” innovation waivers, and provide financial help for states to set up reinsurance programs for high-cost patients.

Providing any new funds to help prop up the ACA will face fierce resistance from GOP conservatives, however, even though President Trump has curiously just proposed two years of funding for the subsidies and new money for the ACA’s risk corridor program in his fiscal 2019 budget proposal. Congressional Republicans have cut off most of the funds for the program, which was intended to help offset insurer losses during the first three years of the law’s insurance exchanges. And though most Republican lawmakers support giving states more leeway to pursue their own reforms, opposition from Senate Democrats fearing a potential loss of consumer protections will likely be a formidable barrier.

Employers urging additional reforms. Some key items on employers' legislative agenda will be in the mix as potential add-ons to the late-March spending package. These include health savings account (HSA) enhancements, such as an increase in the maximum annual HSA contribution to the statutory high-deductible health plan out-of-pocket limits; retroactive relief from employer mandate assessments starting in 2015; and repeal of the employer mandate entirely.

Plan sponsor groups argue that the burdensome employer mandate no longer serves its original purpose of supporting the soon-to-be-gutted individual mandate, but it's not clear if Congress will have the time or appetite to tackle such a big change to the ACA in an election year.

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