Jul 14, 2017

Axios Vitals

By Caitlin Owens
Caitlin Owens

Good morning ... Health care bill is put on hold, rewritten, steered to the right, and reintroduced. Moderates will be blamed if the bill goes down. Where have we seen this before?

For a fun way to follow all this, be sure to check the latest "Axios Sourced" video, featuring our own Caitlin Owens. She took a few minutes yesterday to walk through the policy, the politics, and the behind-the-scenes madness of covering this process.

It's all up to the moderates

If the Senate's health care bill dies, moderate Republicans will likely be the ones who kill it. And the changes released yesterday won't do much to allay their biggest concerns.

Conservatives won some major policy changes yesterday, in the form of Ted Cruz's consumer-choice proposal. Moderates didn't: The bill's Medicaid cuts are just as deep, and the latest version didn't do much to cover more people or make coverage more affordable to older, sicker consumers.

So, what did the moderates get? Money:

  • $45 billion to fight the opioid crisis.
  • An additional $70 billion to help stabilize insurance markets.
  • One particular funding formula was also revised to benefit just one state: Alaska, home to undecided Sen. Lisa Murkowski. The change could net Alaska nearly $750 million over the next 10 years, according to Bloomberg's math.

"We're making it rain on them," one senior GOP aide told Axios' Caitlin Owens.

This is what worked in the House: Conservatives won structural changes to the Affordable Care Act's insurance regulations, and some additional money for states brought moderates on board. Will it work in the Senate?

  • Sens. Susan Collins and Rand Paul said definitively that they'd vote against bringing the bill to the floor, leaving Senate Majority Leader Mitch McConnell with no more votes to spare.
  • Sen. Mike Lee said he's undecided, but if he follows Cruz, the ball would be in the moderates' court.
  • Other than Collins, the rest of the bill's moderate critics either stayed silent or said they're waiting for a score from the Congressional Budget Office.

What's next: We're expecting that CBO score early next week, though it may not include the biggest changes announced yesterday — Cruz's consumer-choice proposal (more on that in a minute). Even so, GOP leaders say the plan is still to hold a vote next week. Just like the plan from two weeks ago. Either way, expect plenty more haggling and last-minute changes over the next few days.

If the Senate takes up the bill: Watch Sen. John McCain. He says he's not happy because he didn't get his amendments to protect the Arizona Medicaid program. He'll try to change that.

What they said before and what they're saying now

In a March letter to McConnell, four Senate Republican moderates — Rob Portman, Shelley Moore Capito, Cory Gardner, and Murkowski — opposed the House bill because "we will not support a plan that does not include stability for Medicaid expansion populations or flexibility for states."

Now, here's what they're saying about the Senate bill, which has tighter long-term Medicaid spending limits than the House bill:

  • "As drafted, this bill will not ensure access to affordable health care in West Virginia, does not do enough to combat the opioid epidemic that is devastating my state, cuts traditional Medicaid too deeply, and harms rural health care providers." — Capito, in statement opposing original Senate bill
  • "I continue to have real concerns about the Medicaid policies in this bill, especially those that impact drug treatment at a time when Ohio is facing an opioid epidemic." — Portman, in statement opposing original Senate bill
  • "I look forward to reviewing the revised Senate health care legislation and forthcoming CBO report to determine the impact on West Virginians but continue to have serious concerns about the Medicaid provisions."Capito, on latest draft
  • "I'll review the text of this new legislation just like I did the last version, and I will review the analysis from the Congressional Budget Office when it becomes available."Portman, on latest draft
Republicans may sidestep CBO

Republicans might rely on the Trump administration — not CBO — to evaluate the effects of Cruz's consumer-choice policy, which was by far the biggest change released yesterday.

  • "I think we'll get other feedback from HHS, [the White House Office of Management and Budget] and others who also have models," Sen. John Thune said, according to The Hill.

But wait, you might say, because we're all Senate procedural experts now — don't the Senate budget rules require a CBO score before a vote? We talked to two experts on Senate procedure, and it turns out, the chamber's rules only require a score, not necessarily a CBO score.

"Is it forbidden under the law or Senate rules? Nope. Do I recall the Senate in the past using a different scorekeeper than CBO? Nope," George Washington University professor Sarah Binder told us.

Why it matters: The Senate typically relies on CBO because, well, that's the whole reason Congress created CBO: So it wouldn't be beholden to the executive branch's agenda when it wanted to know what a bill would do. "CBO was established precisely to avoid having to rely on the administration," Binder said.

Why it doesn't: Per Sen. Ron Johnson, yesterday: "It will be beneficial to America. So on the whole, I mean, I don't need a score to tell me that is a good thing."

The least convincing Republican holdout

It's Marco Rubio. He went on a mini-tweetstorm on Wednesday night, saying he needed things like more hospital money for Florida and the ability to waive Medicaid spending limits if there's another outbreak like the Zika virus. Yesterday, he told reporters he got some of what he needed, but he claimed he was still undecided on the bill.

  • "On the Medicaid side, I see things about it that are better than the original," Rubio said, including a provision that allows more Medicaid spending in a public health emergency — which takes care of his Zika concerns.
  • But he said he's still "concerned" about Florida's treatment as a state that didn't expand Medicaid: "I just want to make sure Florida's not penalized for not buying into an unfair baseline in perpetuity because we were fiscally responsible."

Reality check: Rubio is not going to be the vote that kills ACA repeal. But if you're a senator who wants maximum attention for your priorities, now's the time to get it.

Wall Street is licking its chops over health insurance earnings

Remember how health insurance companies posted record profits in the first quarter this year? Wall Street is expecting a lot more of the same.

Bob Herman combed through financial analyst reports and found that pretty much all of them were drooling over the upcoming second-quarter results for Aetna, Anthem, Cigna, Humana, UnitedHealth Group, and other large health insurers, which start rolling out next week.

Here's why: People are not getting admitted to the hospital as much, are putting off care, and are not filling as many prescriptions. Data and surveys from Citi, Credit Suisse, and Leerink Partners all show slow growth in hospital visits and drug prescriptions ("utilization" in wonk parlance). If people aren't going to the hospital and aren't picking up their drugs, that's money that stays in the pocket of the insurer.

Go deeper: This is happening partially due to the continued rise of high-deductible health plans — a trend that spans well before the ACA.

While you were Senate-ing

Other stuff that happened while you were distracted with the Senate bill:

  • The House Appropriations Labor-HHS subcommittee approved the HHS funding bill. The full committee is likely to take it up next week.
  • The Medicare cuts didn't get triggered. Here's the letter saying so, and here's what Sam wrote about it yesterday.
  • The Centers for Medicare and Medicaid Services put out new Medicare payment proposals. They'd slightly boost payment rates for outpatient facilities and surgery centers, allow total knee replacement surgeries to be done in an outpatient center (they currently can only be done in a hospital), and slash drug spending within a discount drug program.
  • HHS secretary Tom Price called the change on the drug discount program — the "340B" program — "a significant step toward fulfilling President Trump's promise to address rising drug prices."
  • Paul Howard of the Manhattan Institute agreed that it could be significant, because it would make Medicare pay hospitals the actual, discounted price that hospitals pay for those drugs.
Caitlin Owens

One goof: In yesterday's Vitals, we quoted a statement from Dan Hilferty, CEO of Independence Blue Cross, that we said was from this week. It was actually from June 27.

What we're watching next week: CBO score of most of the new bill, though probably not the Cruz provision. Expected Monday. And then the motion to take up the bill — which could end the whole effort if it doesn't succeed. Likely Tuesday.

Also, UnitedHealth Group and Johnson & Johnson kick off second-quarter earnings season, Tuesday, July 18. House Energy and Commerce oversight subcommittee hearing on the 340B drug discount program, Tuesday, July 18.

What else do you want to know about the bill? Give us a shout: david@axios.com, baker@axios.com.