CAHU Health Reform Update and Talking Points

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August 9, 2017


Over the past two weeks, the U.S. Senate majority party attempted yet again to repeal and replace the federal Affordable Care Act (ACA). The efforts were, again, unsuccessful.

The first hurdle was to pass a procedural motion to permit the new attempt at health care reform. In order to pass the motion, the Republicans needed Vice President Mike Pence to cast the tie-breaking vote to approve moving forward with debate on healthcare reform legislation. Shortly thereafter, the Better Care Reconciliation Act (BCRA), first introduced in June, again failed to get the required 60 votes for approval. The Republicans then put forward the Obamacare Repeal Reconciliation Act (OPRA), based on a 2015 bill that proposed significant changes to the ACA. OPRA had passed the Senate in 2016, but vetoed by then-President Barack Obama. This time, OPRA was defeated with a 45-55 vote, with seven Republicans joining all Democrats in rejecting the bill.

On July 27, Senate Republican leadership introduced the HealthCare Freedom Act (HCFA), a "skinny" repeal of the ACA. HCFA proposed repealing the individual mandate and suspending the employer mandate penalties through 2025. The bill would also defund Planned Parenthood for one year, and repealed both the Medical Device Tax, and the Prevention and Public Health Fund.

The Congressional Budget Office (CBO) quickly scored the bill, indicating that 16 million Americans would be left uninsured. Overall, CBO estimated HCFA would produce a net savings of $160 billion, and a net increase in premiums of 20 percent.

Several Senators were concerned the HCFA would be passed as law by the House unchanged, and regarded the bill as a sham. Despite House Speaker Ryan's assurances that the bill would be subject to changes in a House-Senate conference committee, Senator John McCain (R-Ariz.) was not convinced. The final vote, on July 28, was 49 to 51, with Republican Senators McCain, Susan Collins (Maine) and Lisa Murkowski (Alaska) voting against it.

It is possible that Senate leadership could bring back the HCFA for another vote under the rules of the Senate; however, all action on HCFA must be completed by September 30, 2017.

With the inability of the U.S. Senate pass repeal and replace legislation on a majority-vote basis, it likely means any future efforts to change the ACA must be a bi-partisan effort. The good news is that Senators on both sides of the aisle expressed interest in working toward a solution based on repairing existing problems with the ACA itself. Any bi-partisan changes will need at least 60 votes to pass.

It remains to be seen if Senators will come together - both within their own parties as well as across party lines - to coalesce around a workable ACA reform solution.

In the meantime, President Donald Trump has not committed to continuing the Federal cost-sharing subsidies in 2019, causing significant uncertainty in the insurance marketplace. As agents know, market instability leads to higher premiums due to the unquantified risk taken on by carriers.

Federal inaction leaves current problems in the individual market, including issues of rising costs, higher deductibles, and market instability, left unresolved as the nation now enters the next ACA open enrollment season. In addition, key issues that NAHU has marked in need of reform such as the removal of Cadillac tax and the Medical Loss Ratio have not moved forward either. The good news is that NAHU believes that some of these issues will be addressed in coming months by either regulatory action or bi-partisan legislation.



On July 21, 2017, the California State Legislature recessed for their annual four-week summer break.  Once legislators return on August 21, 2017, they will have only 19 working days left in the first year of the two-year legislative session.  The last day of this session year is September 15, 2017 at midnight.  Over that 19-day period, each house of the Legislature will consider hundreds of bills, and then send them on to Governor Jerry Brown for action. 

The Assembly and Senate Appropriations Committees are set to hold hearings the week of August 21 on the fiscal impact of the bills that made it through the policy hearings in early summer.   This includes a hearing on CAHU-supported SB 17 (Hernandez).   

CAHU supports SB 17 because it promote transparency in the health care system by requiring drug makers to give prior notice to purchasers before raising prices.  Agents have been concerned for a number of years that continually rising drug prices play a major role in driving up the overall cost of healthcare both in California and nationally.

SB 17, as amended July 20, 2017, proposes new cost reporting to regulators by health plans and carriers on cost of the 25 most frequently prescribed drugs.  Reporting is also required on the 25 most costly drugs by total annual spending and the 25 drugs with the highest year-over-year increase in total annual spending as part of their annual rate filings with either the Department of Insurance or the Department of Managed Health Care. 

The bill also requires drug manufacturers to notify certain purchasers in writing at least 60 days prior to the planned effective date, if they are increasing the wholesale acquisition cost of a prescription drug that costs at least $40 by 10 percent or more, including any prior increases in the past two years, cumulatively.  Manufacturers must also supply information to the Office of Statewide Health Planning and Development (OSHPD) on reasons for increases as well as information on new drugs coming into the market. 

Purchasers are, as defined in SB 17, to be the state of California including, but not limited to, the Public Employees' Retirement System, the State Department of Health Care Services, the Department of General Services, and the Department of Corrections and Rehabilitation, or an entity acting on behalf of a state purchaser.  A purchaser is also a licensed health care service plan; a health insurer holding a valid outstanding certificate of authority from the Insurance Commissioner; or a pharmacy benefit manager (PBM).    

CAHU Health Care Retreat

Please also join us in Pala, September 11-13 for the CAHU Health Care Retreat, where you'll get the latest legislative updates and the opportunity to learn how to keep moving your business forward in the current atmosphere.   

Registration is Open , including Vanguard Council Karaoke AND Morning Wellness Events!