December 17, 2019

Congress just unveiled a FY 2020 spending agreement to avoid a government shutdown

Daily Briefing

    Congressional negotiators on Monday released a nearly $1.4 trillion spending agreement that would fund the federal government, including health agencies, through end of the fiscal year (FY) 2020.

    The spending package includes several health care provisions, including those to permanently repeal three Affordable Care Act (AA) taxes, delay cuts to Medicaid disproportionate-share hospital (DSH) payments, raise the federal minimum tobacco purchasing age, and more.

    Background

    Congress in August approved a two-year budget deal that raised the U.S. debt ceiling, set new federal spending levels, averted $125 billion in automatic spending cuts, and opened the door for negotiations on individual appropriations measures for FY 2020, which began Oct. 1. However, lawmakers have yet to approve 12 full appropriations measures that lay out specific funding levels for federal departments and agencies, including HHS, for FY 2020.

    Federal lawmakers and President Trump have enacted short-term spending measures that have extended federal funding for the government through Dec. 20, meaning Congress must approve and Trump must sign another measure to fund the federal government by the end of Friday to avoid a government shutdown.

    Details on the spending agreement

    Congressional leaders and Department of the Treasury Secretary Steven Mnuchin negotiated the final year-end spending package, which would expire at the end of FY 2020. The package, which raises discretionary federal spending by about $50 billion when compared with FY 2019, would fund federal health care departments and agencies through Sept. 30, 2020, as well as several federal health care programs through May 22, 2020.

    Funding for health care agencies, programs

    For example, the spending package includes:

    • $3.16 billion in total discretionary funding for FDA, with $78.9 million earmarked for medical product and food safety efforts and $12.1 million for infrastructure, as well as $2 million for FDA to work on developing a regulatory framework for cannabidiol and $75 million for advancing expedited medical product development under the 21st Century Cures Act;
    • $2.9 billion through FY 2029 for the Patient-Centered Outcomes Research Institute; and
    • $25 million for CDC and NIH to conduct research on gun violence, marking the first time Congress would allocate federal funding for gun violence research in more than two decades.

    The spending package also would extend expiring funding for several federal health care programs through May 22, 2020, according to Modern Healthcare.

    For example, the bill would extend federal Medicaid funding for Puerto Rico and other U.S. territories for two years.

    The spending package also would extend funding through May 22, 2020, for:

    • Aging and Disability Resource Centers;
    • Area Agencies on Aging;
    • Certified Community Behavioral Health Clinics;
    • Certified Community Health Centers;
    • The National Health Service Corps;
    • The Patient-Centered Outcomes Research Trust Fund;
    • State Health Insurance Assistance Programs;
    • Teaching health centers' graduate medical education programs;
    • The Special Diabetes Program; and
    • The Special Diabetes Program for Indians.

    In addition, the spending package also would delay planned cuts to Medicaid DSH payments for five months.

    Health policy changes

    The spending bill also includes several changes to federal health care policies.

    For example, the spending package would eliminate the ACA's:

    • Health insurance tax beginning on Dec. 31, 2020;
    • Medical device tax beginning on Dec. 31, 2019; and
    • So-called "Cadillac tax" on high-cost employer-sponsored health plans, which currently is scheduled to take effect in 2022, beginning on Dec. 31, 2019.

    The Congressional Budget Office in May projected that repealing the:

    • Cadillac tax would cost the government $193 billion over a decade;
    • Health insurance tax would cost the government $164 billion over a decade; and
    • Medical device tax would cost the government $20 billion over a decade.

    In addition, the spending package would prohibit HHS from ending auto-enrollment policies for ACA exchange plans and from banning an insurer practice known as "silver-loading" for the 2021 coverage year.

    The spending package also includes:

    • The Bipartisan American Miners Act, which would secure lifetime health benefits for certain miners; and
    • The Creating and Restoring Equal Access to Equivalent Samples, or CREATES, Act, which aims to bolster generic drug competition in the United States.

    In addition, the spending package would:

    • Codify certain policies on biologic drugs into law in order to prevent drugmakers from gaming the biosimilar application process;
    • Clarify which drugs should be considered biologics and cannot receive new market exclusivities; and
    • Increase the federal age at which U.S. residents may purchase tobacco from 18 to 21.

    The spending package does not include measures to prevent so-called "surprise" medical bills or to specifically target rising prescription drug costs, Modern Healthcare reports. A senior House Democratic aide said lawmakers included only a short-term extension for some health care programs—through May 22, 2020—in hopes that a bill to further extend funding for those programs could serve as a vehicle to also pass legislation to address surprise medical bills, according to Politico.

    Next steps

    A Democratic aide said House Democrats split all 12 FY 2020 spending bills into two packages and plan to bring them to the House floor for consideration on Tuesday, Politico reports.

    According to Politico, both the House and Senate are expected to approve the measures and send them to Trump before government funding expires at 12:01 AM on Dec. 21. Trump is expected to sign the measures into law, but a Trump administration official on Monday said aides are still reviewing the spending measures.

    Reaction

    House Appropriations Committee Chair Nita Lowey (D-N.Y.) applauded the deal's proposal to fund research on gun violence. "Since 1996, I have been fighting to give public health researches the tools to study the causes of firearm injury in the hopes that more Americans can be spared from violence, suicide, and firearm-related accidents. This research will finally go forward," she said.

    Observers said repealing the ACA's Cadillac, health insurance, and medical device taxes represents a victory for the health care industry, which has lobbied against the taxes since the ACA was enacted in 2010, Politico reports. A number of observers and industry groups applauded the proposal to eliminate the taxes.

    For example, American Benefits Council President James Klein said, "Repeal of the 40% 'Cadillac Tax' finally removes an onerous burden from health plans that 178 million Americans reply upon."

    Cynthia Cox, director of the Kaiser Family Foundation's program on the ACA, said the law's health insurance tax "could have meant higher deductibles for employees or less choice." Cox said the tax's repeal would "have a positive effect on a lot of people with health insurance coverage."

    However, Kathleen Sebelius, who served as HHS secretary under former President Barack Obama's administration, said repealing the ACA taxes "takes a big step backwards."

    Marc Goldwein, a SVP and senior policy director at Responsible Federal Budget, said, "The Cadillac tax may have resulted in some modest cost increases when it took effect, but what it was actually going to do is reduce health care costs, which would have raised wages" (Luthi/Emma, Politico, 12/16; Cohrs, Modern Healthcare, 12/16; Alonso-Zaldivar, Associated Press, 12/16; Duehren/Rubin, Wall Street Journal, 12/16; Cowan/Cornwell, Reuters, 12/19; Weixel, The Hill, 12/16; Owens, "Vitals," Axios, 12/17; Lotven/Martin, Inside Health Policy, 12/16 [subscription required]; Lienhard, Inside Health Policy, 12/16 [subscription required]; Martin, Inside Health Policy, 12/16 [subscription required]).

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