The Senate on Thursday voted to approve two major spending packages to fund the federal government through fiscal year (FY) 2020 that include several health care provisions, such eliminating three Affordable Care Act taxes and raising the federal tobacco purchasing age to 21.
The spending packages now go to President Trump, who's expected to sign the bill before tonight's 11:59 p.m. deadline to avoid a government shutdown.
Details on spending agreement
The $1.4 trillion year-end spending bills include all 12 appropriations measures needed to fund the federal government, including HHS and other federal agencies through FY 2020. Congress split those measures into two packages:
- One that would fund HHS and other federal agencies; and
- One that would fund national security priorities.
The packages would raise discretionary federal spending by about $50 billion when compared with FY 2019 and would fund federal health care departments and agencies through Sept. 30, 2020. The package also would fund several federal health care programs through May 22, 2020.
Funding for health care agencies, programs
For example, the spending package for HHS and other federal agencies 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 develop a regulatory framework for cannabidiol and $75 million to advance expedited medical product development under the 21st Century Cures Act;
- $2.9 billion through FY 2029 for the Patient-Centered Outcomes Research Institute;
- $1.5 billion for state grants intended to help combat the opioid epidemic;
- $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;
- $19 million for SAMHSA's Suicide Prevention Lifeline, an increase of $7 million over last year.
The spending package also would extend federal Medicaid funding for Puerto Rico and other U.S. territories for two years, and includes funding for Veterans Affairs' Veterans Community Care Program. Puerto Rico under the deal is set to receive up to $5.7 billion in Medicaid funds over the two-year period.
In addition, the spending package 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.
The spending package also would delay planned cuts to Medicaid disproportionate-share hospital payments for five months.
The spending bill also includes several changes to the Affordable Care Act (ACA).
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 beginning on Dec. 31, 2019, which—absent the spending package's approval—currently is scheduled to take effect in 2022.
Overall, the Joint Committee on Taxation estimated that repealing those three ACA taxes would cumulatively cost the federal government about $373 billion over a decade.
However, insurance industry analysts said repealing the ACA's health insurance tax would mean insurers no longer have to pass on the cost of the tax to their enrollees through higher premiums. Further, the tax's repeal could result in Medicare Advantage (MA) insurers investing the money they would save from no longer having to pay the tax into supplemental benefits for MA beneficiaries, analysts said.
Sarah James, a senior research analyst at the financial services firm Piper Jaffray, said repealing the health insurance tax could help insurers "to stabilize the price of their products," which could lead to "more people choos[ing] to go with [MA] as opposed to being in fee-for-service" Medicare.
The spending package also 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.
Other health policy changes
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 (CREATES) Act, which aims to bolster generic drug competition in the United States.
In addition, the spending package would:
- Clarify which drugs should be considered biologics and which cannot receive new market exclusivities;
- Codify certain policies on biologic drugs to prevent drugmakers from gaming the biosimilar application process;
- Expand the definition of biologics to include chemically synthesized polypeptides, such as Eli Lilly's osteoporosis drug Forteo and Novo Nordisk's diabetes drug Victoza;
- Increase the federal age at which U.S. residents may purchase tobacco from 18 to 21; and
- Give hospitals that perform certain stem cell transplants an average of $50,000 to $65,000 in extra Medicare payments per procedure to cover the costs associated with acquiring those stem cells.
Some observers warned that the changes regarding biologic drugs could harm patients.
For example, the Association for Accessible Medicines said expanding the definition of a biologic to include chemically synthesized polypeptides would "dela[y] access to more-affordable generic and biosimilar medicines" and "is not in the best interest of patients," because it would make more drugs eligible to receive biologics' 12 years of market exclusivity. According to STAT+, chemically synthesized polypeptide medications currently are eligible for five years of market exclusivity.
Steven Knievel, an access to medicines advocate at Public Citizen, said, "This is unequivocally a giveaway to prescription drug corporations that will lead to higher drug prices."
However, FDA officials said the change could help to spur competition by making it easier for generic drugmakers to produce copies of chemically synthesized polypeptide medications. Anna Abram, FDA's deputy commissioner, and Janet Woodcock, director of FDA's Center for Drug Evaluation and Research, said the change "will help patients because it provides the potential for chemically synthesized follow-on insulins and other protein products to come to market through more efficient abbreviated pathways, regardless of how they are manufactured," STAT+ reports.
Spending package punts action on 'surprise' medical bills, Rx drug prices to 2020
The spending package does not include measures to prevent so-called "surprise" medical bills or to specifically target rising prescription drug costs. 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 (Maloney, Wall Street Journal, 12/19; Yen, AP/ABC News, 12/18; Cohrs, Modern Healthcare, 12/18; Sullivan, The Hill, 12/19; Florko, STAT+, 12/17 [subscription required]; Owens, "Vitals," Axios, 12/20; Scholtes/Emma, Politico, 12/19; Cowan, Reuters, 12/19).