October Washington, D.C. Update

With never a dull moment in Washington, D.C., the past month has proven that anything and everything is possible. After repeated attempts to repeal the Affordable Care Act (ACA), most observers had written off this partisan effort. Yet unexpectedly in mid-September, Senate Republicans made another ultimately unsuccessful attempt at repealing the ACA.

In other surprising news this month, the White House, without consulting with congressional Republicans, reached an agreement with congressional Democrats to extend fiscal year 2017 (FY17) spending levels and suspend the debt ceiling for three months. The deal was reportedly reached during an Oval Office meeting with House and Senate congressional leadership when President Trump unexpectedly sided with “Chuck and Nancy,” (Senate Minority Leader Chuck Schumer (D-NY) and House Minority Leader Nancy Pelosi (D-CA)) ignoring advice from House Speaker Paul Ryan (R-WI) and Senate Majority Leader Mitch McConnell (R-KY) that the GOP maintain a united front and push for Democratic concessions, including extending the debt limit until after the 2018 elections.

Looking forward, Congress faces a full calendar for October and November, including a new December 8 deadline for FY18 appropriations measures and an extension of the National Flood Insurance Program, as well as reauthorization of the Children’s Health Insurance Program (CHIP). Add to that agenda consideration of the Administration’s $29 billion appropriations request for recovery efforts related to recent hurricanes and wildfires (including Hurricane Maria’s impact on Puerto Rico), a potential bipartisan ACA market stabilization measure, and congressional Republicans’ desire to move forward with tax reform.

In this month’s Washington, D.C. Update, we examine:

Please feel free to reach out for additional information on these topics or other issues of importance.

Sheila Burke
Chair, Government Relations and Public Policy
Baker Donelson

White House Reaches Deal with Congressional Democrats to Keep Government Open and Suspend Debt Limit Until December

President Trump came to an agreement with congressional Democrats to extend FY17 federal appropriations and suspend the debt limit until December 8. The deal, which took congressional Republicans by surprise, was paired with a federal emergency appropriation for hurricane relief in the southeastern United States and passed the Senate by a vote of 80 to 17 and the House by a vote of 316 to 90 with all dissenting votes coming from Republican members. The three-month duration of the agreement, which opened a significant rift between Republican congressional leadership and the White House, gives Congress the rest of the fall to come to some sort of agreement over FY18 appropriations and the debt ceiling…

Congressional Republicans and White House Release Outline of Tax Reform Proposal

On September 27, the White House and its allies on Capitol Hill released the outline of their long-promised tax reform proposal. Generally, the outline seeks to create three individual income tax rates (12, 25, and 35 percent), eliminate many personal exemptions and deductions, lower the corporate tax rate to 20 percent, and implement a territorial tax system. The plan is primarily based on House Speaker Ryan’s “A Better Way” with the exception of the Border Adjustment Tax, which was not included. The proposal was only an outline and much of the plan will need to be worked out by the tax-writing committees in the House and Senate. Look for the debate over tax reform to be intense as congressional Republicans attempt to move the measure through the streamlined reconciliation process over the coming months…

Graham-Cassidy Falters; Bipartisan Talks Restart on Market Stabilization

Following defections from Senators Rand Paul (R-KY), John McCain (R-AZ), and Susan Collins (R-ME), Senate Republican leaders announced on September 26 that they did not have the votes for the Graham-Cassidy plan – the last attempt to push ACA repeal on a partisan vote before the Fiscal Year (FY) 2017 Budget Reconciliation expired on September 30. After initial talks halted due to the Graham-Cassidy push, Senate Health, Education, Labor and Pensions (HELP) Committee Chair Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) reportedly restarted negotiations to find consensus on a limited bipartisan stabilization plan for the individual market. A key sticking point in the debate is the level of state flexibility to waive ACA insurance regulations. Even if a deal were reached, Senate Republicans would need to overcome resistance from conservatives and skeptical House Republicans to achieve passage…

HHS Secretary Tom Price Resigns and the Search Begins for Replacement

Department of Health and Human Services (HHS) Secretary Tom Price resigned on September 29, following the collapse of Republicans’ efforts to repeal-and-replace the Affordable Care Act (ACA) and revelations that he spent more than $1 million on charter and military airplane travel at taxpayers’ expense. Price’s resignation has significant implications for HHS’s regulatory priorities, including enforcement of the ACA, regulatory flexibility on physician practices and the broader health care industry, efforts to combat opioid abuse and childhood obesity, and other HHS initiatives…

Federal Funding for CHIP Expires, Pending Congressional Reauthorization

Federal funding for the Children’s Health Insurance Program (CHIP) – which covers nearly nine million children nationwide at a total cost of approximately $14 billion per year – expired on September 30 as congressional action was sidelined by the focus on Republicans’ ACA repeal-and-replace efforts. On October 4, the Senate Finance and House Energy and Commerce Committees held their respective markups and advanced legislation for a five-year CHIP reauthorization. Congress is seeking to quickly pass an extension of CHIP funding this fall before states run out of money and are forced to reduce coverage, but reaching agreement on fiscal offsets for the legislation is likely to prove contentious…

Trump Administration Broadens Employer Exemption from ACA’s Contraceptive Coverage Requirements

On October 6, the Trump Administration issued two new interim final rules that significantly expand exemptions for employers to the ACA’s requirements to provide free contraceptive coverage. The new regulations, effective immediately, allow exemptions for 1) any employer or university with a health plan with objections to contraception based on religious beliefs, and 2) any non-profit or closely-held for-profit employer with moral objections. These regulations represent a significant departure from the previous standard, under which exemptions were limited to closely-held employers’ religious beliefs only (in addition to churches and some religious organizations that have always been exempt). Under the new interim final rules, many more employers may elect to withhold no-cost contraceptive coverage from their health plans…

Trump Executive Order Expected to Expand Association Health Plans and Short-Term Coverage

President Trump is expected to issue an executive order in the coming days that would direct federal agencies to expand access to association health plans (AHPs), which would be exempt from the ACA’s coverage requirements and eligible to be sold across state lines. The executive order would also expand access to short-term health plans, previously limited to 90 days, by allowing these plans to be purchased for up to a year. Expanding access to AHPs and short-term insurance plans would likely create cheaper, less comprehensive insurance options. However, this new policy may also encourage adverse selection that could increase premiums on the individual market if healthier consumers flock to these plans, leaving behind only sicker, more expensive consumers purchasing comprehensive coverage through the ACA’s insurance exchanges…

Lawmakers Approve a Six-Month Extension of FAA Authorization

On September 28, Congress approved a six-month extension to the Federal Aviation Administration (FAA) authorization, heading off a partial shutdown of the FAA. Expect negotiations over House Transportation and Infrastructure Chairman Bill Schuster’s (R-PA) proposal to spin off the FAA’s Air Traffic Control to a non-profit entity to continue into the spring. Congress now has until the end of March 2018 to come up with a solution to the stalemate or pass another short-term extension…