Daily on Healthcare, sponsored by SBEC: Obamacare taxes bid their farewell

Getting the axe is the health insurance tax, which contributed to higher healthcare spending in 2018, the 2.3% excise tax on medical devices, and the “Cadillac tax,” a levy favored by economists, and just about nobody else, that was supposed to control spending by imposing a 40% tax on expensive employer plans. The “Cadillac tax” was sold as a tax on people who get overly generous health plans, but because the cost of healthcare keeps rising, it turns out quite a lot of people have these so-called “Cadillac” plans, including unions that side heavily with Democrats.

That’s why Democrats are OK with repealing these parts of Obamacare. But what’s important to remember is that the taxes were sold to Democrats during Obamacare’s passage as necessary to pay for the $1 trillion law. Democrats, including former President Barack Obama, touted the law as fiscally responsible and “paid for.”

That won’t be so much the case after these taxes go away. And, as Kaiser Health News’ Julie Rovner pointed out recently, other Obamacare taxes have seen their death over the years. For instance, the penalty on the uninsured, zeroed out by Republicans in the tax overhaul, brought in $4 billion in 2018.

So how did we get here? The taxes have actually been consistently unpopular among lawmakers. The tax on health insurance makes premiums more expensive for enrollees, and the medical device tax has been a headache for lawmakers who represent states that are home to large medical device companies. Over the years, the taxes have been suspended off and on, and the “Cadillac tax” never even went into effect. Now, a decade since Obamacare passed, there’s a bipartisan agreement to make them go away permanently.

One thing Democrats can lean on as they vote to toss the taxes: Obamacare has cost less than the Congressional Budget Office predicted. But that’s largely because fewer people signed up for the health insurance exchanges than expected. At the same time, President Trump cutting off direct payments for cost-sharing reduction subsidies was also more costly to the government.

One thing public option and ‘Medicare for all’ proponents can take away from this: Be careful who you tax. It’s unpopular to tax the industry, which argues that higher taxes get in the way of innovation, get passed onto patients in the form of higher costs and cost jobs. Two taxes that have been durable? A tax on Medicare for people with higher incomes and a tax on net investment income.

While we’re at it, we can also point out that lower Medicare payments to providers have stuck, and were even proposed in Trump’s most recent budget.

Good morning and welcome to the Washington Examiner’s Daily on Healthcare! This newsletter is written by senior healthcare reporter Kimberly Leonard (@LeonardKL) and healthcare reporter Cassidy Morrison (@CassMorrison94). You can reach us with tips, calendar items, or suggestions at [email protected]. If someone forwarded you this email and you’d like to receive it regularly, you can subscribe here.

PROPOSED RULE WOULD BOOST NUMBER OF ORGANS AVAILABLE FOR TRANSPLANT: The Trump administration told reporters Tuesday that Health and Human Services has proposed a rule that would increase the number of organs available for transplants by making organ procurement organizations consider “imperfect” organs from people who currently would not be permitted to donate in order to boost the number of available organs.

While most older donors and those with hypertension are excluded today, the proposed rule would mandate that they be considered for safe transplantation. Organs coming from donors who have Hepatitis C will be considered, because the virus is curable, and organs from donors who are HIV+ will be considered for donation to patients who are also HIV+. A senior administration aide said about 5,000 more organs will become available if proposed rule is finalized.

BESHEAR PULLS THE PLUG ON KENTUCKY WORK REQUIREMENTS: Newly elected Gov. Steve Beshear, a Democrat, announced Monday that the state is no longer going to require certain Medicaid beneficiaries to work or train for work as a condition of receiving government-funded healthcare. The program was started under Bershear’s Republican predecessor, Matt Bevin, but was blocked by a federal judge. Beshear’s lawyers will ask the court to drop Kentucky from any further legal challenges seeking approval to enact Bevin’s plan, according to the Courier-Journal.

WILL CONGRESS GAIN ANOTHER MAJOR MENTAL HEALTH ADVOCATE? Here’s something that caught our eye: Amy Kennedy, a mental health advocate and former teacher married to former Rhode Island congressman Patrick Kennedy, has formed an exploratory committee to consider a House run. She’s got her eye on the seat of Jeff Van Drew, who is switching to the Republican Party. Kennedy pushed for mental health reforms while in Congress, and revealed that he had bipolar disorder after he was in an accident by the Capitol. Upon leaving Congress he continued to advocate in the field.

HYDE AMENDMENT STAYS IN BUDGET: We noticed that the amendment, which prohibits federal funds from paying for most abortions, remains part of the spending bill, despite a push by Democratic leaders and presidential candidates to end it. The bill also doesn’t contain language that would block Trump administration rules prohibiting Title X grantees from directly referring to abortions. This increases the chances that the bills would pass on time, because they’d otherwise be met with opposition from Republicans.

AND THERE ARE A COUPLE OF PROVISIONS RELATED TO ANIMAL RESEARCH: The spending bill contains an agreement that the National Institutes of Health will provide a report in a year that will detail alternatives to using primates, how costly it would be to switch to alternatives, and the positives and drawbacks of doing so. Another piece of the bill calls for the reduction and elimination within five years of using cats, dogs, and monkeys in research done at the Department of Veterans Affairs.

FUNDING FOR GUN VIOLENCE RESEARCH GOES INTO SPENDING BILL FOR FIRST TIME IN DECADES: Congress will likely approve $25 million in funding for gun violence research for the first time in 20 years, even though Democrats wanted double that amount. Half of the money will go to the Centers for Disease Control and Prevention and the rest will go to the National Institutes of Health. Democrats have repeatedly called for gun violence research funding in response to numerous fatal mass shootings. They got close when Congress “clarified” the 1996 Dickey Amendment in 2018, which prohibited federal agencies from promoting gun control, so that agencies could research gun violence. Still, House Democrats haven’t been able to get GOP support for funding research.

ALEXANDER PLEDGES TO MAKE HEALTHCARE COST LEGISLATION A TOP PRIORITY IN 2020: Senate Health, Education, Labor, and Pensions committee chairman Lamar Alexander vowed to keep surprise billing legislation “at the top of Congress’ to-do list in 2020 until it’s done.” Alexander’s Lower Health Care Costs Act never left the Senate HELP committee but the issue of surprise medical billing may be attached to a healthcare extender package due May 22.

VAPING STUDY FINDS A LINK BETWEEN E-CIGARETTES AND RESPIRATORY DISEASES: University of California, San Francisco researchers found a link between e-cigarette use and emphysema and bronchitis, the same chronic lung diseases that regular cigarette smokers are vulnerable to. The first-of-its kind study on the long-term effects of e-cigarette use found that e-cigarette users are 29% more likely to contract a lung disease than those who do not use e-cigarettes, and the rate is even higher for those who use e-cigarettes in conjunction with regular cigarettes.

CMS EXTENDS OPEN ENROLLMENT PERIOD TO WEDNESDAY: The Centers for Medicare and Medicaid Services pushed the open enrollment deadline for plans in the Obamacare marketplace to Wednesday after technical glitches on healthcare.gov kept many from enrolling on time to meet the Dec. 15 deadline. Technical troubles plagued the site under the Obama administration, and people were given “grace periods” in which they could enroll in a plan. This is the first time similar glitches were seen under the Trump administration, and CMS said Monday it was extending the deadline to Dec. 18 by 3 a.m. EST “in an abundance of caution.”

Californians have until Friday to enroll: The state’s health insurance marketplace Covered California has extended the health plan enrollment deadline by a full four days, to Dec. 20, after seeing “a surge in enrollment” late last week. Gov. Gavin Newsom helped get the word out via Twitter Monday not only about the deadline extension, but also about California’s subsidies to help more middle-income Californians afford coverage. Most people have until Jan. 31 to get coverage, but coverage will go into effect Jan. 1 for those who enroll by Dec. 20.

The Rundown

Texas Tribune Nonprofits claim Texas broke the law by leaving them out of Medicaid contracts

The Seattle Times Flu is affecting more people than usual, in Washington and around the country

Stat Purdue, maker of OxyContin, quietly splits ways with PhRMA as it pulls back from lobbying

CNN Hospital costs for treating newborns in opioid withdrawal jumped to $572.7 million

Kaiser Health News Despite quick fixes, Kaiser Permanente mental health care still lags

Calendar

TUESDAY | Dec. 17

Congress in session.

10 a.m. Dirksen 226. Senate Judiciary Committee hearing on “Tackling the Opioid Crisis: A Whole-of-Government Approach.” Details.

WEDNESDAY | Dec. 18

Deadline for healthcare.gov open enrollment.

THURSDAY | Dec. 19

8 p.m. Loyola Marymount University in Los Angeles. Sixth Democratic debate, hosted with PBS NewsHour and Politico.

FRIDAY | Dec. 20

Deadline for spending bill.