McDermott+ Consulting is pleased to provide the McDermottPlus Check-Up, your regular update on health care policy from Washington, DC.

This Week’s Dose

As of this afternoon, Friday, November 6, the official election results remain unknown, although it appears that former Vice President Joe Biden has the clearest path to becoming the 46th President of the United States. Party control of Congress is also not fully settled. While Democrats will maintain their majority in the House of Representatives, run-off elections in Georgia will likely determine if Republicans hold the Senate. We are expecting that recounts and legal challenges will occur, further delaying official results. One thing that is certain is that the next President will assume office in January with a divided Congress and healthcare policy continuing to be a major issue. 

White House

Joe Biden Leading a Close Race for President of the United States. While it appears the former Vice President will likely win the election, we still do not know the final margin of victory as several states have yet to be called. Though it is likely not enough to win reelection, President Trump increased his turnout from 2016 in several key states, inoculating Republicans against the predicted blue wave. So far, Biden was able to flip Michigan and Wisconsin, which went to Trump in 2016, and two news organizations have also called Arizona for the former Vice President. Nevada, Georgia, Pennsylvania and North Carolina have yet to be called, though Biden holds narrow leads in all but North Carolina. President Trump held the swing states of Florida and Ohio, and has filed 10 lawsuits, six of which are still active, challenging ballot counts in other swing states. Assuming Biden wins the White House and Republicans hold the Senate, sweeping policy change will be difficult. Governing in 2021 might best be viewed as an ‘iron triangle’ between Biden, Senate Majority Leader Mitch McConnell (R-KY) and Minority Leader Chuck Schumer (D-NY), all three of whom have longstanding professional relationships. Whatever those three can agree upon is the likely median for legislation. While more progressive action, such as creating a public option to compete in the Affordable Care Act (ACA) commercial insurance exchange marketplace, seems less likely, opportunities for bipartisan reform are possible if policy proposals remain modest or focus on areas of consensus. Additional coronavirus (COVID-19) relief negotiations that have languished for months can restart now that the election has passed, and as always, surprise billing is an issue that remains out there for Congress to address if they can reach a compromise.

House

Democrats Maintained House Majority but Lost Some Moderate Seats. The Democrats are keeping the House but lost several seats in swing districts that Democrats won in 2018. Democrats will have a smaller majority (we discussed why the margin matters on this episode of the Health Policy Breakroom). Biden has voiced support for the current Democratic House leadership, but that may not prevent the progressive wing of the party from calling for change in the wake of these election results. Regardless of who leads, the Democratic caucus will be ideologically further left and restless, producing legislation that will not advance in the Senate while watching President Biden, McConnell and Schumer negotiate compromises that the House may have to pass without support from progressives. 

Senate

Senate Control Too Close to Call. As of Friday afternoon (November 6), the Senate elections remain divided 48 to 48, with four races uncalled. While incumbent Republican Dan Sullivan seems certain to win his race in Alaska (it has not been called because only 56% of the vote has been reported), two races in Georgia and one in North Carolina remain too close to call. Incumbents Thom Tillis (R-NC) and David Perdue (R-GA) are each ahead by about 2 percentage points in North Carolina and Georgia, respectively. The second Georgia Senate race between incumbent Kelly Loffler (R) and challenger Raphael Warnock will be decided by a runoff election in January. If Tillis and Perdue are reelected, Republicans will control the Senate by either 51 or 52 seats, depending on the outcome of the Georgia runoff. If either are defeated, or Perdue ends below 50% of the vote, thereby triggering a runoff of his own, control of the Senate will hinge on the January runoff election in Georgia (Perdue is currently at 49.8%, so a runoff is likely). Republicans have historically won runoff elections in Georgia, making Republican control of the Senate the more likely outcome. However, an upset is possible, and the Senate could end in a 50/50 split with the Vice President (expected to be Kamala Harris) casting the tiebreaking vote. Earlier, we predicted that if Democrats took the Senate by a large margin, they may have moved to eliminate the legislative filibuster. Even if Democrats do take control, it will be by such a narrow margin that it seems the filibuster is alive and well for now.

Courts

US Supreme Court Will Hear ACA Case Next Week. Next week, all eyes will turn to the Supreme Court, where the newly confirmed Justice Amy Coney Barrett will join her eight colleagues and hear oral arguments on November 10 in the case challenging the constitutionality of the ACA’s individual mandate. As we note in this +Insight, the Court is likely to affirm that the individual mandate is unconstitutional without a corresponding tax consequence, and can no longer be justified under Congress’ taxing authority. It also seems likely that a majority of the justices would hold that the individual mandate is severable from the remainder of the law, allowing everything but the mandate to stand. In an alternative but less likely scenario, the Court may hold that the mandate is unconstitutional, but that the mandate is not severable, meaning that the Court would strike down the entire ACA. A summary graphic of the possible outcomes is available here. 

Quick Hits

• The US Department of Health and Human Services (HHS) issued a notice of proposed rulemaking requiring the Department to review its regulations that have a significant economic impact every 10 years to determine whether they are still needed and effective. Regulations will expire if the Department does not review them in a timely manner. Comments on the proposal are due December 4, 2020.

• The Center for Medicare and Medicaid Innovation announced the 51 participating entities for the Direct Contracting Model implementation period, which runs from October 1, 2020, through March 31, 2021. The first performance year begins April 1, 2021.

• The Centers for Medicare and Medicaid Services (CMS) published Part II of the 2022 Medicare Advantage Advance Notice, which the agency expects to increase plan revenue by 2.82%. Public comments are due November 30, 2020.

• CMS published the End-Stage Renal Disease (ESRD) Prospective Payment System final rule, which creates add-on payments for innovative at-home dialysis equipment. The agency expects to raise pay for free-standing ESRD facilities by 2%.

• CMS approved Georgia’s Section 1332 waiver that eliminates the state’s insurance Marketplace and allows the private market (brokers, agents, and other private entities) to entirely conduct enrollment and sell plans. The approval comes on the heels of the Administration approving Georgia’s 1115 Medicaid waiver that allows for Medicaid work requirements and a partial Medicaid expansion.

• A federal district court vacated the Trump Administration’s public charge rule nationwide, the latest in a series of court battles over the policy.