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Week Ahead: Buyouts and Budgets

Valentine’s Day is just around the corner, and there are signs of a lover’s quarrel between House and Senate Republicans over who gets to be first to move forward with the budget reconciliation process.  There is certainly no love lost between President Trump and congressional Democrats!  What does this week hold in DC?  Let’s get into it. Welcome to the Week Ahead! 

The Administration   

Elon Musk and his “Department of Government Efficiency (DOGE)” have turned their attention to the Department of Health and Human Services (HHS). The Centers for Medicare and Medicaid Services (CMS) confirmed in a February 5 statement that “two agency veterans” are working with DOGE staff to find “opportunities for more effective and efficient use of resources in line with meeting the goals of President Trump.” Democratic leaders of the congressional committees with jurisdiction over CMS have called for an investigation highlighting their concerns about DOGE having access to Americans’ personal health information.  While the big dollars of waste, fraud, and abuse come from Medicare and Medicaid, you know DOGE will be digging into the Centers for Disease Control and Prevention and Food and Drug Administration soon enough.  

The administration is also looking to trim the federal government by buying out federal employees.  The deadline for federal workers to take deals was February 6, but a federal judge extended that deadline to February 10, when a hearing is scheduled to consider the legality of the buyout. Regardless of what happens with the buyout and DOGE, the administration’s actions related to federal agencies and the federal workforce have already led to massive disruption at the agencies, including their unwillingness to hold meetings and respond to normal government requests. 

The Senate   

Senate Budget Committee Chair Lindsey Graham (R-SC) has released a Fiscal Year 2025 budget resolution to advance Trump Administration priorities on defense, border security, and energy. Although health care isn’t the focus, the resolution does call on the Senate Finance Committee to produce at least $1 billion in savings. Senate Finance Committee Ranking Member Ron Wyden (D-OR) sees this as a sign that Republicans will look to make cuts to public health programs to pay for their priorities. However, President Trump has communicated that he does not want to see cuts made to Medicare and Medicaid. Of course, what is and what is not a “cut” is in the eye of the beholder. The Senate Budget Committee is scheduled to consider the budget resolution on February 12 and February 13 

Senate Majority Leader John Thune (R-SD) has filed for cloture on several cabinet nominees, including RFK Jr. to be Secretary of HHS. A vote on his nomination could come as soon as February 14.  Trump’s nominee to lead CMS, Dr. Mehmet Oz, is still working on getting his paperwork in order, but his committee hearing is in the offing.  Dr. Oz has recently met with Senate Finance Committee Chair Mike Crapo (R-ID) and Senate Health, Education, Labor, and Pensions Chair Bill Cassidy (R-LA), a critical step in the confirmation process 

The House  

House Republicans had reportedly been close to unveiling a budget resolution for markup ahead of the Senate Budget Committee’s hearings on February 12 and 13. Accomplishing this would’ve been a nice win for House Speaker Mike Johnson (R-LA) and would’ve sent a message to his caucus that he can move on to the President’s agenda. However, Speaker Johnson called a time out at the Super Bowl last night when he said that markup may need to be postponed in order to get the details right.  

The House Ways and Means Health Subcommittee has scheduled the first hearing of the 119th Congress for February 11 to “examine ways to promote healthy living with more options, greater flexibility, and better incentives for patients.”  This hearing will focus on employer-sponsored health plans and chronic care, highlighting Buchanan’s recently introduced a bill to allow for employers who offer high-deductible health plans the option of including pre-deductible coverage for certain chronic disease treatments.  This bill has also been a priority for Senate Majority Leader Thune, boosting its chances of becoming law this session. 

There You Have It 

What was your favorite Super Bowl ad?  We are posting our favs on LinkedIn!  Let us know. Make it a great week!  

DOGE and Health Care: Real Change or Political Theater?

Medicaid in 2025: Will changes to federal funding and requirements impact the program?

The Push to Limit Medicaid Enrollment 

As we enter 2025, the political landscape in Washington is as polarized as ever. One of the most contentious topics that continues to dominate the national conversation is health care – specifically, the future of Medicaid. With the return of President Donald Trump and a Republican-run Congress, a significant effort is underway to reform Medicaid, which may include limiting Medicaid enrollment or even cutting the program in its current form.  

The Republican Plan: Restricting Eligibility and Cutting Costs 

President Trump and Congressional Republicans have stated their desire to reform Medicaid, viewing it as overly costly and unsustainable. In January 2025, discussions began to gain momentum about restricting Medicaid eligibility to cut back on government spending. The arguments presented by Republicans center around the need for fiscal responsibility; they point out that the expansion of Medicaid in one reason health care expenditures have skyrocketed over the past several years.  

A significant part of this proposed reform includes setting strict eligibility requirements for Medicaid, effectively tightening the criteria for low-income individuals who can qualify. Republicans argue that by narrowing who is eligible, they can reduce the financial burden on taxpayers while still targeting aid to those who are most in need. Some proposals put forward by congressional committees and the administration involve enforcing stricter work requirements, introducing more stringent asset tests to ensure that people are not hiding wealth to qualify for benefits, or capping Medicaid enrollment at a certain number of people. 

In addition to limiting eligibility, another avenue for cuts is in the form of reducing the federal contribution to Medicaid. Currently, the federal government covers a significant portion of Medicaid’s costs, but some Republican lawmakers have proposed per capita caps, which would cap Medicaid reimbursement based on historical spending with a predetermined inflationary factor like the Consumer Price Index, the index accounting for urban inflation (the CPI-U), the index for medical inflation (the CPI-M), or a modification of these or others.  As the inflationary factor is based on historical rates, the amount given to states will be less than it is currently – CBO has scored this proposal as saving the federal government $907 billion.    

The Economic Argument: Saving Money or Straining State Budgets? 

From a political standpoint, Republicans argue that Medicaid, as it currently operates, is too expensive and unsustainable. The idea of limiting enrollment is primarily positioned as a fiscal necessity—an attempt to curb the rapidly growing budget deficit and reduce federal spending. Trump and his allies suggest that the federal government cannot continue to foot the bill for expanding Medicaid, especially in the wake of soaring national debt.  (Note: The ACA expanded Medicaid to cover nearly all adults with incomes up to 138% of the Federal Poverty Level.  The federal government paid 100% of the expansion costs in the 1st two years and pays 90% every year after.  This is in comparison to the current match of 50% federal/50% state for traditional Medicaid populations)  

However, this position is not without its detractors. Medicaid advocates argue that these proposed cuts would disproportionately harm the most vulnerable members of society. Lower-income families, seniors, people with disabilities, and underserved populations could be left without access to critical health care services. Reducing funding and limiting enrollment could place a large burden on state governments, particularly those in states that expanded Medicaid under the Affordable Care Act (ACA). Many of these states rely on Medicaid expansion to provide health care to millions of low-income residents.  

Another consequence of Medicaid program cuts are impacts to hospitals, community health centers, federally qualified health centers, and clinicians.  These providers provide a health care safety net for the uninsured – as the number of uninsured rises, so does the provider’s financial burden for uncompensated care.  Both the Federation of American Hospitals and the American Hospital Association put out 2025 public policy agendas outlining their push to keep the Medicaid program as is.   

Critics of Medicaid population or rate cuts argue that they would lead to long-term economic consequences that could outweigh any short-term savings. For instance, fewer people receiving preventative care could lead to more costly health emergencies down the road, which could place an even greater strain on hospitals and emergency services. 

The Politics 

The proposal to limit Medicaid enrollment or cut the program entirely is not just a financial issue, it’s a deeply divisive political issue. Medicaid has long been a cornerstone of the Democratic Party’s vision of health care access for all. Democrats argue that health care is a right, not a privilege, and that access to health care should not depend on income. On the other side, Republicans maintain that the government should not be the primary provider of health care insurance, preferring instead to emphasize personal responsibility and market-driven solutions. 

Complicating Republican efforts to move forward with program change are Medicaid beneficiaries themselves. Most of who like their Medicaid care – a recent KFF poll found that 77% of people have a favorable opinion of the Medicaid program. Reducing a popular program is never a good recipe for future electoral success.   

What’s Next? 

As we move through 2025, the future of Medicaid remains uncertain but President Trump’s return to the political spotlight has rekindled the debate.  During Robert F Kennedy Jr.’s recent confirmation hearing, the subject of Medicaid access and funding was brought up over and over.   The stakes are high, and with the 2026 midterm election looming on the horizon, it’s clear that Medicaid will remain a key issue in the ongoing political discourse. 

Week Ahead: Reconciliation Waiting Game

Lawmakers return to D.C. following tragic plane crashes in Arlington, VA and Philadelphia, PAamid a number of questions regarding airline safety. Congress continues consideration of President Trump’s cabinet nominees as well as discussions on budget reconciliation and government funding. So, with that, let’s get into it. Welcome to the Week Ahead!  

The Administration 

The Centers for Medicare and Medicaid Services (CMS) issued a presser on January 29 commenting on the Biden administration’s recent release of the next 15 drugs to be included in the second cycle of Medicare prescription drug price negotiations. CMS intends to “provide opportunities for stakeholders to offer specific ideas to improve the Negotiation Program consistent with the goals of achieving greater value for beneficiaries and taxpayers and continuing to foster innovation.” 

Allowing the government direct negotiating power in the Medicare prescription drug program (Part D) was a signature achievement of the Inflation Reduction Act and has been a policy goal for Democrats going back to the creation of the Part D program.  President Trump’s position on Medicare drug price negotiations is murky at best.  While he hasn’t always held to traditional conservative positions on drug policy, Democratic Members of Congress aren’t taking any chances and are asking for Trump to reject any effort to undo the Medicare negotiation policy. 

The Senate  

The name of the game for the Senate continues to be confirming President Trump’s nominees. On February 4, the Senate Finance Committee will hold an Executive Session to vote on the nomination of RFK Jr. to be the Secretary of the Department of Health and Human Services (HHS). This vote follows hearings at both the Senate Finance Committee and the Senate Health, Education, Labor, and Pensions (HELP Committee) where RFK Jr. received widespread support from Republicans (although there were some grumblings from a few HELP GOP Members about Kennedy’s position on vaccine safety and efficacy). Since the Senate Finance Committee is the only committee that will vote on Kennedy’s nomination, the next step after the February 4 vote (assuming the committee advances the nomination) will be a vote on the Senate floor for confirmation.   

The Senate Finance Committee will also consider Jamieson Greer for U.S. Trade Representative on February 6. The U.S. Trade Representative can have a significant impact on health care policy as they work to implement the President’s trade agenda.  

In Trump’s case, that agenda includes the use of tariffs. Even though the Constitution gives Congress the authority to lay and collect duties on imported goods, Congress has given the President authority to change tariff rates if the administration can make the case that doing so is in response to specific national security or foreign policy interests.  

President Trump made use of these authorities during his first administration and has promised to impose tariffs on imported products including medical supplies and prescription drugs. The Trump Administration and other Republicans argue that these tariffs are necessary to protect American industry and reduce the nation’s dependence on foreign countries for critical supplies such as medicines. Opponents raise concerns that tariffs may lead to increased prices and more shortages of generic drugs. We expect tariffs to be a major topic of conversation at Greer’s hearing.  

The House  

Rep. Greg Murphy (R-NC) and a bipartisan group of lawmakers introduced the Medicare Patient Access and Practice Stabilization Act of 2025 on January 31. This bill would provide physicians with a 6.62% increase in Medicare reimbursement rates that would be retroactive to the start of 2025 when a 2.8% reimbursement rate reduction went into effect. Addressing concerns about the Medicare reimbursement rates for physicians has long been a priority for doctors. When Congress didn’t step in to mitigate the impact of the reimbursement rate reduction at the beginning of the year, physician groups were disappointed. But the introduction of this bill gives some hope that some relief from the payment cut that took effect on January could happen. That said, introducing the bill is just the first step in a year packed with government funding decisions and budget reconciliation.  

Speaking of budget reconciliation, it is unlikely that House Speaker Mike Johnson (R-LA) will be able to meet his optimistic goal of passing a budget resolution by February 27. This is especially true given reports of a phone call between members of the House Budget Committee that apparently failed to produce a date for marking up the resolution. Speaker Johnson is now reportedly pushing expectations back to May 2025, a timeline more in line with recent Congresses.  A later date is also an acknowledgment of the difficulty of passing a partisan resolution where just one or a few GOP defectors could be spoilers.  

Also Happening This Week 

  • 2/5: House Natural Resources Subcommittee on Indian and Insular Affairs legislative hearing on bills including H.R. 741, to elevate the Director of the Indian Health Service (IHS) to an Assistant Secretary position (Note: RFK Jr. has said he will elevate the IHS Director to an Assistant Secretary position if confirmed as HHS Secretary). 
  • 2/6: House Energy and Commerce Health Subcommittee hearing on the threat of illicit drugs.  

There You Have It 

The 2025 GRAMMYs were awarded on February 2, with a special effort to raise funds for those impacted by the L.A. wildfires. Did your favorites win? Let us know! Make it a great week!  

How Will Congress Reform Prior Authorization?

Reforming Prior Authorization in Health Plans: A Bipartisan Issue for the 119th Congress? 

As the 119th Congress begins its legislative work, one of the issues gaining increasing attention within health care reform is prior authorization. But will this issue unite lawmakers across party lines, or will it become another partisan battleground?  

Prior Authorization: A Growing Problem 

Prior authorization is intended to ensure that medical services or treatments are medically necessary and cost-effective, helping to control health care expenses. However, over time, critics argue that prior authorization has become a cumbersome and bureaucratic obstacle that delays patient care. According to a 2024 survey by the American Medical Association (AMA), 94% of physicians report that prior authorization causes delays in patient care, with some of these delays resulting in worsened health outcomes (AMA, 2024). Moreover, health care providers are spending more time on administrative tasks related to prior authorization requests, detracting from their ability to focus on direct patient care. 

The burden of prior authorization is not confined to any one area of health care. Prior authorization affects public and private insurance systems and extends beyond medical services, including medications, imaging procedures, and durable medical equipment.  While prior authorization is used to manage costs and prevent overuse of health care  services, the process can be time-consuming and opaque, contributing to frustration for patients, providers, and insurers alike. 

A Bipartisan Issue? 

Prior authorization reform has historically garnered support from both parties, particularly as the system’s burdens have become more apparent. On the one hand, Democrats have focused on reducing administrative inefficiencies and improving access to timely care. At the same time, Republicans have typically championed efforts to cut through regulatory red tape and strengthen health care cost management. 

For instance, in the previous Congress, a bipartisan bill, The Improving Seniors’ Timely Access to Care Act, aimed to reduce the burden of prior authorization for Medicare Advantage beneficiaries by introducing requirements for transparency, quicker decision-making, and a more standardized process. The legislation received broad backing from both Democrats and Republicans (with over half of members in both bodies cosponsoring the bill), alongside support from leading medical and patient advocacy groups, including the AMA and the American Heart Association. 

As Congress moves into the 119th session, the push for reforms to the prior authorization process remains strong. However, expanding these reforms across broader health care  sectors, particularly private insurance, will require navigating complex political dynamics. While there is a shared interest in reducing administrative burdens, insurers and Republicans who prioritize cost control may resist significant changes to the system. 

Potential Pitfalls of Reform 

Despite the broad support for prior authorization reform, Congress will face several key challenges to pass meaningful legislation. 

  1. Resistance from Insurance Companies: Many insurance companies view prior authorization as a necessary tool to manage costs and ensure the appropriate use of health care  services. While insurers may acknowledge the administrative burdens on providers, they often argue that eliminating or loosening prior authorization would result in unnecessary treatments, driving up health care  expenditures. This perspective could lead to significant pushback from the insurance industry, which may be able to influence lawmakers concerned about costs. 
  2. Balancing Cost Control with Patient Care: One of the primary concerns of prior authorization reform is maintaining a balance between reducing administrative barriers and ensuring that only medically necessary treatments are covered. If the prior authorization process is reduced too much, there may be concerns about increased utilization of unnecessary services, which could ultimately increase the cost of health care across the board. 
  3. Fragmentation Across Insurance Plans: With multiple insurance plans, both public and private, there is a lack of uniformity in the prior authorization process. Different insurers often have varying rules and guidelines, leading to confusion for both patients and health care  providers. Creating a standard process across different plans could face significant resistance from the insurance industry, which may prefer to maintain its own policies and decision-making frameworks. 

 

Where will the Administration Stand on the issue? 

During his previous presidency, President Trump made efforts to reduce the burden of regulatory requirements in health care, including addressing prior authorization. In 2020, his administration signed an executive order aimed at improving transparency in health care  pricing and addressing the burdens of prior authorization within both public and private health care systems. The executive order pushed for greater transparency from insurers regarding prior authorization rules and encouraged the development of electronic systems to streamline the process. 

Although President Trump has not specifically spoken about prior authorization reform since leaving office, his overall approach to health care reform—focused on reducing government regulation and enhancing competition within the health care market—suggests he may support efforts to reduce administrative burdens. However, his stance on health care policy generally favors market-driven solutions, meaning that any reform efforts might need to strike a balance between improving patient care and preserving cost-control mechanisms within the insurance industry. 

So, will Congress and the administration act on reforming prior authorization this year? While bipartisan support for reform exists, the complexities involved in balancing patient care, cost control, and insurance company interests could complicate the passage of significant legislation. As the legislative process moves forward, watching how Congress navigates these challenges will be important. However, we have seen over the past month that most citizens are angry about health insurance profit levels and perceived lack of access to care – so Congress will need to act on this issue one way or another before the end of 2025.   

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