Insights

The 2024 Reports from the Medicare Trustees and the Social Security Trustees are here.  Let’s dig in to learn where things stand on the perennial question of insolvency and their recommendations. 

The 2024 Medicare Trustees Report showed a positive trend for the Hospital trust fund (Part A), with 5 more years of solvency added.  This moves out the point at which all benefits could be paid at current levels from 2031 to 2036. 

The improvement was due to lower than expected Medicare trust fund expenditures for 2023 (especially for inpatient hospital and home health services), higher payroll tax income, and “a policy change correcting for the way medical education expenses are accounted for in Medicare Advantage rates starting in 2024.”  

In other words, they changed the way the assumptions were calculated.   

The trustees noted 3 factors related to the pandemic: 

1. Beneficiaries who died from COVID-19 were the sickest with more comorbidities.  Now, the remaining Medicare population is “healthier” as a percentage which leads to lower overall projected spending.  

1. The expiration of the waiver requiring a 3-day inpatient stay to receive SNF services. Trustees assume that the 3-day inpatient stay requirement will now remain in place, which will increase inpatient spending by 1.9 percentage points and decrease SNF spending growth by 7.5 percentage points in 2024.      

1. Lower than normal home health spending.  Due to staffing shortages in 2023, home health expenditures were still lower than expected.  But Trustees believe that demand will increase in 2024, and are projecting an increase in the home health spending growth factor by 2.9 percentage points for the next 3 years (2024-2026).   

By contrast, the Social Security Trustees noted a neutral trend from last year.  For Social Security, insolvency is coming in 9 years (CY 2033), which is the same projection as last year.  Funding was projected to decrease due to declining fertility rates but was projected to increase due to increased labor productivity.  So, the two factors equalized the other out.   

Medicare and Social Security Trustees said that Congress and the White House need to act now to be able to create solutions that can be more flexible and gradual.    If the can continues to be kicked down the road, cuts will have to be harsher and more immediate.  Trustees also recommended that Congress and the White House work together to come up with solutions.   

So, is this the year that Congress and the administration address Medicare and Social Security insolvency?  It looks unlikely.  When Speaker Johnson (R-LA) took leadership in January, he announced he would create a bipartisan fiscal commission to address the national debt and necessity of spending cuts.  But news agencies have already reported the Commission is DOA.  Sponsors of a bill to create such a commission in both the House and Senate have said that they have no support to move the bills forward.  A commission faces bipartisan disapproval, with Democrats concerned a commission would cut benefits like Social Security and Medicare and Republicans concerned a commission would be a vehicle for tax increases.    

So, the deadline towards insolvency once again looms, without a path to address it…. 
 

With Congress back in session before they head home for Memorial Day parades and the unofficial beginning of summer next week, let’s see what they can move forward.  It is hard to believe but after this, the House and Senate both have 9 legislative weeks before breaking for the November elections. So, let’s jump in. Welcome to the Week Ahead!

The Administration

Biden Watching the CRA Clock

Before he can enjoy a nice ice cream cone at Rehoboth Beach, the President also huddling with his advisors to make sure the Administration gets as many rules published before the Congressional Review Act(CRA) deadline passes.

A CRA resolution allows a new Congress to overturn federal rules published after a certain date with only a simple majority and without the threat of a filibuster.  The Administration has been governing by regulation amidst this Congress and they want these rules to stick.

When’s the big day? The exact date is a bit unclear. A January analysis from Venable LLP predicted late June, but a February analysis from Hunton Andrews Kurth predicted May 22.

Marijuana Gets on a New Schedule

Now turning to a different type of schedule, on May 21, the Drug Enforcement Agency (DEA) Published a Notice of Proposed Rulemaking to transfer marijuana from a Schedule I drug (no medical value, high potential for abuse/dependency) to a Schedule III Drug (accepted medical use moderate to low potential for abuse/dependency).

So what? In 2020, then-candidate Biden promised to decriminalize Marijuana. This is not that. But it is something that the Biden campaign can point to as progress. Additionally, the Administration is certainly happy to get this published before the CRA deadline to protect therule from an easier repeal if Trump wins in November.

Senate

AI Working Group Lays Out a Roadmap

Sen. Majority Leader Schumer (D-NY) unveiled the Senate Bipartisan AI Working Group’s Roadmap for AI Policy last week.  The roadmap includes several health care proposals including, a call to fund AI R&D at NIH, guidelines to consider when developing health care legislation, and a reminder to give HHS and other health care agencies the tools to regulate AI.

Now what? We previously reported that committees were all over the place when it came to developing AI legislation. There is no reason to think that changes with this report. However, we will certainly be watching for AI as we monitor committee activity going forward…especially those committees with jurisdiction over health care.

Senate Health Hearing Schedule: Mad dash to Recess

The Senate certainly isn’t taking things slow in this last week before recess. Here is what we are watching this week

• May 21: Senate Judiciary Committee hearing on competition in the prescription drug market
• May 21: Senate HELP Primary Health and Retirement Subcommittee hearing on food as medicine
• May 23: Senate Aging Committee hearing on the Older Americans Act
• May 23: Senate Finance Committee hearing on the Fentanyl Crisis
• May 23: Senate HELP Committee executive session to markup 7 health care bills
• May 23: Senate Appropriations Interior, Environment, and Related Agencies Subcommittee, & Related Agencies hearing on the FY25 budget request for NIH

The House

House Examines Health Care Consolidation

The House Budget Committee will hold a hearing on May 23 entitled “Breaking Up Health Care Monopolies: Examining the Budgetary Effects of Health Care Consolidation.”  Not to be outdone, the House Ways and Means Health Subcommittee will examine the impact of consolidation on independent medical practitioners on May 23, among other effects like regulatory burden.

So what? As we get closer and closer to the election, the time and likelihood for bipartisan action grows smaller. The issue of health care consolidation has recently gotten some love from both sides of the aisle as members of the Senate Finance Committee and the House Energy and Commerce Oversight Subcommittee brought up consolidation in hearings with United Healthcare’s CEO on the Change Healthcare attack and if United’s size made it too much of a target. It remains to be seen if the House Budget Committee can keep the love going.

Beyond the hearing room, we continue to watch for updates from the House Ways and Means Committee on a package of rural health proposals, which we anticipate in the coming weeks and months.

E&C Health Puts FDA Regs in the Crosshairs 

On May 22, the House Energy and Commerce Subcommittee on Health will hold a hearing  with the FDA directors of the Center for Drug Evaluation and Research (CDER), the Center for Biologics Evaluation and Research (CBER), and the Center for Devices and Radiological Health (CDRH).

What to listen for? 

• The FDA’s recently finalized rule on laboratory-developed tests (LDTs)
• The impact of Medicare drug negotiation’s impact on innovation
• An update on the recently stalled effort to ban menthol cigarettes

House Oversight Keeps Up the Pressure on NIH 

It’s not exactly shocking that a House subcommittee controlled by the opposite party from the White House is investigating the Executive Branch.  That said, those who are looking for something to be done in response to concerns about how the government funds biomedical research had something to celebrate with the news that HHS will be suspending funds to EcoHealth Alliance, an organization that some Republicans have accused of funding risky biomedical research with taxpayer dollars.

The House Oversight and Accountability Select Subcommittee on the Coronavirus Pandemic is scheduled to hold a hearing on May 23, with National Institute of Allergy and Infectious Diseases Senior Scientific Advisor, Dr. David Morens. This follows a May 1 hearing the subcommittee with the President of EcoHealth Alliance and a May 16 hearing with NIH Deputy Director Lawrence Tabak. It also follows the release of a transcript and memo on the subcommittee’s interview with former NIH Director Francis Collins.

So what? This leaves Subcommittee Ranking Member Ruiz (D-CA) to balance praising the Administration’s oversight actions without seeming to give credence to what many have called a conspiracy theory that Echohealth Alliance helped create the COVID-19 virus.

See Rep. Ruiz’s press release from the ranking member provides a look at how he is doing that so far and the upcoming hearing provides him with another opportunity.

 

There You Have It

As we slide into summer, Chamber Hill Strategies honors our military men and women who paid the ultimate sacrifice to secure, protect, and preserve the freedom we enjoy this Memorial Day. One of our favorite DC monuments in DC, the Korean War Memorial reminds us that that freedom is not free.  Make it a great week!