COVID/Health Care Policy Update

by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.

The Debate Over the COVID Stimulus Package

Last Thursday, Senate Democrats green-lighted the use of the “reconciliation” process to enact President Biden’s $1.9 trillion COVID Stimulus Package. This is important for a bunch of reasons, which I highlight below.
- Analysis: First, as I mentioned in my most recent update, it did NOT look like Majority Leader Schumer was going to be able to get 60 votes for President Biden’s $1.9 trillion COVID Stimulus Package. That was confirmed when 10 Republican Senators made a counter-offer to President Biden with a $618 billion Stimulus Package proposal. President Biden so far has rejected that counter-offer, coupled with the message that: “Hey guys, I am open to ideas, so let’s keep talking.” Anyone who knows DC politics knows that is code for: “I am going to pretend like I want to work the other party, but it’s my way or the highway people, so get on board or get out of the way.” Republicans do it too. That all led to Congressional Democrats deciding to “go-it-alone,” which then led to the approval of a budget resolution that would allow the House and Senate to use the “reconciliation” process to by-pass the 60-vote threshold and pass President Biden’s $1.9 trillion Package with a simple majority in the Senate. So now, IT’S RECONCILIATION FIGHTIN’ TIME (for those of you who are a “Battle Bots” fan, I hope you are smiling). Okay, so we are now squarely in the “reconciliation” world, so we need to put our “reconciliation” glasses on, and we first have to understand something I mentioned to you in my last update: The “reconciliation” process can only be used ONE TIME during a fiscal year. The U.S. fiscal year runs from Oct. 1^st to the Sept. 30^th. Which means, the majority party can use the “reconciliation” process TWICE during a calendar year. This is what Republicans did in 2017 when they tried to repeal and replace the ACA, and they also enacted Tax Reform. Why is this important? Well, if President Biden and Congressional Democrats move the COVID Stimulus Package through “reconciliation,” they burn 1 of their 2 “reconciliation” chits. Which will only leave Democrats with 1 more chit to play later this year. Will that chit be used for a health care “reconciliation” bill? I believe the answer is YES, although others I have spoken to think that the next “reconciliation” exercise will involve climate change and infrastructure. Maybe. Maybe not.

What Might We See In Said COVID “Reconciliation” Stimulus Package?

We all know that the COVID Stimulus Package will primarily be made up of NON-health care-related items. For example, extending unemployment insurance, sending direct checks to certain individuals, additional funding for State and Local governments, and now some possible changes to the child tax credit. HOWEVER, there will also be some important health care-related items we health care policy geeks need to pay attention too.
- Analysis: For example, Federal COBRA subsidies for people who lost their job will likely be included in a COVID Stimulus Package. These COBRA subsidies could be retroactive, similar to how the COBRA election rules that the Trump Administration put into place back in April 2020 in response to the first wave of COVID (by the way, these COVID COBRA election rules are still effective, still allowing a terminated employee to wait to elect COBRA coverage retroactive to when they lost their job). Note, the COBRA subsidies are pure government spending, so this definitely gets into a “reconciliation” bill. What else could we see? Well, we will likely hear talk about additional mandates on insurance coverage of the vaccines. There are some legal questions as to whether employers that force their employees to get a COVID vaccine violate the Americans With Disabilities Act (ADA) and other workplace and religious protections. The Equal Employment Opportunity Commission (EEOC) has issued guidance that attempts to draw a bright line between what employers can and cannot do when it comes to employers mandating that their employees get the vaccine shot(s). Statutory clarity would be nice though. Could we see Congressional Democrats try to provide said clarity? It’s unclear at this point. But even if Congressional Democrats thought it was necessary, it is highly likely that providing legal clarity on ADA-related and workplace-related issues does NOT directly impact revenue and spending, and thus, would likely NOT be included in “reconciliation” bill. Also speaking of mandates, we will likely hear talk about free coverage for COVID “treatment” or clarifications to how the requirement to provide free coverage for COVID “testing” works (for example, like allowing employers to mandate that their employees – and even customers – take a COVID “test” before entering the workplace/business establishment). I am sure some Congressional Democrats would like to see these changes too, but I do NOT believe they can rightfully get into a “reconciliation” bill. Also, President Biden and Congressional Democrats would like to increase the ACA’s premium subsidies and make the subsidies available to individuals with incomes ABOVE 400% of FPL. This proposal was part of The Biden Health Care Plan that I would have expected to see in a health care “reconciliation” bill. BUT, President Biden and Congressional Democrats want to leverage the current pandemic and include as many of their priorities as possible into the COVID “Reconciliation” Stimulus Package. Soooooo, look out for these ACA “improvements” in the forthcoming legislative draft. Note, increasing the premium subsidies and expanding subsidy eligibility directly impacts government spending (and taxes, considering the premium subsidies are technically tax credits, but in reality they are spending through the Tax Code). Soooooo, these are definitely “reconciliation” bill worthy. And again, why not go for getting these Biden Health Care Plan proposals into the law NOW when you can take advantage of the public health emergency. Especially when you have things like increases in the capital gains tax and tax increases on super-wealthy individuals and maybe even a corporate tax increase to help pay for these ACA “improvements,” along with all of the other COVID-related spending. This way, Congressional Democrats can hold on to prescription drug reforms as an “offset” for the spending in any forthcoming health care “reconciliation” bill later in the year.

A Minimum Wage Increase and the COVID “Reconciliation” Stimulus Package

Some of my friends and I are fascinated over the current discussions to increase the minimum wage to $15/hour. Why?
- Analysis: Because first, it is an example of trying to leverage the pandemic to enact Democratic priorities. After all, is increasing the minimum wage really COVID-related? I can certainly argue that a minimum wage increase is NOT related to COVID. BUT, I could also argue that increasing the minimum wage is a NECESSARY economic stimulus boost to our pandemic-ravaged economy. Having said that though, it doesn’t really matter who wins the above stated argument. What really matters is whether a minimum wage increase satisfies the “reconciliation” rules. The Senate Parliamentarian is going to be in the hot-seat over this one!! What I mean is this: It’s almost logical to conclude that requiring employers to pay employees a minimum wage of $15/hour does NOT have a direct impact on revenue and spending. Even if Congressional Democrats try to cushion the financial blow for certain employers (like small employers) by giving them a refundable tax credit (i.e., spending through the Tax Code) to offset the wage increase, that move is NOT going be enough to result in a minimum wage increase having a direct impact on spending/taxes. Phasing the increase in over a number of years is NOT going to do it either. BUT, Congressional Democrats argue that the more wages people have, the more tax revenue the government collects – both from the worker themselves as well as in the form of corporate taxes because people will be buying more stuff, thus generating taxable revenue for businesses. I agree with this argument. BUT, does this meet the standard of having a direct impact on taxes/spending? In my opinion, this is particular question could quite possibly tear the Senate apart.

Setting Precedent: Would Senate Democrats Go There??

When I suggest that the fight over increasing the minimum wage could tear the Senate apart, here is what I mean:
- Analysis: As you know, there has been a TON of talk about eliminating the “filibuster” (i.e., the 60-vote threshold). That debate was ultimately put to bed when Senators Manchin (D-WV) and Sinema (D-AZ) signaled they did NOT support nuking the filibuster any time soon. That does NOT mean that nuking the filibuster won’t happen at some point in the future. As we all know, there are always crazy twists-and-turns in politics that surprise us all. AND, all bets may be off if Senate Democrats pick up additional seats in the 2022 mid-term elections, where Majority Leader Schumer may not even need Manchin’s and Sinema’s votes. That’s assuming, however, the Democrats can hold onto the House in the mid-terms, which is definitely NOT a sure thing. But again, it does NOT look like we are going to see the unprecedented act of eliminating the filibuster. Then why I am talking about precedent? WELL, you have also heard me – and others – talk about the Senate Parliamentarian. And we explained that the Senate Parliamentarian serves as a non-partisan umpire. And as umpire, the Senate Parliamentarian plays the ever-so-important role of determining what CAN and CANNOT go into a “reconciliation” bill. In others words, the Senate Parliamentarian rules whether a particular proposal directly impacts spending or revenue – OR – rules that a particular policy change is so significant that it outweighs its budgetary impact – OR – rules that a particular legislative provision will increase the deficit in the out-years. These are BIG TIME decisions because they determine whether the majority party can pursue a particular policy priority through the “reconciliation” process or not. WELL, during every “reconciliation” exercise that I am aware (dating back to the 1970s when the “reconciliation” process was added to the Senate’s procedures), the majority party ALWAYS listened to – and respected – the Parliamentarian’s decision. In other words, while the majority party is NEVER happy with an adverse decision made by the Parliamentarian, the majority party historically listened to the Parliamentarian and followed whatever ruling the Parliamentarian rendered. This is the “precedent” that I am referring to above. WELL, this precedent is important because there is NO Senate rule prohibiting the majority party from OVER-RULING the Senate Parliamentarian’s decision. That is, if the majority wanted to, they COULD simply say NO to the Senate Parliamentarian. Again, the majority party has NEVER said NO up to this point in time. BUT again, there is NO rule prohibiting the majority party from doing so at their choosing. Sooooooooo, will the Senate Democrats go there?? Will they say NO to the Senate Parliamentarian – Elizabeth MacDonough – if and when Ms. MacDonough rules that, for example, the minimum wage increase does NOT satisfy the “reconciliation” rules? In other words, when Ms. MacDonough informs Vice President Harris (who would be presiding over the Senate) that the minimum wage increase must fall out of the COVID “Reconciliation” Stimulus Package, would Vice President Harris IGNORE that ruling and allow the minimum wage increase to receive a 51-majority up-or-down vote. The ONLY way to over-turn the Vice President’s decision to ignore the Parliamentarian is getting 60 votes, which obviously ain’t happenin.’ So in the end, while Senate Democrats are currently NOT able to nuke the filibuster entirely, Senate Democrats may still be able to get some of their non-tax/spending policy priorities through the Senate with a simple 51-vote majority. Doing so, however, would be UNPRECEDENTED. And bypassing the Parliamentarian would surely tear the Senate apart. Yes, it’s not as if the Senate – as an institution – has not already been unraveling over the last decade. IT HAS. But, at least in my opinion, over-ruling the Parliamentarian would be a BIG TIME – HUGE – DEAL. And, we could very well see it happen this year.

A Health Care “Reconciliation” Bill Later This Year?

To me, everything is pointing to a health care “reconciliation” bill in the last Quarter of 2021. Just like taxes are the “bread and butter” of Republicans, health care is the “bread and butter” of Democrats. And, just like Republicans who were able to enact Tax Reform in fairly short-order (because taxes are easy for Republicans), so too can Democrats process a health care “reconciliation” bill in short-order (because health care is easy for Democrats (even though others think it’s hard)).
- Analysis: BUT more importantly, I believe the Democrats have learned their lesson from 2009/2010, and they want to get a health care bill done in the year before the mid-term elections. Also, due to the fact that Democrats are starting with the COVID “Reconciliation” Stimulus Package in the first part of 2021, the Democrats know they only got one shot on a health care “reconciliation” bill (cue in Eminem Lose Yourself here), so I think Democrats move quickly on processing said health “reconciliation” bill. So again, if timing is an issue for Democrats – which I think it will be – trying to enact a “reconciliation” bill that instead deals with climate change or infrastructure, such a “reconciliation” bill may take MUCH longer to pass than passing a health care “reconciliation” bill ever would, which again, leads me to believe that a health care “reconciliation” bill is the favored candidate for serving as the 2^nd “reconciliation” exercise in 2021 (note, Democrats do have until Sept. 30, 2022 to enact a 2^nd “reconciliation” bill, but again, if you slip into 2022, you are asking for trouble in the mid-terms). As I have told you before, The Biden Heath Care Plan will certainly serve as the 4-corners of any health care “reconciliation” bill. You will be happy to know that I am NOT going to re-hash what those proposals may be (in time, I will re-visit). BUT, I do want to say this: I believe that adding a “public option” to the “individual” market will be a part of a health care “reconciliation” bill. I have suggested that the entirety of “public option” proposal will NOT satisfy the “reconciliation” rules. HOWEVER, if Senate Democrats set the precedent of OVER-RULING the Parliamentarian during the COVID “reconciliation” exercise, what’s to say Senate Democrats don’t do the same thing during the health care “reconciliation” exercise and OVER-RULE the Parliamentarian to put a “public option” to a 51 up-or-down vote? If so, then the next question to ask is this: Can Majority Leader Schumer get 50 Democrat Senators to vote YES on a “public option”? That is another conversation, for another day…

ACA Exchange Update

President Biden Issues His “Health Care” Executive Order

As stated above, on Jan. 28^th, President Biden issued what I am referring to as the “health care” Executive Order (EO). Most of the attention surrounding the EO was on (1) the announcement of a “special enrollment” period for the Federal Exchange (i.e., Healthcare.gov) due to COVID and (2) a direction to HHS to do what it can to over-turn State Medicaid “work requirements” and the TN Medicaid Waiver (which allowed TN to move their Medicaid program to a block grant program). HOWEVER, there is more to the EO than just these 2 policy changes. Also, the manner in which HHS is implementing the COVID “special enrollment” period took a lot of people – including me – by surprise.
- Analysis: Let’s start with the surprise. Most of us expected that the COVID “special enrollment” period would simply give uninsured individuals the ability to purchase an “individual” market plan through the Federal Exchange over a temporary period of time. HOWEVER, this COVID “special enrollment” period is more than just giving uninsured Americans access to health coverage. In HHS’s “fact sheet” explaining how the COVID “special enrollment” period would work, practitioners like me were struck – after they had to read ¾ of the way down the release – that existing ACA Exchange planholders could change their plan-level (e.g., “bronze” to “gold”) during the same COVID “special enrollment” period that is being made available to uninsured Americans. AND, that there would be little if any efforts made by HHS to “verify” whether the planholder even qualified for the COVID “special enrollment” period in the first place. Most of the media reports I read about the EO did NOT pick up this aspect of the COVID “special enrollment” period. Instead, most of the news articles claimed that the COVID “special enrollment” period would NOT result in adverse selection, and that this SEP would get more people into the risk pool. I agree. That is, if we were ONLY talking about allowing uninsured individuals to enroll through this COVID SEP. But now, we are ALSO talking about allowing existing planholders to switch their coverage mid-year, which takes our discussion of adverse selection to a whole new level. Ummmm, who are the most likely existing planholders to switch their plan-levels? Answer: Planholders utilizing a higher amount of health care, relative to those planholders who are limited in their health care use. AND, for these higher-medical utilizers, there is strong likelihood that they will use more health care if they are allowed to switch to, for example, a lower deductible health plan. Any resulting spike in health care utilization would skew a particular insurance carrier’s risk pool, thus adversely affecting that carrier’s risk pool. Make no mistake, I recognize that we have an “under-insured” problem in our country, and there are many high-medical utilizers covered under a high-deductible “bronze” or even “silver” plan and these individuals may be foregoing needed health care services because they cannot afford the out-of-pocket costs associated with these services (e.g., the costs before the deductible is met). Believe-you-me, that is NOT GOOD. I too want these high-medical utilizers to get the care that they need without exposing them to high costs. BUT, I do believe that by allowing these under-insured individuals to seek a lower deductible plan mid-year, this could adversely impact a carrier’s risk pool, resulting in higher-than-average premium increases in the following year. It would appear that the Biden Administration felt that any possible future premium increases were outweighed by the immediate assistance the Administration wanted to provide to under-insured individuals. AND, maybe the Biden Administration did some modeling (that no one has seen) that showed that any negatives flowing from this policy change were slight, compared to the bang the Administration could get out of communicating that they are trying to help the under-insured. Maybe in the end, the Biden Administration is right. BUT, without specific data telling me otherwise, I do NOT see it that way.

What Else Did the EO Say?

WELL, the EO directed Treasury to issue regulations fixing the “family glitch.” Whether Treasury will be found to have exceeded its authority if and when we see a regulatory fix is an open question. In other words, I fully expect to see regulations from Treasury fixing the “family glitch.” BUT, will these regs be challenged in court?
- Analysis: The EO also rescinded President Trump’s “health care” EO from October 2017. While NOT calling them out specifically, this means that the short-term health plan regs, the Association Health Plan regs, and the individual coverage HRA (ICHRA) regs are all on the hot-seat. The EO directed the relevant Federal Departments (e.g., HHS in the case of the short-term plan regs, the DOL in the case of the AHP regs, and Treasury, DOL, and HHS in the case of the ICHRA regs) to review these regs to determine if they should be “revised” – OR – “rescinded.” Nothing is ever a guarantee, but the conventional wisdom is that the short-term health plan regs will be “rescinded” and replaced with the Obama-era rules applicable to short-term plans, which limits them to 3-month’s worth of coverage. It is also likely that the AHP regs are “rescinded,” but what is unclear to me is whether the DOL will move to issue “revised” AHP regs that would be considered “Biden AHPs” as opposed to “Trump AHPs.” It is certainly NOT out of the realm of possibility that we see “revised” regs, especially with the ongoing debate over how to extend workplace benefits to “gig economy” workers (i.e., self-employed individuals with no employees). One pathway to getting at least health benefits (and retirement benefits) to these “gig workers” (i.e., self-employed individuals) could be through the AHP regs. I would envision regs that include more consumer protections and ACA mandates like coverage of the “essential health benefits” and maybe even an age band of 4 to 1 (as opposed to the ACA’s 3 to 1 age band and the large group’s 5 to 1 age band). Sticking with the issue of AHPs: Union plans currently operate just like an AHP, where small employers with a unionized workforce offer health coverage to their employees through one, single large group plan. With the incoming labor-focused DOL Secretary – Marty Walsh – could union plans and AHPs covering employees of small employers through one, single large group plan co-exist because they are more or less the same? Or would AHPs be too much competition for unions (and thus, the unions might try to put the kybosh on AHPs)? It is well-accepted that small employers that have gotten crushed by the COVID pandemic are struggling to find comprehensive health benefits other than through the ACA’s “small group” market, which continues to be a dysfunctional market (although premium increases in the “small group” market have not been as significant as in year’s past). Last is the ICHRA regs: In my opinion, I think it is going to be status quo for the ICHRA rules. As I have said in the past, I believe ACA supporters think ICHRAs are good for the ACA because ICHRA will help get more lives into the “individual” market risk pool. Heck, I could even see Congress considering legislation that would allow employees of say small employers to use BOTH the ACA’s premium subsidies – AND – the employer’s tax-free HRA contribution to purchase an “individual” market plan. When the ICHRA rules were developed – along with the small employer ICHRA rules before that (called QSEHRA) – policymakers did NOT want employees to DOUBLE-DIP (i.e., policymakers did NOT want employees to get BOTH the premium subsidy AND the tax-free employer contribution). BUT, considering the fact that the Biden Administration wants to improve the ACA’s “individual” market, one way get more lives into the “individual” market is to allow an employer HRA contribution to be additive to the ACA premium subsidy amounts, provided the employee is subsidy-eligible in the first place.