Speaker Ryan Unveils Republican Health Care Proposal Under the “Better Way” Plan

On June 22, 2016, Speaker Paul Ryan (R-WI) unveiled the Republican Party’s new health care agenda last Wednesday in a speech at the American Enterprise Institute.  This is the first time that Congressional Republicans have proposed specific proposals for their “repeal and replace” effort against the Patient Protection and Affordable Care Act (ACA).  Deemed “A Better Way,” the Ryan paper primarily reflects traditional and familiar Republican ideas about health care, rather than new ideas.  The full proposal can be found here.

As drafted, the white paper is not susceptible to scoring, so the cost of the proposal is unknown.  Notably, Speaker Ryan doesn’t propose the passage of one sweeping replacement law but, instead, the passage of several separate pieces of legislation.  The stated goal of the proposal is to lower health care costs, expand flexibility for patients and providers, delegate greater authority to states on Medicaid and Medicare issues, and support research and innovation in medical research.

More Choices, Lower Costs, Greater Flexibility

HSAs: The Speaker’s framework names several proposals rooted in the premise that the ACA limits patients’ and providers’ ability to make the best economic choices for themselves.  These policies include expanding health savings accounts (HSAs) to allow spouses to make catch up contributions to the same account; to allow certain expenses incurred before coverage begins to become eligible for reimbursement from an HSA account; and allowing participants in the Indian Health Service and TRICARE to qualify for HSAs.

Consumer Choice and Portable Plans: In addition to HSA reforms, the plan advocates for expanding the use of defined contribution methods such as health reimbursement accounts (HRAs); providing financial assistance for insurance plans that can move with individuals between various jobs and into retirement; and offering a refundable tax credit for health expenses to those without employer coverage.

Employer-Sponsored Insurance: The plan suggests three modifications to employer-sponsored insurance (ESI).  Firstly, it suggests capping the amount of insurance costs that individuals can exclude from their gross income.  Second, it omits employee contributions to an HSA that are made on a pre-tax basis from counting towards the cost of coverage that is used to determine the cap.  Finally, it excludes lower income workers and individuals living in areas with high labor costs from the so-called “Cadillac tax,” a 40% excise tax on high end premium plans.

Pooling: Speaker Ryan proposes allowing consumers to find coverage options across state lines and to allow states to enter into interstate pooling compacts.  He suggests creating avenues for small businesses to enter into association health plans (AHPs) to increase their ability to obtain cheaper costs for their employees’ plans.  Under this framework, the AHP pools would be barred from “cherry picking” participants based on their health or from charging different rates for those who are sicker.  Speaker Ryan also advocates for the implementation of individual health pools (IHPs), where individuals would also be able to collectively bargain for better plan rates when buying insurance on their own.

Additional Proposals: Speaker Ryan’s plan would remove restrictions on employee wellness programs that are linked to financial rewards, so long as the incentives do not violate the Americans with Disabilities Act or the Genetic Information Nondiscrimination Act.  It would allow employers to choose between various insurance options including self-insurance and stop-loss protections.  Additionally, Speaker Ryan addresses medical liability reform by proposing a cap on non-economic damage awards and encouraging states to work with professional medical societies to develop laws requiring higher standards of evidence in suits against medical professionals.

Protecting and Strengthening Coverage Options for All Americans

The Republican health care proposal includes provisions prohibiting sudden policy cancelations and barring the denial of coverage based on pre-existing conditions.  It continues to allow dependents to stay on their parents’ plan until the age of 26.  The plan would also modify the current ratio used to determine the cap on the difference between older and younger individuals’ plan costs from three-to-one to five-to-one.

The plan carves out a block of $25 billion for State Innovation Grants, where states would receive funding for innovation programs based on how well they perform on tasks such as reducing premiums and the number of people in that state who are uninsured.  The plan additionally sets aside $25 billion in federal funding for high risk pools consisting of individuals priced out of coverage.

The proposal would also ensure implementation of the Weldon Amendment, which prohibits the use of federal funds towards states that discriminate against those who exercise their conscience.  It would additionally prohibit federal funds from covering abortions.

Medicaid Reform: Empowering States and Increasing Flexibility

Per Capita Allotment: Speaker Ryan’s plan proposes providing states with a choice between per capita Medicaid allotments or block grants.  Under the per capita funding system, states would receive federal allotments beginning in 2019, where the amount of the funds distributed would be determined by that state’s per capita allotment for the aged, the blind and disabled, children, and adults, as well as the number of individuals enrolled in each of those categories.  Federal funding would be capped based on the category, independent of how much the state actually spends per enrollee so as to encourage efficient use of the grant.

Also beginning in 2019, states with ACA expanded Medicaid programs would continue to receive the same amount of funding, but would be able to reallocate those funds between participant groups wherever the need is greatest.  Additionally, the enhanced Federal Medical Assistance Percentages (FMAP) for the expanded adult population would be incrementally lowered each year until it reaches the state’s normal FMAP level.  The Children’s Health Insurance Program (CHIP) would return to a joint federal-state financing system.

Under the proposed per capita allotment system, states would be permitted to set their premiums and to require able-bodied adults be employed, seeking employment, or enrolled in an approved educational program.  States would also gain the ability to charge premiums on benefits and populations whose coverage is optional.  Medicaid demonstration waivers would be required to be budget-neutral for the federal government.  Finally, states would be able to decide their own laws regarding Medicaid participation in elective abortions.

Block Grants: States that do not opt for a per capita allotment would automatically be enrolled in a federal block grant program, where funding is determined on the assumption that individuals enrolled in the state program under the ACA expansion would be transitioned into other plans.  Aside from funding required services for legally mandatory populations, states would have flexibility in determining how the block grant is spent.

Protecting and Preserving Medicare

The proposal lays out several propositions for modifying Medicare.  It suggests repealing the benchmark cap system for Medicare Advantage (MA) plans, limiting negative payment adjustments for MA coding that were created by the ACA, and expanding the open enrollment window for MA.  The proposal also aims to repeal the Independent Payment Advisory Board, to repeal the Center for Medicare and Medicaid Innovation by January 2020, and to repeal the ACA provision allowing CMS to adjust payments to different states in a manner that is budget neutral.  The plan also seeks to repeal the ACA ban on physician owned hospitals.

Speaker Ryan also suggests structural reforms to Medicare, such as introducing a value based insurance design for MA and reforming Medigap plans.  His plan proposes combing Medicare Parts A and B, creating a unified deductible, and combing all existing Medicare Savings Programs into one singular program.  Speaker Ryan suggests creating a personalized care demonstration program where beneficiaries and providers can agree to enter into arrangements for non-Medicare services and allowing providers to choose which health plans they participate in without the possibility of losing their medical license.

The health care plan recommends creating one national pool of uncompensated care (UCC) funds that are distributed to Disproportionate Share Hospitals base on federally collected data; creating a Medicare Compare website; and increasing the Medicare retirement age beginning in 2020 until it corresponds with the Social Security retirement age.

Promoting Innovation in Health Care

The Republicans’ proposal aims to keep medical and health regulations up to date with current scientific practices.  It therefore suggests providing the National Institutes of Health with a robust level of discretionary funding, supporting young scientists who are working on medical innovations, streamlining clinical trials, modernizing data collection, moving forward on precision medicine, and advancing the use of electronic health records.

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Will Firing His Campaign Manager Help or Hurt the Trump Campaign?

Mark Alderman and Jim Schultz discussed presidential polling and a change up in the Trump campaign on NBC10 news on June 20. Trump recently fired his campaign manager, which Jim says “helps the campaign” and isn’t “as big of an issue as some  are making it.” Jim added that, “We saw Paul Manafort getting more involved in the campaign throughout the end of the primary cycle. Corey Lewandowski did a great job in the primary cycle, didn’t have to spend a lot of money, got his candidate elected, there were 17 candidates across the board and his guy won. But for the general election cycle it’s a different game and he’s going to put together a different team to get it done.” Conversely, Mark says, “Trump’s ship is taking on water and the question is whether firing Lewandowski is going to right that sinking ship or just blow another hole in hull. We’ve seen very little evidence that Donald Trump is mature enough to run a responsible campaign. I don’t see this helping much but I do not underestimate Donald Trump’s tenacity. He’s going to lie to the American people until the last vote is counted.”

To watch the full clip, click here.

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CPS’ Latest Presidential Election Call Discusses the California Primary and Beyond

Listen to Mark Alderman, Howard Schweitzer, and Blake Rutherford discuss the latest developments in the Presidential race. Wednesday’s call predominantly focused on Tuesday’s California primary and the presumptive nomination of Hillary Clinton. Howard Schweitzer and Mark Alderman also engaged in a spirited discussion about Donald Trump, the national party conventions, and the electoral map.

You can listen to the full call here.

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Cozen O’Connor Public Strategies Latest Presidential Prognostication Call

Listen to Mark Alderman and Howard Schweitzer discuss the current state of the Presidential race. They were also joined by the Co-Chairs of Cozen O’Connor’s State Attorneys General practice, Lori Kalani and Bernard Nash, who provided some insights on the current state of affairs for Attorney General races across the country.

You can listen to the full call here.

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Op-Ed on Donald Trump in Fortune

See the Op-Ed from Mark Alderman and Howard Schweitzer in which they comment on Donald Trump’s shifting policy positions.

“Donald Trump’s Incoherent Positions Are Part of His Master Plan”

Find the Op-Ed here.

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The Daily Caller Op-Ed

See the blog post from Cozen O’Connor Public Strategies’ Howard Schweitzer “Sealing The Deal: Imagining A Trump Transition,” in the Daily Caller here.


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What Hillary Could Learn from Jimmy Carter [The Washington Examiner]

Mark Alderman, chairman of Cozen O’Connor Public Strategies, discusses Hillary’s road to the Democratic National Convention and lessons of note from the bitterly fought 1980 Democratic primary in The Washington Examiner. Mark explains that the 1980 Democratic primary created a schism within the Democratic Party that endured throughout the Ford and Carter administrations. Barring any, “calamity of unforeseeable dimensions,” Hillary is the likely nominee and will need to unify the Democratic Party for the general election. Mark offers three key considerations for Hillary to galvanize Sanders supporters. In sum, he suggests that Hillary make efforts to demonstrate respect for Senator Sanders, adjust her rhetoric, address her record for better or for worse and select a running mate that appeals to Sanders supporters.

To read the full article, click here.

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Medical Marijuana to be Legal in Pennsylvania

The Pennsylvania House of Representatives on April 13, 2016 passed Senate Bill 3, legalizing medical marijuana in the commonwealth of Pennsylvania. The Pennsylvania Senate had approved the bill earlier in the week.

In what will be the final stretch of a two-year legislative roller coaster, the governor announced he will sign the legislation at 1:00 p.m. on Sunday, April 17.

The bill would allow medical marijuana to be used to treat 17 conditions, including seizures, PTSD, chronic pain, HIV/AIDs, glaucoma, Crohn’s disease, multiple sclerosis, autism and additional neurological and gastrointestinal conditions. Pennsylvania would join 23 states and the District of Columbia in offering some form of legal medical marijuana.

Medical marijuana would be regulated by the Pennsylvania Department of Health, but a separate board within the department would devise regulations and be responsible for things such as adjusting the list of conditions that can be treated with medical marijuana, and adjusting consumption methods.

Medical marijuana could be dispensed in forms including pills, creams, oils, liquids and forms that can be vaporized, but smoking of medical marijuana isn’t allowed.

The state would initially license up to 25 growers/processors and 50 dispensaries, with each dispensary allowed to have up to three locations. Medical marijuana would be taxed 5 percent at the wholesale level, and there would be a program to make sure it is affordable for the poor.

These grower/processor and dispensary registrations will be allocated in no less than three to-be-determined regions of the commonwealth based on regional population, the number of patients suffering from serious medical conditions, the types of serious medical conditions, access to public transportation, and any other factor the department deems relevant.

Dispensaries may apply for exceptions to a provision that prevents them from operating within 1,000 feet of a school, with the exception intended to overcome the fact a buffer of that size might not be possible in densely developed urban areas such as Philadelphia.

Medical marijuana will have to be grown within indoor, highly secure facilities.

Patients, after a recommendation from their doctor, would need state-issued cards, as would their caregivers.

Doctors and others in the “prescribing” and dispensing process will have to undergo training.

Full text of the final bill is available here.

Although Pennsylvania will be joining 23 other states to legalize medical marijuana, marijuana is still classified as a Schedule I controlled substance by the U.S. Drug Enforcement Agency, and as such it remains a federal crime to grow, sell and/or use marijuana. Any content contained herein is not intended to provide legal advice to assist with violation of any state or federal law. Although Senate Bill 3 provides for the legalization of medical marijuana in the commonwealth of Pennsylvania, one should obtain legal advice with respect to any such compliance issues.

Please note that this was co-authored by Joe Bedwick, co-chair of Cozen O’Connor’s Cannabis Industry Team.

Posted in Cannabis, health

The Role of Cyber Insurance in Risk Management

The House Homeland Security Committee’s Subcommittee on Cybersecurity, Infrastructure Protection, and Security Technologies recently held a hearing on The Role of Cyber Insurance in Risk Management. The witnesses were Matthew McCabe, a Senior Advisory Specialist for cyber insurance at Marsh FINPRO, Adam Hamm, North Dakota Insurance Commissioner, Daniel Nutkis, CEO at Health Information Trust Alliance, and Tom Finan, CSO at Ark Network Security Solutions. The goal of the hearing was to evaluate the current state of the cyber insurance market and its potential for growth, as well as examining ways to promote the adoption of cyber best practices and the use of cyber insurance to more effectively manage risk.

In his opening statement, Subcommittee Chairman Rep. John Ratcliffe (R-TX) outlined the goals of the hearing and the importance of cybersecurity in an increasingly interconnected world. The potential for cyber insurance to encourage companies to improve risk management has been an important topic recently, which Mr. Ratcliffe underscored by pointing to a string of high profile breaches including Home Depot, Target, and JPMorgan Chase, which impacted everyday Americans. While noting that the cyber insurance market is still in its infancy, he conveyed optimism for the market’s future potential. Mr. Ratcliffe believes that cyber insurance may be one solution to improving the security of companies that store data online. In a premise that was reiterated throughout the hearing, he noted how the process of considering, applying for, and maintaining a cyber insurance policy forces companies to examine their own cyber security weaknesses and vulnerabilities. He also mentioned the work of the Department of Homeland Security’s Cyber Incident Data and Analysis Working Group, which is facilitating discussions with key stakeholders on mitigating risks, examining the potential value of a cyber incident data repository, developing new cyber risk scenarios and models, and seeking to help organizations to evaluate and improve cyber risk management. Ranking Member Rep. Cedric Richmond (D-LA) echoed these sentiments and raised the question of what a cyber insurance policy would look like in certain scenarios, such as if a company was already hacked, malware was dormant, but it still wanted to mitigate its subsequent risk. This brought up some of the challenges that are unique to cyber insurance compared to other types, such as homeowners insurance.

In the witnesses’ opening statements, they discussed the state of the cyber insurance market from an industry and regulatory perspective, as well as ways that it might grow. Mr. McCabe discussed cyber insurance as a product, how it helps improve resiliency against threats, and the use of data analysis to support and improve the industry. He also discussed Marsh’s role in helping clients assess their own risk exposure and helping them deal with the financial impact of a cyber incident.  He argued for the importance of cybersecurity and risk management for the private sector, as well as to protect U.S. critical infrastructure that is increasingly connected to the internet and therefore increasingly vulnerable to cyber attacks.

Mr. Hamm’s opening statement focused on cyber insurance from a regulatory perspective, and how the system compares to other types of insurance. He reiterated the evolving nature of cyber threats, especially as society becomes increasingly reliant on electronic communication and businesses collect and store more “granular” information about their customers. He pointed out that contrary to what many businesses may believe, commercial insurance policies do not cover many cyber risks, which require a cybersecurity policy. Because cyber insurance is so new, he urged caution in using the term “cybersecurity policy,” which can mean different things depending on the specifics for the purchaser and insurer. He then outlined the structure and benefits of the state-based insurance regulation system. Mr. Hamm stated that though cyber insurance policies are relatively new, the policies are scrutinized just as rigorously as other insurance policies.

Mr. Nutkis discussed the role of cybersecurity in risk management and the work done by HITRUST and the health care industry to enhance this role. He underlined the importance of cyber insurance in increasing the health care industry’s cyber awareness, improving its cyber preparedness, and strengthening its risk management posture. He then detailed the work HITRUST does to provide a risk-based information privacy and security control framework, compliance assessment and reporting for regulatory requirements, and best practices frameworks specifically for the health care industry, among other services.

The final witness, Mr. Finan, described the role that DHS has played in identifying and overcoming obstacles to a more robust cybersecurity insurance market, as well as the role of the private-public engagement model, especially as it relates to small and mid-sized businesses. Like the other witnesses, he underlined the importance of cyber insurance in cyber risk management, because it encourages critical infrastructure owners to better manage their cyber risk in return for better and cheaper policies. He then outlined some of the major obstacles preventing insurers from providing more cyber insurance coverage, including the ongoing lack of actuarial data, the absence of common cybersecurity standards, the lack of understanding about critical infrastructure dependencies and interdependencies, and the failure of businesses to incorporate cyber risk into their traditional enterprise risk management programs.

Many of the members’ questions focused on the link between cyber insurance and improved risk management and cyber security measures, the details of a potential data repository, and the role of government in the growing cyber insurance market. Rep. Ratcliffe asked Mr. Nutkis if they had found that applying for cyber insurance caused organizations to bolster their security, to which he replied that this is usually the case, since making good decisions on cyber controls and lowering residual risk result in lower premiums.

Rep. Richmond asked witnesses about the impact of the “risk culture” and whether cyber insurance changes the conversation on cyber risk, which is usually low on businesses’ list of priorities. Mr. Finan replied that cyber risk is usually relegated to IT departments because it isn’t understood in business terms. Insurance, however, could play a bridging role because executives understand how it fits into an enterprise risk management framework.

Members asked about the specifics of cyber insurance policies and what they look like. Mr. McCabe discussed how different companies’ policies would differ based on factors such as sector, revenue, and current risk management practices, meaning that they could be tailored to companies of all sizes. Mr. Hamm talked about the importance of gathering and sharing data in order to better understand cyber risk and come up with better products that can respond to the evolving nature of cyber threats. The question that followed was who should develop the standards and maintain and protect the data repository. Mr. Hamm did not have a specific answer, saying that his only concern was that the data be useful and available to state insurance commissioners. When prompted by Rep. Scott Perry (R-PA), however, he did concede that he didn’t wish to see another federal program.

This concern came up with other members as well, as they and the witnesses talked about the role of the federal government in cybersecurity and the cyber insurance market. Rep. Curtis Clawson (R-FL) said he wanted to see the market sort things out on its own, since the government would take an overly-simplified approach that could hamper the market in its early stages. While the witnesses generally agreed that the federal government shouldn’t be completely involved in the market, they agreed on the importance of a limited role, such as private-public partnerships and other initiatives. One witness discussed the “ghost of Edward Snowden,” which has led to discomfort with the federal government housing a potential data repository, while also recognizing it has an important role to play.

This hearing underscored the constantly evolving nature of cyber threats and the potentially devastating impact of cyber breaches, and thus the importance of addressing and better understanding cybersecurity. Cyber insurance is just one of many tools an organization can use to address these threats and manage its risk, and the witness testimonies indicate that demand will only continue to increase.

Posted in Cyber, cybersecurity, Washington, D.C.

Paul Ryan’s Plan to Expand Opportunities

One of the ways in which Speaker Ryan’s agenda has differed from conventional Republican legislative priorities is in his focus on fighting poverty and expanding opportunity. He believes that conservative policies can help the poor and middle class, and he sees this platform as an important way to broaden the appeal of the Republican Party. Mr. Ryan also recognizes the balance between seeking to reform agencies such as the Consumer Financial Protection Bureau (CFPB) and pursuing reform in areas important to consumers such as student loan debt, mortgage lending, and “the disappearing middle class.”

In July 2014, then-Chairman Ryan and his staff released a document entitled “Expanding Opportunity in America,” in which they lay out a summary of legislative initiatives intended to expand income opportunities, especially for the poor.  Although a main tenet of the paper is to encourage work and lessen the size and scope federal benefits programs such as the Temporary Assistance for Needy Families and the Supplemental Nutrition Assistance Program, there is also a focus on reforming current student loan and higher education policies.  In this paper, Mr. Ryan targets federal aid programs as the reason for high tuition and massive student loan debt.  Under initiatives set forth in the document, the federal government would reduce its federal student aid programs so that it is no longer “supporting failing schools or stoking tuition inflation.”  Student loans and the cost of higher education have been salient topics in the presidential campaigns, and the issue has resonated with young voters who support Senator Sanders. It is likely that Speaker Ryan will help move education policy discussions in this reform direction.

During his time as House Ways and Means Committee Chairman, Mr. Ryan held numerous hearings in which he highlighted his anti-poverty proposals.  However, Speaker Ryan still has some reputational damage to repair after he made some public statements about individuals receiving public assistance that were seen by anti-poverty advocates as less than sympathetic.  Mr. Ryan has continued to push for the reforms he laid out in “Expanding Opportunity in America,” and may use discussions around student loan debt and the high cost of college to lay the foundation for some of those policy initiatives.  It is clear that any public assistance related legislation that he will allow to come to the House floor will need to follow the path and theme set forth in Mr. Ryan’s anti-poverty plans.  Common themes like encouraging work programs for those receiving assistance and supporting private charities to work with communities will need to be at the forefront of the discussion to be included in Speaker Ryan’s House floor agenda.

In January, Speaker Ryan moderated the Kemp Forum on Expanding Opportunity in South Carolina along with South Carolina Senator Tim Scott. The forum gathered Republican presidential candidates (notably, missing from the group were Donald Trump and Ted Cruz) to discuss ways to address poverty in America. The policy-heavy discussion featured varying approaches by different candidates, but repeatedly came back to the failure of existing federal programs to address the root causes of poverty. Among the ideas discussed were improving treatment of nonviolent drug offenders, expanding federal Pell grant access, giving states more control over poverty and welfare programs, and increasing work incentives. Mr. Ryan and many in the GOP want to challenge the notion that combatting poverty is only a Democratic issue.

Most recently, Speaker Ryan met with members of the Congressional Black Caucus in early February as he considers adopting a broad anti-poverty plan supported by black Democrats in the Capitol. The plan includes shifting more federal money to parts of the country with persistent and high rates of poverty. With the support of some on the Republican side, Mr. Ryan says he will discuss targeted poverty funding with Democratic Rep. James Clyburn, an influential CBC member. During his time in Congress, Mr. Ryan has met with CBC members to try to find common ground on poverty alleviation policies. While there has generally been substantive disagreements, targeted funding, especially the 10-20-30 strategy in which at least 10 percent of federal funding for poverty programs goes to districts in which 20 percent of the population has lives below the poverty line for at least 30 years, has been an area of agreement. Presidential politics will make sweeping anti-poverty reform difficult, but Mr. Ryan has shown a significant openness to exploring areas of possible reform.

Speaker Ryan’s strategy of addressing poverty and his willingness to find common ground across the political spectrum fit into his broader vision of a more inclusive Republican Party. It remains to be seen how much ideological purity the GOP conservative wing will demand, especially in an election year, and how a highly partisan electorate will respond. But it seems clear that Ryan is looking much farther ahead to well-being of the party and his own political ambitions.

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About The Hot Button Blog
For many businesses, nothing seems more remote than the maneuvering of Beltway insiders. But what happens in Washington and in state and local government is critically important to your company and your industry. With government more involved in business than at any time since the 1930s, organizations that can negotiate the government labyrinth of politics, policy, and process will come out on top.
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