New GOP Healthcare Bill Targets Costs, Hospital Consolidation

March 10, 2019
In The News

A new, 200-page healthcare proposal by a GOP House lawmaker goes after hospital consolidation and pricing as part of a sweeping attempt to cut costs and increase coverage.

The legislation from Rep. Bruce Westerman (R-Ark.), who has been working on it for more than a year and a half even though he doesn't sit on any House health committee, signals the mounting unrest among individual members of Congress over high healthcare costs. This is feeding into the momentum from both sides to address hospital consolidation.

"If you're concerned about monopolies in general, I think there are people on the left and right who share that concern," said Avik Roy, a conservative policy adviser who has consulted on Westerman's bill.

Westerman's hospital provisions would, among other things, boost resources for the Federal Trade Commission to go after mergers, reward states that repeal their certificate-of-need, scope-of-practice and any-willing-provider laws, and cut Medicare rates for hospitals in concentrated markets

They reflect proposals by Rep. Jim Banks (R-Ind.)—co-sponsored by Westerman—that would clamp down on consolidation and mergers. Key Democrats of the House Judiciary Committee, Reps. Jerrold Nadler (D-N.Y.) and David Cicilline (D-R.I.), are also eying antitrust issues in healthcare.

Roy said anti-taxation Republicans need to step up to address costs, particularly now that the median family's share of healthcare costs is 15% of their income—higher than their new tax rate.

"Tax rates are low, but hospital and healthcare spending is a component of family spending, and if we allow monopoly power to extract high prices you get to the point where that's a bigger tax on a family than the actual tax collected by the Internal Revenue Service," Roy said. "If we aren't at a tipping point now, we're nearing it."

Including the hospital provisions in a bill that also addresses the Affordable Care Act exchanges and the prescription drug market, as well as Medicaid and Medicare, cuts to Westerman's goal of bipartisan support for tackling the cost problem.

It's unclear where the legislation will go next. Westerman is a member of the rank and file and doesn't sit on the Energy and Commerce or Ways and Means committees. Yet he has been working on the legislation since the GOP repeal-and-replace effort fell apart in 2017.

It's the first major healthcare proposal from a Republican since that failure, and comes as the Democrats' progressive wing sees an opening for single-payer or Medicare for All. Some GOP lawmakers have gotten antsy to put forward something of their own on healthcare, particularly after bruising losses in 2018.

Westerman's staff engaged in constant back-and-forth with the Congressional Budget Office on individual pieces of the bill to make sure they knit together the cost and coverage issues.

"Going back to the early days, when I did a postmortem analysis of the American Health Care Act, I think what hurt it politically was the Congressional Budget Office score," Westerman said. "So as we first discussed it, I said, 'We've got to have a bill that covers more people and lowers cost.' If it covers more people, who can argue with that? If it's lower cost, who can argue with that?"

Along with the hospital provisions, the bill includes the bipartisan Creates Act from Sen. Patrick Leahy (D-Vt.) to promote generic and biosimilar competition in the drug market; it would create a $20 billion-per-year federal reinsurance pool; and it would power significant anti-monopoly efforts against hospitals.

ACA market-related provisions include a change to the rating band from a 3-to-1 spending cap ratio for older people to 5-to-1—proposed in the GOP's American Health Care Act—a repeal of the employer mandate, and "copper" and 12-month short-term plan options.

The bill would also authorize cost-sharing reduction payments and transfer federal employees into the exchanges—a move Westerman's office estimates could nearly double the existing exchange market.

Additionally, it would loosen Stark and anti-kickback laws for hospitals—currently the goal of a regulatory push in HHS—and expand Medicare reimbursement for telehealth. It would tighten hospital reporting requirements for the 340B drug discount program, as well as for pharmacy benefit managers.

Westerman's big Medicaid and Medicare overhauling proposals are unlikely to bring Democrats on board. Under the bill, Medicaid could offer a state the option of block grants for the traditional population and shift the rest to the exchanges—a move that could be pricey under the individual market's status quo.

Also, while people with more than $10 million in lifetime reported earnings from salary could keep traditional Medicare (Part A), they would lose eligibility to Parts B and D as well as Medigap.