December 2, 2024

Election surprise brings Republican trifecta to U.S. federal government

Republicans celebrated big election wins last month as American voters elected Donald Trump to his second, non-consecutive term, ended Democratic control of the Senate and kept Republicans in control of the House. Donald Trump won every “swing state”, leading to both an electoral college and popular vote victory. As expected, Republicans secured control of the Senate by flipping Democratic seats in Montana, Ohio, West Virginia and Pennsylvania, giving them a 53-47 majority. While many observers (including the Gridiron crystal ball!) expected the Democrats to win the House, Republicans barely held on to their majority. The GOP controls the House 220-215, an incredibly narrow majority. On top of that close margin, President-elect Trump has nominated a handful of House Republicans for key positions in his new Administration, meaning special elections and open seats that will make it extremely difficult for Republicans to move major legislation without some Democratic support. Republicans will move quickly on key policy priorities, most notably immigration and tax reform. Mid-term elections are often unkind to the party that controls the White House (let alone both the House and Senate), so expect Republicans to advance major legislation early in the new 119^th Congress, which convenes on January 3. Senate Republicans selected John Thune (R-SD) as their Majority Leader, striking a blow to many Trump supporters who viewed Thune has too close to the establishment. Thune and Trump will likely bump heads on some issues, although likely less than the former president and former Majority Leader Mitch McConnell (R-KY). Current House Speaker Mike Johnson (R-LA) remains the front runner to continue his role leading the House, but some extreme conservative members may push back when the House formally elects its leadership on January 3. Shortly after January 3, we’ll be watching committee leadership and general member committee assignments very closely. Sen. Mike Crapo (R-ID) is expected to chair the powerful Senate Finance Committee (which oversees Medicare policy), while Rep. Brett Guthrie (R-KY) is the favorite to assume the chairmanship of the powerful House Energy & Commerce Committee. 

Trump nominates loyalists for key health care leadership posts, but Senate must concur

It didn’t take President-Elect Trump long to send the message that he plans to take a different tact when choosing key Administration officials in his second term. While Trump’s 2016 victory took many by surprise, he relied heavily on traditional Republican leaders for key roles in the first Administration. Not so, this time around. On the health policy front, Trump nominated Robert F. Kennedy, Jr. as Secretary of Health & Human Services (HHS). Kennedy has been a sharp critic of biopharmaceutical companies, vaccines, and the food industry. He’s spoken negatively about industry-paid fees (PDUFA fees) that fund FDA staffing for drug reviews, claiming that they allow companies undue influence over the process (nearly half of the FDA’s budget currently comes from user fees). Dr. Mehmet Oz has been tapped to lead the powerful Centers for Medicare & Medicaid Services (CMS). Dr. Oz, a former celebrity TV host and failed U.S. Senate candidate, has been nominated to oversee federal health care programs that account for $1.6 trillion in spending (nearly 25% of the federal budget). Trump hailed Oz as a “world-class communicator” and “eminent physician, heart surgeon and inventor” in his nomination comments. Trump took a bit more traditional role in nominating Johns Hopkins surgeon Martin Makary to the role of Food & Drug Administration (FDA) commissioner. The British-American physician was outspoken in his opposition to lockdowns and vaccine mandates during the COVID pandemic, but did not publicly oppose vaccines themselves (like RFK, Jr. did). A longtime critic of the FDA, Makary has called on the agency to get back to its regulatory roots. Some observers believe much of the early focus will be on the nation’s food supply—and issue close to RFK, Jr. and Makary. “We have poisoned our food supply, engineered highly addictive chemicals that we put into our food. We spray it with pesticides that kiss pests…What do you think they do to our gut lining in our microbiome?” Makary asked during a congressional roundtable on health and nutrition in September. All three of these important roles require confirmation from the U.S. Senate. The nominees have begun their 1:1 visits with key senators and will face confirmation hearings, likely beginning in late January. Given many of the controversial statements and positions assumed by the nominees, there will be bipartisan scrutiny. Democrats will likely oppose the nominations, and it will only take 4 Republican senators to vote “no” to tank a nomination. Kennedy is already receiving criticism by some Republican senators for his past comments in support of unrestricted abortion. Former FDA Commissioner Scott Gottlieb, who is well respected by Republicans on the Hill, said on CNBC last week, “I think if RFK follows through on his intentions, and I believe he will, and I believe he can, it will cost lives in this country.” 

What does the election mean for Medicare & Medicaid?

Medicare and Medicaid provide health care coverage for more than 135 million Americans. Therefore, policy proposals or decisions impacting the programs are always controversial. While strong political statements have been made and ads from both sides of the aisle have raised anxiety over the future of the programs, it’s unlikely that major changes will happen. Impactful changes…yes. Major overhaul…unlikely. What should we keep an eye on in the next few years? MEDICARE: 1) The new Administration will likely look to expand the Medicare Advantage program, believing that it will save money. Medicare Advantage plans (which currently provide coverage to just over half of all Medicare beneficiaries) have come under scrutiny for many reasons in the last few years, but they’ll likely find a friendly environment in the Trump White House. 2) While House Republicans would love to repeal the Inflation Reduction Act (IRA), including its government price controls on prescription drugs in Medicare, it is unlikely. Both Trump and VP-elect J.D. Vance have expressed general support for government negotiation of drug prices and pledged to further reduce drug prices. The IRA provisions also include a $2,000 out of pocket cap on drug spending that goes into effect next year. This popular protection would be extremely difficult to take away from seniors. CMS may rework some IRA drug pricing proposals, and Congress is likely to pass legislation protecting rare disease drug development and removing disincentives for small molecule drug development, but most the IRA will likely remain intact. MEDICAID: 1) Republicans will likely look to allow states to require Medicaid beneficiaries to take part in “community engagement” activities (aka “work requirements”) for a certain number of hours to remain Medicaid eligible. These activities could include work, volunteering or seeking an education. The Trump Administration approved 11 state waivers on this topic in its first four years, but most were struck down in the courts and not implemented due to the pandemic. It’s expected that the GOP will renew this push, which they claim will generate savings that could be used to fund tax breaks. 2) While the Biden Administration focused heavily on expanding Medicaid rolls, Trump’s HHS will likely move in the other direction. Expect less funding for outreach and enrollment programs and potential proposals to reduce the federal match for states that elected to expand their Medicaid program eligibility (40 states have elected to expand, while 10 have refused expansion).

Biden Administration pushes through obesity drug coverage in its final weeks, sparking celebration, debate and warnings

Coverage of weight loss products in Medicare has been prohibited by law for more than two decades. Last week, the Biden Administration proposed that federal programs (Medicare and Medicaid) permit coverage of anti-obesity medications. In its new proposed regulation, CMS said there is a growing consensus among experts that obesity is a chronic disease associated with a large number of health risks, stating that anti-obesity medications (such as Ozempic ® and Wegovy®) should be covered by Medicare Part D for obese patients (a body mass index over 30). CMS estimates that 7.4 million Medicare and Medicaid beneficiaries would be newly eligible to receive the medications under the proposal. Given the timing of the proposal (which requires a 60-day comment period), the rule would need to be finalized by the incoming Trump Administration. HHS Secretary nominee Robert F. Kennedy Jr. has been critical of anti-obesity medications, while CMS administrator nominee Dr. Mehmet Oz has expressed support. Some patient advocates hailed the proposal, but some budget watchdogs have expressed concern over the price tag, which is expected to cost $25 billion for Medicare and $11 billion for Medicaid over a ten-year span. President Biden commented that the Medicare Drug Negotiation Program would drive the cost of the medications lower, since any anti-obesity medication would likely rise the top of the government’s negotiation list. HHS Secretary Xavier Becerra said, “Our loved ones with Medicare deserve care that puts their interests first. To achieve that, we want to remove barriers that delay care or deny people services and medications they need to be healthy.” 

Health Policy Snippets

1. HIV positive liver and kidney transplants get the green light. People with HIV are now permitted to donate kidneys or livers to recipients are also HIV positive. The new rule went into effect November 27 and is intended to shorten wait times for transplants. The decision comes on the heels of a recent study published in the New England Journal of Medicine, which found that recipients of organs from HIV-positive donors had “similarly high rates of overall survival and low rates of organ rejection” over a four-year period.
2. ACA may survive, but enhanced subsidies are likely on the chopping block. While Republicans generally continued their criticism of the Affordable Care Act (ACA) during the 2024 campaign, moves to complete repeal the law won’t gain momentum. However, the enhanced government subsidies for many enrollees’ premiums are set to expire at the end of 2025—and likely won’t be renewed with the GOP controlling Congress and the White House. Some advocates are warning that expiration of the subsidies will lead to millions losing coverage and becoming uninsured. The Congressional Budget Office (CBO) has projected that a permanent extension of the subsidies would cost $335 billion over the next ten years. With Republicans looking for crucial budget offsets to fund an extension of the 2017 tax cuts, which are set to expire at the end of 2025 as well, the subsidies may disappear.