Capitol Insights Newsletter

Authors: Luke Schwartz, Parker Krex, and Matt Reiter

What happened in Congress this week?

This week Republicans on the House Energy and Commerce Committee introduced a proposal to revamp the National Institutes of Health. Their plan includes closing NIH research centers and granting greater congressional oversight.

Medicare Physician Fee Schedule Update

We expect the Medicare Physician Fee Schedule will be released sometime in the next few weeks.

CMS Releases National Health Expenditure Projections

On June 12th, the Centers for Medicare and Medicaid Services (CMS) recently released their National Health Expenditure projections and new historical data. This report examines trends in health spending from the last year and projects them forward for the years 2023-2032.

The report shows overall national healthcare spending is steadily growing, even after the end of the COVID-19 Public Health Emergency. Health spending grew by 7.5% in 2023. This was largely due to an increase in the insured population and a greater general willingness to consume healthcare services. According to the report, 93.1% of Americans had health insurance in 2023.

Spending on physician and clinical services is expected to have increased by 8.4 percent in 2023 (totaling $959.1 billion), which far outpaces 2022’s 2.7 percent growth rate. The rate of price growth for these services is estimated to have remained somewhat low at 0.5 percent, suggesting utilization, not price increases is behind the accelerated growth rate. For 2024, spending growth for physician and clinical services is projected to decelerate to 4.9 percent with Medicaid spending on these services expected to drop by 4.8 percent, consistent with projected declines in enrollment for this program.

Spending by the Medicare program was also high. Medicare expenditures were 8.4 percent growth in 2023, up from 5.9 percent in 2022. The report attributes this to “Medicare spending per beneficiary growth and increased hospital spending, as well as continued increases in Medicare Advantage (MA) enrollment.” However, spending by commercial health insurance was higher, at 11.1 percent.

The report also includes projections for 2023-2032 expenditures. Medicare is projected to have the highest ten-year spending growth rate due to an influx of retiring baby boomers. While Medicare enrollment grows along with its spending, Medicaid and private health insurance spending are expected to slow both in spending and enrollment.

Overall, National Health Expenditure forecasts show growth in the healthcare industry. The 2023-2032 average growth is expected to outpace the average GDP growth during that period, and health expenditures will grow from 17.3% of GDP to 19.7%. The use of healthcare services and projected spending will grow faster than the rest of the economy at the same time that Medicare faces a long-term financing shortfall and prescription drug spending becomes a larger part of health expenditures.

All of this suggests that decreasing health spending will continue to motivate federal healthcare policy.

SCOTUS to Rule on Major Case Impacting
Healthcare Policymaking Next Week

In the coming days, the Supreme Court of the United States (SCOTUS) is expected to issue an opinion on Loper Bright Enterprises v. Raimondo. This case challenges the Chevron deference doctrine, established by the 1984 decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council. For 40 years, Chevron deference has allowed federal agencies to make “reasonable interpretations” of statutes that are “silent or ambiguous.” Federal agencies frequently rely on this precedent when developing regulatory policies. If SCOTUS overturns this precedent, it would significantly change how Congress and federal agencies create and implement policies.

Loper Bright considers whether or not federal agencies should have the power to interpret ambiguous statutes established by Congress. While the substance of this case has nothing to do with health policy, a decision that overturns the Chevron deference precedent would have major implications for healthcare policymaking.

Federal healthcare agencies rely on Chevron regularly to interpret ambiguity in healthcare policy areas. For example, the Centers for Medicare and Medicaid Services (CMS) regularly uses it to interpret major statutes. In one example highlighted in an October 2023 edition of Capitol Insights, CMS interpreted “ambiguity” in the No Surprises Act statute to give the qualified payment amount (QPA) added weight compared to other factors. The Texas Medical Association (TMA) challenged this interpretation in federal court because the NSA statute did not give any factors added weight. CMS defended its decision arguing it had the authority to give the QPA added weight based on the Chevron precedent. The district court disagreed, ruling that the statute was not ambiguous on this matter.

Overturning Chevron will undermine the authority of relevant federal healthcare agencies to interpret ambiguities within complex policy areas. Currently, under Chevron, agencies are empowered to make decisions within the scope of the intention behind policies, and as long as the interpretation is reasonable, courts can defer to that interpretation. If Chevron is overturned, more responsibility would also fall on Congress to define who gets to interpret the ambiguity of federal statutes.

SCOTUS is expected to publish its opinion on Loper Bright by the end of next week.

Top Stories in Healthcare Policy

Senate Democrats are proposing to use Medicaid funding to address labor and delivery unit closures in rural areas.

CMS will be ending a program that addressed Medicare funding issues related to the Change Healthcare cyberattack.

The Congressional Budget Office has estimated that the uninsured rate will hit 8.9% by 2034. If Marketplace subsidies expire in 2025, Marketplace coverage is expected to fall by 20% within one year.

The Surgeon General is asking Congress to require mental health warning labels on social media platforms.

Change Healthcare has begun the process of notifying Americans of compromised private information.

House Republican leaders promise to block the online privacy bill introduced earlier this year from being brought to a vote on the House floor. The bill garnered significant attention upon its introduction. However, as has been the case many times over the last decade, the intricacies of US federal privacy legislation remain contentious.

Senators Martin Heinrich (D-NM), Mike Rounds (R-SD), Marsha Blackburn (R-TN), and Todd Young (R-IN) wrote a letter to the Centers for Medicare and Medicaid Services (CMS) asking the agency to establish a payment pathway and related policies for artificial intelligence and machine learning based healthcare services.