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Health Affairs This Week places listeners at the center of health policy’s proverbial water cooler. Join editors from Health Affairs, the leading journal of health policy research, and special guests as they discuss this week’s most pressing health policy news. All in 15 minutes or less.
Hello, and welcome to Health Affairs This Week. I'm your host, Jeff Byers. We're recording on 06/05/2025. We're just gonna get into it today. Y'all become an insider, blah blah blah.
Jeff Byers:Today on the pod, we have Katie Keith back on the program to dive into the budget reconciliation package. Katie, welcome back.
Katie Keith:Thank you for having me.
Jeff Byers:Yeah. So you're located in DC. Are you lamenting the loss of Haikon currently?
Katie Keith:Jeff, have no idea what that means.
Jeff Byers:Oh, well, big ups to the real ones. It's a it's a Katie, it was a ramen place that closed last month. Oh, you should have gone.
Katie Keith:But I we could never get in. So I don't know how they closed either because we could never get a reservation. So there you have it. But now I know what you're talking about.
Jeff Byers:Oh, okay. Yeah. Well, they were they were very good. We don't have to dwell on that. On more timely health policy news, the budget reconciliation measure was passed in the house.
Jeff Byers:It moved to the senate this week if I if you can correct me if I'm wrong. You came on a couple of weeks ago to talk about this, but, you know, what do we know as a process right now as we're recording?
Katie Keith:Yeah. Absolutely. So the you are correct. The bill is firmly with the senate. It was passed in the wee hours overnight, in in late May by the house, 02/2015 to 214, so on a party line vote.
Katie Keith:So now that the bill has, you know, passed the house, there's not a ton of public action right now. I think, there's a lot of quiet negotiations happening within the Republican Party. Some of those spill out into public, but not all of them. And so you can see was a similar dynamic in the house as well, where you have a certain block of the conservatives in the senate pushing for even steeper cuts to federal spending, including health care spending. You have some moderates who are worried and concerned about the degree of spending cuts that they're seeing, especially to programs like Medicaid.
Katie Keith:And so I don't know where that shakes out, but you could tell there's a lot of activity happening within the party. And then I think the second thing to, you know, the folks in DC are certainly attuned to, but, you know, both sides of the aisle are teeing up, I think, both of the, presumably, staff and member level to start meeting with the parliamentarian, to plead their case about what should stay in the bill because and we could go into this, Jeff, but, you know, this Republicans in congress are using the budget reconciliation process, which is a very specific and, in some ways, limited process, which means not you can't put every single thing that you might want to put in this kind of a bill. So there are certain restrictions, and, you know, this only applies really in the senate where each side will be pleading their case, presumably democrats, about why different provisions do not satisfy the requirements of budget reconciliation, with Republicans fighting to keep some of those policies in. So that is a, not a public process, but, I'm sure people are working on that very much behind the scenes to to make some of the arguments about what qualifies and doesn't.
Jeff Byers:Yeah. Yeah. I would love to touch on that coming up. But first, you have a lot of expertise in the Affordable Care Act field. Readers of Health Affairs forefront will know that you've, been a big contributor to the following the ACA series.
Jeff Byers:What are some of the major changes and implications in this budget reconciliation package for health measures relating to the ACA currently?
Katie Keith:So the Affordable Care Act changes are quite significant. You're starting to see, I think, more media attention, on this and and better explanations. I think a lot of people were maybe surprised by how significant the changes could be. So I think the first thing to highlight is this would really pretty fundamentally change how people enroll in marketplace coverage. And some of this will sound similar to what I'm sure we'll talk about on the Medicaid side too, but there's you know, if this bill becomes law, there'll be a ton of new paperwork requirements, administrative burdens.
Katie Keith:You know, to submit you know, someone going to enroll through healthcare.gov or their, state based marketplace would have to show proof of why they qualify both before they can actually enroll in the coverage and if they qualify for, you know, financial help to lower their monthly premiums. The bill would ban what we call auto reenrollment, which is, you know, if I'm already enrolled in coverage, a lot of folks just, you know, simply automatically roll over in their same plan to the next year. This would change that. You'd have to, you know, physically go into your plan and select. And if not, you could risk losing your coverage, which I think would be very, very confusing for many consumers who've relied on auto reenrollment for, you know, many, many years now.
Katie Keith:You have a shorter enrollment window. So you're just really, you know, setting up a much more complicated sis it's already a complicated system for many people to navigate, this a, you'd be changing the rules, like long standing rules in real time, but really throwing up a whole bunch of barriers that people wouldn't necessarily be familiar with. I think the other things I wanted to highlight is changes that would result in higher out of pocket costs. So at a time when, you know, a lot of people are struggling with health care costs, this bill would, you know, change the methodology that's used a little bit technical, but the bottom line is it would raise the annual cap on out of pocket costs and, you know, make financial assistance less generous. The plans would also be less comprehensive.
Katie Keith:They would sort of cover less, consumers would be on the hook for paying more for their out of pocket costs. And the third major change is around kind of eligibility changes. So, you know, the Affordable Care Act in the marketplaces have been an important source of coverage for lawfully present immigrants. So think refugees, you know, folks who, need asylum, domestic violence survivors. This would and dreamer, know, DACA recipients, this bill would eliminate eligibility for that.
Katie Keith:So, even lawfully present immigrants could no longer rely on the marketplace as a source of coverage, which I think would be quite significant. And all of this, of course so that's some of the stuff that's in the bill. I would also say overnight at the the very end, house Republicans added a proposal to fund cost sharing reductions, which are a bit complicated, so I don't think we should go into them here, but would also presumably disrupt abortion access to abortion insurance coverage in a bunch of states across the country. So that happened overnight. And then all of this is combined with, you know, expiration of more generous, enhanced premium tax credits, at the end of the year.
Katie Keith:And so it will be a full kind of double whammy for folks who've relied on this market. And and spend you know, over the past decade, 50,000,000 Americans have used the marketplaces. And I think the expectation is enrollment would decline by, you know, I would say at least a third if all of these changes happen. So it's it's huge changes coming if this bill does make it across the finish line.
Jeff Byers:Yeah. We'll get into the Medicaid scope of it. But much like Medicaid, you mentioned potential administrative burden on those marketplace beneficiaries or enrollees. I'm just kinda curious, like, do you get a good sense of what that administrative burden might equal to when it comes to people either forgetting that they have to sign up or not knowing they have to make a step and then they lose coverage? Is there any parallels to the Medicaid market on that?
Katie Keith:No. Absolutely. And there's an incredible amount of research and data that shows sort of, you know, when whenever you have some kind of a barrier. Right? Anytime a consumer has to take an extra step, and, you know, many people can think about this in their own lives too, if you have to take an extra step, it makes it much harder to, you know, get across the finish line.
Katie Keith:And so, you know, I am not an expert on this, but I think the what we saw happen in Arkansas when the state added Medicaid work requirements is you saw 18,000 people lose coverage, not because they weren't eligible, but because they didn't know about or didn't know how to comply with the paperwork requirements. And so I think there is a cross cutting theme here, which is, you know, a lot of the the folks we are talking about are eligible for the coverage. It's but you're creating barriers that we know will result in coverage losses, which is how these bills are saving money, which I think is is the point and and we'll get to based on, you know, this week's congressional budget office score. So they save money precisely because people lose their coverage due to the administrative barriers that are being put up across these different programs.
Jeff Byers:Well, let's move on to the Medicaid side of things. So in in general, the individual marketplace, I think it has, less raw numbers than the Medicaid market.
Katie Keith:That's right. Yeah. In in total.
Jeff Byers:That's right. Right. Double checking my own work there on a hunch. So the impacts to Medicaid in this budget reconciliation bill has also gotten a fair amount of attention, especially in the health care media space. What are the major provisions there?
Katie Keith:Yeah. So there's a a ton happening in Medicaid just like on the Affordable Care Act. And I think a big takeaway is a lot of the changes are targeted, at the Medicaid expansion populations, but, a lot of the changes that are happening here would really have effects across the entire Medicaid program. So I think would extend to, you know, the coverage offered to children, to people with disabilities, to, you know, all the additional sort of categories you have in in what we refer to as traditional Medicaid. So I think if you think about both the Affordable Care Act marketplaces and the Medicaid expansion population, I wouldn't say that your congress is repealing both of those programs, but they are severely undermining both and going to you know, would impose changes that are gonna make it so much harder for millions and millions of people to access the coverage.
Katie Keith:So in terms of some of the specific changes we're seeing to Medicaid, you know, one that's gotten a fair amount of attention is the work requirements that would go into effect. It was originally, I think, 2029, and then, again, overnight, house Republicans would move that up to December of twenty twenty six, which would be extremely quick for every state in the nation to develop and implement and then inform Medicaid enrollees about an entirely new system. And and I think this would, you know, transform a lot of the Medicaid program. The idea would be before you could enroll in Medicaid coverage for certain people, and then to keep your coverage, you would have to show that you are doing some kind of activity for eighty hours a month, whether that is working or in school. You know, they call these community engagement requirements.
Katie Keith:And there is just a a ton of, you know, experimentation on the state side to show that these have not worked in part because, you know, the vast majority of Medicaid enrollees already work. Or if they're not working, it's because they're caregivers or they have a disability or they're in school. And so I always think of Medicaid work requirements as a solution in search of a problem, if you will. Beyond work requirements, there would be a lot of changes to the way that states finance their Medicaid program. So freezing what we call Medicaid provider taxes so states couldn't, you know, amend those taxes or adopt new ones, and that would really kind of shift how most states use these, kinds of provider taxes.
Katie Keith:So it really reduced flexibility even at the same time as the this bill would shift a lot of the costs of the Medicaid program from the federal government to the state, so you're sort of tying states' hands there. There's provisions that would prevent states from using their own money, so not even federal dollars, but state dollars to, fund coverage or care programs for undocumented residents, which seems to me to be quite unprecedented. And then there's attempts to limit access to gender affirming care across both Medicaid and the Affordable Care Act. So those are some highlights or maybe lowlights from my perspective, but dig in in a lot more detail in those in various forefront pieces.
Jeff Byers:Right. And listeners can check out the health policy at a crossroads series on forefront. Check that out. Moving on, and I I kinda wanna give a hat tip to Kaiser Family Foundation. I think they're called KFF now for highlighting this, putting this on my radar.
Jeff Byers:But there are some changes to health savings accounts in this bill. Gym memberships can be considered, medical expenses that you can pay through your health savings accounts funds, and and annual contribution limits would increase by about $4,000 for self coverage, essentially doubling the basic contribution limits for 2025. I thought that was kinda interesting. I don't know if you have anything to add on that.
Katie Keith:Interesting is is I think the right word. So there's you are totally right. There's a ton of changes in here to various health savings accounts provisions. I think the sort of gym membership one that you mentioned is quite is sort of interesting. A lot of these have, I think, bipartisan support, and they've been proposed, you know, many times over and have never made it across the finish line.
Katie Keith:The other thing that this bill would do is codify a Trump administration proposal. They were called individual coverage health reimbursement arrangements, ICRA, which is a name that no one could love. And so this bill would rename them as choice arrangements, which is certainly a good rebrand, and offer a tax credit. And the way that those work, these new choice arrangements, small employers would be able to, you know, put money aside for an employee to go purchase coverage in the individual market. So market you know, it could be marketplace coverage, that kind of thing.
Katie Keith:And I think the
Jeff Byers:Who doesn't love a choice? Unless Who doesn't love choice fatigue.
Katie Keith:Exactly. And, you know, I I wrote about a bunch of these changes so folks can go look in more detail there too. But I think one global point is, and this is a broader point about the entire bill. A, I think those choice arrangements are only going to be successful if employers, have an a stable individual market in which they can put their employees in. And so a lot of the changes that we've already talked about with respect to the marketplaces are going to undermine the individual market.
Katie Keith:Right? So it seems a little bit to me a mixed message. We're gonna give tax credits for employers to send people to the individual market even as we are undermining it through these other changes and cutting enrollment by a third. So that's point one. And then point two, I think, you know, these health savings account changes, again, bipartisan, have been talked about for a long time.
Katie Keith:You know, I'm really not kind of weighing in on the policy, but it does stick jump out to me that, you know, these are these are sort of tax breaks. Right? And and health savings accounts are, you know, used disproportionately by higher income people. And so the fact that they're paired in this bill where you are, you know, cutting a trillion dollars in federal health care spending while advantaging and sort of, you know, giving more more benefits to higher income people through HSAs really jumps out at me. And so even things like the the gym memberships, I have not looked at this in the more recent congressional budget office analysis, but when it was moving through the Ways and Means Committee, that's about a $10,000,000,000 proposal.
Katie Keith:And so, you know, you've got us the time when we're kind of moving up Medicaid work requirements, but giving, you know, tax breaks for gym memberships, it just really jumps out to me.
Jeff Byers:Thanks for sharing that information. Here I am just thinking it relates to gym memberships, and it turns out there's contains a multitude on that very simple line.
Katie Keith:For better or worse. That's right.
Jeff Byers:Finally, what are some of the major changes in Medicare?
Katie Keith:So they're much fewer relative certainly to the marketplaces in Medicaid as we've been discussing many fewer changes to Medicare. I think in part, because the president has been quite clear, he does not want to be cutting Medicare or perceived as cutting Medicare. But there are some changes, things like updates to the Medicare, physician fee schedule, you know, the bill would stave off, you know, cuts that are otherwise coming earlier to Medicaid disproportionate share hospital reductions, which is sort of Medicare related. There's some some changes to the Medicare drug negotiation program and then some transparency requirements for pharmacy benefit managers to per that participate in Medicare Part D, which is the prescription drug program for Medicare. So I think big changes each one of those kind of in and of themselves, and yet nothing sort of pales in comparison to what we're talking about, I would say, the Affordable Care Act and and Medicaid piece.
Katie Keith:And, Jeff, I was gonna mention to you too because it's something we've talked about on the podcast before, but at least the the version the house version of the bill would include about a hundred million dollars to fund the Trump administration's deregulatory efforts. There were, at at one point in the bill, much broader kind of deregulatory changes that were seemed to me to be much more policy focused that were stripped out at the end in that overnight amendment. Could have been more changes. There are fewer changes there, but definitely, trying to fund, that that those sort of deregulatory efforts through the office of Management and Budget. So I wanted to flag that one for you too.
Jeff Byers:Thank you. And the listeners will thank you. So with that, yeah, the drug pricing stuff and the other items you mentioned, I'm sure we could talk about those ad nauseam for the next fifteen to, you know, hour or so. But, unfortunately, we don't have that time. We'll have to cap it at, like, what can we expect next?
Jeff Byers:So there was a CBO analysis that went live this week where and I'm quoting an AP news article headline, now Trump tax bill will add 2,400,000,000,000.0 to the deficit and leave 10,900,000 more uninsured, CBO says. What are what do we think is gonna move move with this?
Katie Keith:Yeah. So, I mean, maybe staying on the the big CBO analysis, for one, and and then we could talk about what's gonna happen or what might happen next, I guess. You know? And I I think that's worth pointing out that there was not full CEO analysis until after this bill was passed by the house. So now we sort of know, all the implications.
Katie Keith:There were various scores that had happened before, but this is the the comprehensive look by our budget experts about how even how pieces of this legislation interact with one another. So I think you are exactly right. The $2,400,000,000,000 in debt being added, federal health care spending cuts of over a trillion, which reflect the huge cuts to Medicaid and the Affordable Care Act that we talked about, really significant cuts, to SNAP too. So, again, kind of disproportionate impact on, lower income Americans. A total of 11,000,000 people would be uninsured under this legislation, and then that will pretty quickly jump to 16,000,000 people uninsured if you add in the effects of not expanding the enhanced premium tax credits under the Affordable Care Act, which, again, I think probably for the third time I'm saying that on this podcast, but will expire at the end of the year.
Katie Keith:So I think very safe to talk about this as 16,000,000 uninsured people. That and and just for context, folks who were around during the 2017 ACA repeal and replace fight, those coverage loss numbers are very similar to what we were looking at back in 2017, and and higher, I think, than the sort of very famous version of the bill that was being voted on in the senate when, you know, senator John McCain had his very dramatic, you know, thumbs down in the senate. So we're we're already much higher than than those levels, and I think that's important to keep in mind. And then I've mentioned this already, but, I think the CBO analysis really underscores how much, redistribution is happening through this legislation. So taking significant cuts to Medicaid and SNAP from the lowest income Americans and transferring those resources to higher income Americans through a bunch of the tax breaks that are there.
Katie Keith:So that is, you know And I think there is analysis coming on the Congressional Budget Office report that will be very useful for folks to dig in more. And then from there, you know, there's gonna be continued discussions. The so called birdbath, I think, will be ongoing. I think Senate negotiations will continue. But the goal would be The stated public goal from, I think, Senate Republicans is that they would like to have a vote by the July 4.
Katie Keith:I don't know if they will make that deadline or not, but, from there, you know, depending on what comes out of the senate, which I assume will look different at least in some ways from the house bill, the legislation would go back to the house, or there would be sort of a conference committee effort that and then that bill would have to pass both chambers again. So we're we're not there yet even though, folks are moving moving quickly. And I think and and hope to, I think, keep the, pedal and metal, if you will. So there we are, but that's what might happen next.
Jeff Byers:Katie Keith, what else is going on that we may have missed in this conversation?
Katie Keith:Yeah. There's always more to say about what is going on in health policy, but I I think I wanted to highlight, you know, we saw for the first time the Trump administration, I think, take significant action on abortion access. And so earlier this week, the Trump administration withdrew guidance under the, emergency medical treatment and active labor act that had been put in place by the Biden administration to make it clear that women experiencing a medical emergency whose, you know, doctor agreed that an abortion was the life or health saving treatment that she needed, she should be able to get that abortion care in in every state in the country, including states with abortion bans. That was pulled back by the Trump administration, and I think we'll leave a bit of a vacuum. That guidance had been meant to provide clarity to to doctors about what federal law requires, and in its absence, the law is still there, but I think it will add to the chilling effect about when doctors should provide and women can access the care that they need.
Katie Keith:You also saw FDA Commissioner McCary commit to Senator Josh Hawley to do a fulsome review of medication abortion. So, you know, some of that has been kind of in the ether, but to me, this seemed like a very clear indication that they were going to do that. And then we're recording on Thursday, and earlier today, had four Democratic states ask the FDA file what we call a citizen's petition to, you know, also look at the way that FDA regulates medication abortion and make it less stringent. So some major shifts this week. I think a lot more to come, but, definitely something high on my radar.
Jeff Byers:Yeah. Well, we'll have to have you back on as more information becomes available. Katie Keith, always a pleasure. Thanks for joining us today on Health Affairs This Week. And if you, the listener, enjoyed this episode, send it to the ramen lover in your life, and we'll we'll will hold on.
Jeff Byers:We will see you next week. We are taking some time off in the summer, but we'll be back on next week. We'll see you next week. Thanks all.