What a debt ceiling breach could mean for health care

Presented by PhRMA: Delivered daily by 10 a.m., Pulse examines the latest news in health care politics and policy.

May 22, 2023 View in browser   By Kelly Hooper and Daniel Payne Presented by Driving the day Veterans hospitals could close and veterans might not get the care they need if the U.S. defaults on its debt. | Scott Olson/Getty Images DEBT CEILING DOOMSDAY — Health care experts warn that the impact of the U.S. breaching the debt limit could be stark, your host reports. A short-term breach could disrupt Medicare and Medicaid payments, and a long-term breach could severely harm health systems, potentially making providers reluctant to see Medicare and Medicaid patients, Moody’s Analytics predicts. “This is like dropping a nuclear bomb on the health care system,” said Sara Rosenbaum, emerita professor of health law and policy at George Washington University. Debt ceiling talks broke down over the weekend, but House Speaker Kevin McCarthy said he and President Joe Biden will meet today to try to close the distance on negotiations and avoid a looming debt default, which the Treasury said could come as early as June 1. Here are some key areas of health care that would be affected by a debt limit breach: Medicare/Medicaid: Many providers' revenues come from federal programs — Medicare accounted for about 26 percent of national hospital spending in 2021. If the federal government suspends funds, providers might have difficulty meeting their obligations, experts said. Because many providers are unhappy with Medicare’s and Medicaid’s administrative burdens and low reimbursement rates, said Moody’s Analytics economist Bernard Yaros, “this could just be another reason for many of these providers to stop seeing Medicare and Medicaid patients.” Affordable Care Act: Insurance companies that participate in the Affordable Care Act might have some reserves they can dip into to keep paying claims if government funding stops. But for people getting their health care through the ACA marketplace, “they would instantly see their premiums go up” if the Treasury can no longer fund subsidies, said Frederick Isasi, executive director of Families USA, a health care advocacy group. Veterans Affairs: One of the biggest impacts of a sustained debt limit breach would be on the department’s ability to keep its staff, experts said. That begs the question of whether veterans hospitals could remain open and whether veterans could access the care they need, said Bill Hoagland, senior vice president at the Bipartisan Policy Center. WELCOME TO MONDAY PULSE. I’m Kelly Hooper, filling in as your host this morning. Have any thoughts on other ramifications a debt limit breach could have on health care? Send them my way — and any other news tips — at khooper@politico.com. And don’t forget to send tips to your regular Pulse host, dpayne@politico.com. TODAY ON OUR PULSE CHECK PODCAST, host Katherine Ellen Foley talks with Kelly about her reporting on the devastating impact a debt limit breach could have on health care, like Medicare not paying its bills, VA hospitals missing their payrolls and patients on Obamacare plans losing their subsidies. Listen to today’s Pulse Check podcast     Abortion Gov. Ron DeSantis spoke at a Florida Family Policy Council event Saturday but barely broached the topic of abortion. | Matt Dayhoff/Journal Star via AP DESANTIS AVOIDS LENGTHY ABORTION TALK — Florida Gov. Ron DeSantis made little mention of his new six-week abortion ban during remarks at the Florida Family Policy Council’s annual gala on Saturday night, POLITICO’s Sally Goldenberg and Anna Wilder report. Instead, the Republican governor’s remarks on abortion were relegated to about two minutes of a roughly 40-minute address, even as he spoke to a nonprofit group that describes itself as tied to “the leading pro-life, pro-family organizations” nationwide. “We believe that everybody counts, everybody’s special, and our Heartbeat Protection Act shows that we say what we mean and we mean what we say,” DeSantis said, referring to the six-week ban he recently signed into law. But DeSantis’ reluctance to expand on the topic as he’s set to announce his presidential campaign in the coming days was the latest sign of the tightrope he’s walking on abortion — eager to make inroads with conservatives in the GOP primary but wary of alienating moderates for whom abortion access has become a major concern. “It cuts one way in the primary and the caucus, and it cuts another way in the general. That’s the problem,” Doug Gross, a Republican operative who was chief of staff to former Iowa Gov. Terry Branstad, said ahead of DeSantis’ speech. While the six-week ban is popular among Republicans in Iowa, Gross said, “if you go into the general, a six-week ban will be seen to be extreme. … Even Trump understands that.”   GET READY FOR GLOBAL TECH DAY: Join POLITICO Live as we launch our first Global Tech Day alongside London Tech Week on Thursday, June 15. Register now for continuing updates and to be a part of this momentous and program-packed day! From the blockchain, to AI, and autonomous vehicles, technology is changing how power is exercised around the world, so who will write the rules? REGISTER HERE.     Global Health COUNTRIES JEOPARDIZE PANDEMIC TREATY — The fate of a global pandemic treaty — aimed at strengthening health systems to deal with crises — hangs in the balance as countries are fiercely divided on key issues, POLITICO’s Ashleigh Furlong reports. The who’s who of global health is descending on Geneva this week for the World Health Assembly — the annual meeting of the decision-making body of the World Health Organization. The treaty, proposed by European Council President Charles Michel in the Covid pandemic’s worst days, will be the main topic of discussion over glasses of champagne at swanky receptions. A compromise is looking more and more unlikely as countries — with just a year left to agree — face off over issues like intellectual property rights and the rules around sharing medical products developed during a pandemic. “If the groups can give up a little bit and try to compromise, I think that in the middle, we might have something left … we might have something that is useful for the future,” said a Geneva-based diplomat, who requested anonymity to talk about confidential negotiations. The issue of ensuring countries comply with what’s agreed on in the treaty has been another roadblock. “A treaty with no compliance mechanism is just a piece of paper,” warned Nina Schwalbe, founder of the public health think tank Spark Street Advisors and former senior official at UNICEF and Gavi, the Vaccine Alliance. Lobby Watch HEADING TO THE HILL — Health group representatives will continue to meet with lawmakers on the Hill this week and next to push their policy agendas. The American Society of Anesthesiologists spoke with lawmakers last week about the workforce, surprise billing, veteran care, payment reform and the opioid epidemic. The Association of American Cancer Institutes and the American Association for Cancer Research were at the Capitol last week, encouraging increased cancer research funding, particularly through the National Institutes of Health and the National Cancer Institute. Family doctors will meet Tuesday with lawmakers and staffers, including leadership of the Senate HELP and House Energy and Commerce committees, to push for measures to strengthen the primary care workforce, reduce administrative complexity for clinicians and make Medicare physician payments sustainable.   A message from PhRMA:   In Congress ON THE HOUSE SKED — On Wednesday, the House will begin to consider the HALT Fentanyl Act, which would permanently classify fentanyl-related substances in the Schedule 1 category. The House Energy and Commerce Committee approved the bill largely along party lines in a markup in late March, with Democrats raising concerns that it would expand mandatory minimum prison sentences. Reps. Angie Craig (D-Minn.) and Kim Schrier (D-Wash.) joined Republicans in supporting the bill. The House will also consider today the Preventing the Financing of Illegal Synthetic Drugs Act, which would target Chinese manufacturing of synthetic drugs. The House Financial Services Committee passed the bill with broad support in February. The chamber plans to pass it today under suspension of the rules, a procedure the House uses to act expeditiously on legislation.   DON’T MISS POLITICO’S HEALTH CARE SUMMIT: The Covid-19 pandemic helped spur innovation in health care, from the wide adoption of telemedicine, health apps and online pharmacies to mRNA vaccines. But what will the next health care innovations look like? Join POLITICO on Wednesday June 7 for our Health Care Summit to explore how tech and innovation are transforming care and the challenges ahead for access and delivery in the United States. REGISTER NOW.     Names in the News Elizabeth Cullen is joining Hadassah, the Women’s Zionist Organization of America, as government relations director. She most recently served as associate director of health policy for the Jewish Federations of North America. Haley Brown will be senior manager of political affairs and advocacy at the Society of Thoracic Surgeons. She previously was government affairs specialist at the American College of Radiology. What We're Reading The Washington Post reports on the challenges often faced by those struggling with opioid addiction in receiving buprenorphine. NBC News reports on what could happen if the bird flu spreads to humans. STAT reports on how sport and exercise medicine is finally catching up to women athletes.   A message from PhRMA: Middlemen say they want lower prices, yet they often deny or limit coverage of lower-cost generics and biosimilars while giving preferential coverage to medicines with higher prices. This might be good for PBM’s bottom line, but it can lead to higher costs for patients. What else are they hiding?     Follow us on Twitter Dan Goldberg @dancgoldberg Katherine Ellen Foley @katherineefoley Lauren Gardner @Gardner_LM Kelly Hooper @kelhoops Ben Leonard @_BenLeonard_ David Lim @davidalim Krista Mahr @kristamahr Megan Messerly @meganmesserly Alice Miranda Ollstein @aliceollstein Carmen Paun @carmenpaun Daniel Payne @_daniel_payne Ruth Reader @RuthReader Erin Schumaker @erinlschumaker Megan R. Wilson @misswilson   Follow us

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