Health care is a consistently active area for policymakers on Capitol Hill. This alert highlights five health policy issues to watch as Congress returns from August recess.
Key Takeaways
- Further action on FY26 appropriations awaits, but the outlook is uncertain.
- OMUFA reauthorization is on deck.
- There are no guarantees PBM reform will get done this year.
- Expiring Medicare and Medicaid “Health Extenders” are on the horizon.
- The end of the year will bring an increasing focus on the enhanced ACA premium tax credits.
Further Action on Fiscal Year 2026 Appropriations Awaits, But the Outlook is Uncertain
While the fiscal year 2026 (FY26) appropriations process has been moving forward, the progress has been uneven, and the outlook remains uncertain. The House Appropriations Committee has reported out more bills overall and formally adopted topline allocations that hold defense spending steady while cutting non-defense funding by about six percent. Prior to the August recess, eleven of the twelve bills had been drafted, nine had cleared the full committee and two had passed the House. On September 1, the committee released text of the last of the twelve annual appropriations bills, the Labor, Health and Human Services, Education, and Related Agencies bill, which the subcommittee is scheduled to mark up on Tuesday, September 2. However, the process in the House has largely been a partisan exercise.
In contrast, the Senate Appropriations Committee has advanced its work on a more bipartisan basis, though it has not formally adopted subcommittee allocations, instead allowing topline numbers to emerge bill after bill. Eight bills have been reported by the Senate Appropriations Committee, and the full Senate has already passed three measures with significant bipartisan support, including the Senate’s FY26 Agriculture, Rural Development, Food and Drug Administration and Related Agencies bill.
When Congress returns, appropriators in both chambers are expected to resume markups, and the Energy and Water Development and Related Agencies bill is scheduled for consideration on the House floor. Despite progress, a final agreement on all twelve bills before the September 30 deadline is highly unlikely. That makes a short-term continuing resolution (CR) the most likely path to keep the federal government open while giving both chambers more time to negotiate. A shutdown remains a risk if lawmakers cannot agree to the terms of a CR, and even if one is adopted, an overall FY26 deal is far from certain. Another complicating issue for an agreement on a short-term CR in September is President Trump’s recent use of a “pocket rescission” to cut approximately $5 billion in appropriated foreign aid funding, which arguably increases the possibility of a government shutdown at the end of the month. Still, one factor that could encourage compromise on an overall agreement later in the year is pressure from members who are eager to secure their earmarks, which weren’t funded as a result of the full-year CR for FY25, and potentially seeking to include other “must-do” policies to such a legislative vehicle.
Over-the-Counter Monograph Drug User Fee Program Reauthorization is On Deck
Authorized in 2020, the first reauthorization of the Over-the-Counter (OTC) Monograph Drug User Fee Program (OMUFA) is pending before Congress, with the current program set to expire on September 30. Prior to August recess, the House Energy and Commerce Committee and the Senate Health, Education, Labor and Pensions (HELP) Committee unanimously approved their respective versions of the bill. While the House version (H.R. 4273) is considered a “clean reauthorization,” the Senate bill (S. 2292) includes additional policy provisions related to the evidence and testing standards for active ingredients intended for topical administration of nonprescription drugs and requires FDA to issue guidance to increase the clarity and predictability of the process for the development of applications for Rx-to-nonprescription “switches” as noted in our previous client alert on OMUFA reauthorization. Ultimately, the House and Senate will need to approve the same legislation and send it to the President to ensure OMUFA’s continuation beyond the current authorization expiring at the end of this month.
Congress continues to work on drug pricing policy, but there are no guarantees PBM reform will get done this year
As expected, the Trump administration has been extremely active on drug pricing policy fronts. Against this backdrop, reconsideration of several PBM reforms has been front and center on the congressional drug pricing agenda, including the reintroduction of reforms that garnered notable bipartisan support last Congress. These legislative efforts include the reintroduction of the PBM Reform Act (H.R. 4317), which was included in an initial end-of a year-end funding vehicle in December 2024 but later fell away when the broader legislative package was scaled back. Of note, President Trump’s “Most-Favored-Nation” (MFN) Executive Order has sparked bipartisan and bicameral interest from congressional lawmakers, leading to the introduction of drug pricing bills like the Global Fairness in Drug Pricing Act (H.R. 3493) and the Fair Prescription Drug Prices for Americans Act (S. 1587), which aim to codify MFN principles and implement international reference pricing.
The work on drug pricing legislation has also included legislation related to the Inflation Reduction Act (IRA). Of note, the One Big Beautiful Bill Act (OBBBA, P.L. 119-21) included a provision to expand and clarify the definition of orphan drugs under the IRA, allowing drugs treating multiple rare diseases to be exempt from Medicare drug price negotiations. It is likely that there will be another push to include PBM reforms in an end-of-the-year package. It remains to be seen if the legislative dynamics once again prove too difficult to get these reforms across the legislative finish line this year. For a complete list of drug pricing and PBM reform legislation in the 119th Congress, please see our summary chart.
Expiring Medicare and Medicaid “Health Extenders” are on the Horizon
Congress spent a significant amount of time this year considering OBBBA. As noted in our prior alert, OBBBA included numerous health care provisions, including significant reforms to the Medicaid program. However, Congress has yet to address the health care provisions that are set to expire at the end of the fiscal year (commonly referred to as “health extenders”). As outlined in our chart here, many of these provisions are considered “must-pass” and Congress is likely to take action on them to prevent disruption to patients and providers; however, it is not yet clear how Congress will address these provisions as the deadline to do so draws near. The cost associated with extending these provisions will be a consideration as Congress has offset the cost with savings in federal health programs in prior years. Given the significance of these provisions to Medicare, Medicaid and public health programs, including safety net care, Congress is likely to take action to prevent these provisions from expiring at the end of the month.
As we have seen with prior funding bills, Congress may elect to extend these provisions as part of legislation to fund the federal government. There is long-standing precedent for including the extenders on legislation to fund the federal government. In March of this year, Congress passed the Full-Year Continuing Appropriations and Extensions Act and extended these provisions through September 30, 2025. However, the length of any extension for these expiring provisions typically lines up with the length of the CR or funding bill, meaning another extension of these provisions would ripen as part of end-of-year legislative considerations. It’s also worth noting that in addition to these extenders, a number of public health reauthorizations remain outstanding, including reauthorization of the SUPPORT Act, the Pandemic and All-Hazards Preparedness Act, in addition to authority related to the rare disease pediatric priority review voucher program.
Enhanced Advance Premium Tax Credits (eAPTCs)
Without Congressional action, the Affordable Care Act (ACA) enhanced premium tax credits for individuals who purchase health coverage through the ACA marketplace will expire on December 31, 2025. Enhanced tax credits were enacted by the American Rescue Plan in 2021, and extended by the IRA in 2022, two pieces of legislation championed by Congressional Democrats during the Biden-Harris administration. Even though these tax credits expire later in the year, extending them through a CR could be a major consideration because doing so would enable health plans to reprice their premiums to reflect the enhanced credits during the upcoming ACA marketing and open enrollment periods this Fall.
The Congressional Budget Office estimates that if the enhanced credits expire, the number of people without health insurance in the U.S. will increase by 4.2 million over the next 10 years and annual health insurance premiums will significantly increase in 2026 for 18 million enrollees who remain in the ACA marketplace. As a result, hospitals and other providers would likely see greater uncompensated care costs.
While these credits are far reaching and consequential, their future beyond this year is uncertain. There does not appear to be consensus among Republican Members of Congress about whether and how to extend the enhanced credits, but some Republican lawmakers have expressed a desire to see changes, such as reducing the credit amount for individuals at higher income levels. Democrat lawmakers have signaled concern about creating additional health insurance coverage losses given estimates of the number of people who will lose health insurance under the OBBBA. Cost will be a consideration as a one-year extension could cost between $15 to $25 billion depending on its design. Given concerns about the enhanced credits on both sides of the aisle, this issue will continue to be a focus and increasing point of policy discussion on Capitol Hill in September and beyond.
