Legislation & Politics

Week Ending July 10, 2009

Health Care Reform Debate Moves Into High Gear

Late last week, the Senate Health, Education, Labor and Pensions (HELP) Committee released the final elements of its draft health care reform bill - the public health insurance option and the employer responsibility measures.  The public health insurance option would be federally operated and be available throughout the country.  It would help lower costs and keep the insurance industry honest by providing consumers with an additional choice of coverage.  The bill includes employer "pay or play" provisions, requiring that they either provide coverage for their workers and pay a substantial share of the premium, or pay a fee into a fund so their employees can get coverage through the "exchange."  The HELP Committee began debate on these portions of the bill this week, and is expected to continue next week.

In the House, health care leaders are expected to introduce a revised version of their bill early next week.  Based on an earlier draft, by and large it will be a better bill than HELP's.  It will include a more robust public health insurance option and require employers to shoulder more responsibility in providing coverage for their workers.  Three House committees will begin debating that bill next week.
There have also been developments on the controversy over whether health benefits will be taxed as part of health care reform.  Senate Majority Leader Harry Reid (D-NV) expressed strong opposition to the notion of taxing the benefits of the middle class and stated that many Senate Democrats would vote against a bill that did so.  This announcement undermines the effort by Senate Finance Committee Chairman Max Baucus (D-MT) to help pay for reform by taxing benefits. We expect the bill released by House leaders will not include a tax on benefits, but will include taxes on the wealthy. 

New Insurance for Home Care Services Gains Support from Obama Administration

This week, Department of Health and Human Services Secretary Kathleen Sebelius expressed strong support for including the Community Living Assistance Services and Support: (CLASS) Act in health care reform legislation.  The AFSCME-supported CLASS Act is in the Senate HELP health care bill.  It would create a national insurance program for workers who become functionally disabled. The new insurance would be financed through voluntary payroll deductions and will provide benefits for supports and services to workers to help them stay independent, employed and remain in their communities.  The CLASS Act has been introduced in the House but is not in its draft health care reform bill at this time. 

Public Health Insurance Plan Option Could Save State and Local Governments $921 Billion

If health care reform includes a public health insurance option that pays Medicare payment rates to providers, state and local governments are predicted to save an estimated $921 billion in lower health care costs over 11 years, according to researchers at the well-respected The Commonwealth Fund.  If a public health insurance plan pays providers at rates set midway between current Medicare and private plan rates, state and local governments would save $765 billion during this period, but they would save only $594 billion if no public plan option is offered.  The study, "Fork in the Road: Alternative Paths to a High Performance U.S. Health System," also found that overall health care savings with a public health insurance choice would be $3 trillion over 11 years, and only $1.2 trillion under a private plan-only scenario.  The major sources of the differences in savings are lower administrative costs, greater efficiencies in health care delivery and slower growth in health care spending with a public plan choice.  Further, the authors estimate that premiums for the public plan option paying Medicare payment rates would initially be 25 percent below those currently available for a comparable benefit package in the private individual/small firm market.  Go to http://commonwealthfund.org/Content/Publications/Fund-Reports/2009/Jun/Fork-in-the-Road.aspx to see the full paper.  

House Subcommittee Approves Labor, Health, Education Funding Bill

A House subcommittee quickly approved its FY 2010 spending bill by voice vote for programs funded through the Departments of Labor, Health and Human Services, and Education. The full committee is scheduled to take up the bill next week in what is expected to be a longer hearing.

Overall, the bill provides $160.7 billion in annually-approved spending for the three departments plus some independent agencies.  This is $52 million less than the President requested and $5.6 billion more than enacted last year. The departments' accounts total $730.5 billion when all funding is included.  Republicans have expressed concern about the funding increases.

In particular, the subcommittee approved increases for the Employment and Training Administration and State Unemployment Insurance and Employment Service Operations, and a $122 million increase for Head Start to support cost of living increases for staff.

Some key programs are flat funded, including the Child Care and Development Block Grant (CCDBG), Title I education funding, and special education.  While these programs all received large increases in the economic recovery bill, AFSCME is advocating for additional funding. Other specific spending allocations had not yet been released by press time. 

Uncertain Timeline on Surface Transportation Bill

House and Senate leaders announced their full support for a long term rewrite of highway and public transportation policy and funding on July 9.  It remains unclear, however, when either chamber will bring the legislation to the floor for a vote.  Both Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi (D-CA) cite an already busy agenda for their reluctance to commit to moving forward on the potential $500 billion measure. Foremost on their list of priorities is major health care reform legislation that could take up a considerable amount of floor time this year.   In addition, the Administration issued a statement calling for a delay in moving forward with the bill and imposing an 18-month extension.  The current transportation law expires September 30.

Senator Barbara Boxer (D-CA), Chair of the Environment and Public Works Committee that writes the majority of the bill, has backed the Administration's 18-month extension of current law which she says would give her panel more time to craft such extensive legislation. The committee will mark up an extension during the July 20 week.  In the House, Rep. Peter DeFazio (D-OR), Chairman of the Highways and Transit Subcommittee, said that the full Transportation Committee would not be able to act on the bill until September at the earliest.  DeFazio also announced that he opposes the Administration's 18-month extension, but that he would support a "short-term patch." 

HHS Rescinds Bush Administration Regulations That Would Have Cut Medicaid Funds to States

On June 29, HHS Secretary Kathleen Sebelius announced that the Obama Administration will rescind all or part of three Medicaid regulations that would have cut payments to states for targeted case management, school-based administrative costs, and outpatient hospital and clinical services. AFSCME had successfully advocated to Congress to place a moratoria on these regulations through July 1, 2009, as part of the American Recovery and Reinvestment Act.    

Economic Recovery Act Update

Federal funds from the American Recovery and Reinvestment Act of 2009 (ARRA) continue to flow to state and local governments, with the bulk of the funding slated to be released during FY 2010, which begins on October 1.

On June 29, HHS announced the release of $851 million for the Recovery Act Capital Improvement Program (CIP). These grants will support the construction, repair and renovation of health centers. In addition, the funds will be used to purchase new equipment or health information technology systems and expand the use of electronic health records. These funds are in addition to the $155 million for establishing new health centers and the $388 million in Increased Demand for Services Grants. In total, ARRA provided $2 billion for grants to health centers.

As of June 26, the federal government has awarded $25 billion in Medicaid funding as a result of the increase in the federal matching share (FMAP) under ARRA. Of that amount, states have drawn down $22 billion. The amount of funds obligated by state is available at: http://transparency.cit.nih.gov/RecoveryGrants/grant.cfm?grant=Reinvestment.

The Secretary of Education announced that more than $2.7 billion is being made available early to help states as they face increasing budgetary pressures. This funding represents the last third of the government services fund, which was initially scheduled to be made available only after states completed Phase II applications as part of ARRA's State Fiscal Stabilization Fund. Go to http://www.ed.gov/news/pressreleases/2009/07/07012009.xls to view how much each state will receive early.   

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