Hart Health Strategies provides a comprehensive policy briefing on a weekly basis. This in-depth health policy briefing is sent out at the beginning of each week. The health policy briefing recaps the previous week and previews the week ahead. It alerts clients to upcoming congressional hearings, newly introduced bills, regulatory announcements, and implementation activity related to the Patient Protection and Affordable Care Act (PPACA) and other health laws.


President Signs Two-Week FY 2011 CR

After some shouting from the Senate, but with little fanfare thereafter, last week the Senate adopted and sent to the President for his signature the House-passed continuing resolution, H.J. Res. 44, which cuts FY 2011 discretionary spending by about $4 billion over the two weeks.  The passage of the short-term CR only heightens the battle to come over spending cuts for the weeks to come through September 30. 

Led by Vice President Joe Biden, a united Democrat party countered the House Republican’s discretionary budget cuts of $60 billion over current spending levels (less the $4 billion over the next two weeks) with a statement that they would meet the House proposal “half-way” but which was quickly exposed as a ploy by the Washington Post “Fact Checker.”  When all the number juggling is over, the Democrat counteroffer amounts to a $10.5 billion cut from current spending levels (also including the $4 billion reductions in the two-week CR), $49.5 billion short of the previous House-passed legislation.  To give the Senate more negotiating leverage, this week Senate Majority Leader Harry Reid will bring to a vote the House-passed legislation as well as legislation advanced by the White House for an additional $6.5 billion in cuts (from current spending levels).  Presumably speaking for the Democrat leadership, Senate Majority Whip Dick Durbin said that the latter is the maximum cut he can accept.  When, as expected, both these measures fail to pass Senate muster, the House-Senate negotiations will take on a new urgency with a potential government shutdown looming March 18th.  In anticipation of a stalemate, House Speaker John Boehner has said his next move might be to keep funding the government two weeks at a time while continuing to cut $4 billion in each two-week CR.  Facing this scenario, Senate Democrats may be forced to counteroffer with a four-week CR including the White House’s $6.5 billion in cuts over the same period.  Either maneuver will only delay the inevitable, with a government shutdown or a negotiated compromise being the main options.  House Republicans face a new obstacle when Federal Reserve Chairman Ben Bernanke testified last week that the House bill, if passed as is, could result in 200,000 new unemployed.  Both parties could potentially avoid total gridlock if the White House agrees to a “summit” on spending, with the goal being to resolve remaining FY 2011 spending levels and a FY 2012 budget framework that would include entitlement reductions as well.  House Republicans have already declared their intention to include in their FY 2012 budget entitlement reform spending goals, but without specifying specific program changes. 

It might be noted that even the two-week CR will result in significant cuts in HHS health programs:

  • $397 million from HRSA; $21 million from both the CDC and the Children and Families Services program; $15 million from SAMHSA;
  • $6 million from the Administration on Aging; $3 million from CMS program management; and
  • $1 million from the Child Care Development Block Grant. 

Presaging future changes, even the President’s FY 2012 budget includes health related cuts, including $1.3 billion to community health centers and funding for the children’s hospital graduate medical education program.  Republicans avoided a Senate stalemate this time by excluding the PPACA “defunding” measures included in the $60 billion set of cuts. Taking further aim at the PPACA, the House Energy and Commerce Subcommittee on Health is slated this week to hold hearings on the issue of converting PPACA mandatory spending to discretionary spending (to give Congress greater control in the future over total entitlement spending for health care).  The old “chicken and the egg” dialogue must also be resolved within four weeks or so when Treasury Secretary Geithner said the current $14.3 trillion debt limit must be increased to avoid a potential default. 

In looking for places to cut federal waste, both parties could do worse than considering the recent report released by the GAO, “Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars and Enhance Revenue,” which suggests that duplicative federal programs result in billions in spending that could be saved if programs were made more efficient.  The report also found that payment errors made under the Medicare ($34.3 billion), Medicaid ($22.5 billion) and unemployment insurance programs amounted to about $74 billion.

March 7, 2011: | Page 1 Page 2 Page 3 Page 4



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