POLICY BRIEFINGS


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.


THIS WEEK'S BRIEFING - JULY 5, 2011


Debt Ceiling Increase and Geithner's Next Move?


Amid rumors of his desire to leave the Obama Administration, Treasury Secretary Timothy Geithner reaffirmed August 2nd as the “drop dead” date for Congress to enact an increase in the federal debt ceiling limit.  The President also likened Congress to school children not doing their homework, thus embarrassing the Senate to remain in session this week, along with the returning House.  Deficit reduction negotiations would likely have to be concluded by July 22nd in order for Congress to have time to draft and pass any deal that can be reached.  The tough words of the President pushing back on House Speaker John Boehner’s admonition that the House cannot pass legislation including tax increases leaves much in doubt the realization of a grand $2+ trillion deficit reduction deal.  However, the House has recourse to pass a temporary debt limit increase along with short-term spending reductions of equal magnitude to tide Congress over into September, or into next year, if the increase amounts to about $1 trillion in spending reductions which have already been targeted in the now stalled negotiations chaired by Vice President Joseph Biden.  The Senate would have little recourse but to accept whatever the House passes, given the timeframe left for increasing the debt ceiling limit.  The House could force the hand of the Senate by recessing until September after the spending reduction/debt ceiling vote.  A deal of less than $2+ trillion, which would take the debt limit off the table until after the 2012 elections, would ante up the tough decisions on taxes and entitlement spending just before next year’s elections.  The truncated “Gang of Five” proposal may be unveiled in a week or so, or not, depending on the continuation of any negotiations among the President, Senate Majority Leader Harry Reid and House Speaker John Boehner.  This week, the House is scheduled to continue consideration of the Defense Appropriations Act for FY 2012, thus making it even harder for Democrats to reach into the defense budget for deficit reduction.  To date Senate Democrats have not offered up any proposal on spending or taxes for FY 2012, however Senate Budget Committee Chairman Kent Conrad said he intends to introduce a budget proposal this week which would trim 10-year deficits by about $4 trillion  (and including about $1 trillion in new revenues), a target considered as a minimum by the President’s own Deficit Reduction Commission.  With Republicans sticking to their position on no new taxes and Democrats on their position of no new Medicare and Social Security cuts, Senators Joseph Lieberman and Tom Coburn have offered up a bipartisan $600 billion 10-year proposal (saving an estimated $10 trillion over 75 years) to “save” Medicare by:

  • slowly raising the eligibility age for 65 to 67;
  • combining Part A and Part B deductibles into a single $550 annual deductible;
  • accelerating planned changes to home health services;
  • creating new maximum out-of-pocket annual maximums that would be higher for high-income earners;
  • limiting Medigap policy cost-sharing; requiring wealthy earners to pay their full Part B premiums; and
  • increasing the Part B premium enough to cover 35% of the program’s cost. 

Of note, the Lieberman/Coburn proposal also includes a three-year fix to the Medicare physician payment sustainable growth rate which would come at a 10-year cost of $37.7 billion. 

Not quite closing the door on revenue increases, Senate Minority Whip Jon Kyl also indicated that some Republicans are open to increases in various user fees and the means testing of several federal spending programs.       

The debt ceiling issue has also stalled South Korea, Colombia, and Panama trade legislation with Republicans also resisting the Administration’s insistence that the pact include extended Trade Adjustment Assistance (TAA) financial help and medical assistance for displaced workers.  To help pay for the TAA extensions, about $400 million would be raised by reducing Medicare provider payments for imaging services (the utilization rate for imaging services would be increased from 75% under the PPACA to 80% in 2012 and to 90% in 2013).



July 5, 2011: | Page 1 Page 2 Page 3

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BRIEFING ARCHIVE


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