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.


Budget Deal or "In Your Face" House Action?

Last Friday the President and House Speaker John Boehner failed to reach an agreement on a $3-4 trillion ten-year “Big Deal” deficit reduction plan.  A Saturday White House meeting with congressional leaders also did not appear to move the budget deficit negotiations further to enable a quick agreement to raise the debt ceiling limit, thus avoiding a default on August 2nd.  The President blamed House Republican Tea Party sympathizers for the collapse of a long term budget deal while House Speaker Boehner said the President was unwilling to agree to meaningful Medicare and Medicaid entitlement reforms and insisted on $1.2 trillion in revenue increases over ten years even though House Republicans were willing to a tax overhaul that would raise $800 billion in revenues. 

This Wednesday appears to be the practical deadline for reaching a bicameral agreement or singular action by the House to force Senate Democrats and the President to accept a House spending-reduction/debt ceiling measure.  House Speaker John Boehner said he would confer with the other congressional leaders to forge an agreement or be forced to come forth with a House Republican solution to the impasse.  If so, it is likely that the House Republican leadership will resurrect, for a vote by Wednesday, a revised version of H.R. 2560, the Cut, Cap and Balance Act, which the House passed last week on a 234-190 vote and the Senate tabled on a 51-46 vote.  Also, Senate Democrats may offer a counter fall-back proposal that would cut spending about $2.5 billion over ten years without increasing taxes while increasing the debt ceiling sufficient until 2013.  It is yet possible that a proposal can be crafted which would increase the debt limit while addressing the long-term deficit problem, even if the mechanism to reduce deficits and reform the tax system is left to a special congressional committee or similar forum.  Still on the table is the plan proposed by Senate Minority Leader Mitch McConnell which would require the President to seek congressional authority to raise the debt ceiling by $2.5 trillion over three installments in the next 18 months and for him to propose spending reductions of an equal amount with Congress debating the reductions under normal appropriations procedures. 

If the final legislation to lift the debt ceiling cap includes a special deficit reduction procedure, the $3.7 trillion 10-year deficit reduction proposal offered by the Gang of Six could take on added significance.  The plan released by Senators Chambliss, Coburn, Conrad, Crapo, Durbin and Warner would provide for a cap on discretionary spending and phasing in a “chained” CPI for Social Security and other government benefits.  About $500 billion in “health savings” would be targeted by congressional committees which would be directed to finish details of the plan.  The plan would also result in a net of $1 trillion in new revenue by limiting tax breaks for medical costs, charitable donations, mortgage costs and retirement funds in return for lowering individual tax rates to three brackets (the first between 8% and 12%, the second between 14% and 22%, and the third between 23% and 29%) and one corporate tax rate.  The plan would eliminate the Alternative Minimum Tax (AMT) while keeping the earned-income tax credit and the child tax credit.  Of note, the plan also proposes to pay for reforming the current Medicare physician payment sustainable growth rate (SGR) at a cost of $298 billion.  In addition, the plan calls for the repeal of the PPACA CLASS Act long-term care program and for the judiciary committees to obtain savings from some sort of medical malpractice reform.  The plan would also require the Senate Budget Committee to report legislation within six months from the plan’s date of enactment “to review total federal health care spending starting in 2020 with a target of holding growth to GDP plus one percent per beneficiary.”  The plan would require the Congress and the President to take appropriate action if the growth rate is exceeded.  Senator Tom Coburn upped the ante on the Gang of Six plan by releasing details on a ten-year $9 trillion deficit reduction proposal containing: $2.64 trillion in Medicare and Medicaid spending cuts; an increase in the Medicare eligibility age by two months annually until reaching age 67; increasing Part B premiums by 2% annually until reaching 35% of costs; block granting Medicaid; and requiring means testing for Medicare and other federal programs.  About $1 trillion in revenue increases would be raised by eliminating several current tax breaks.

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