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 - DECEMBER 19, 2011


Congress Approves Final FY 2012 Megabus Appropriations Bill


On Friday the House voted 296-121 to approve H.R. 2055, the so-called “megabus” appropriations bill which completes FY 2012 federal funding for the remaining nine appropriations bills, including: Defense, Energy and Water, Financial Services, Homeland Security, Interior/Environment, Labor/Health and Human Services/Education, the Legislative Branch, Military Construction/Veterans Affairs and State/Foreign Operations.

On Saturday the Senate followed suit on a vote of 67-32.  Passage of the bill avoided the showdown over a government shutdown Friday night; however, another short-term CR was passed to allow the complex bill to be enrolled and sent to the President for his signature.  In general, the $915 billion in discretionary spending provided under the legislation conforms to the $1.043 trillion spending limit under the Budget Control Act (BCA) which amounts to a $6 billion cut from this year’s spending for all the affected agencies.

HHS was allotted $69.7 billion (a $700 million reduction) with the amount spread among the following agencies:

  • CMS gets $3.9 billion for program management (a $241 million increase);
  • CDC gets $6.1 billion (a $38 million increase, including $80 million for the Preventive Health and Health Services Block Grant proposed for elimination by the President);
  • NIH gets $30.7 billion (a $299 million increase);
  • HRSA gets $6.5 billion (a $41 million reduction); and
  • SAMHSA gets $3.5 billion (a $27 million reduction).

 

Also, the Defense portion of the bill includes $32.5 billion for Defense health programs, or $1.1 billion above FY 2011 spending levels.  The Military Construction/Veterans Affairs section of the legislation (used as the vehicle for the megabus) includes a total of $58 billion in discretionary funding and $$64.2 billion in mandatory funding for the Department of Veterans Affairs.  The bill’s passage was delayed earlier in the week when Senate Majority Leader Harry Reid refused to have the bill enrolled unless Republicans also agreed to compromise on the other major legislative end-game, the passage of an extension for unemployment benefits and the 2% payroll tax cut, as well as a legislative fix for the upcoming 27.4% cut in Medicare physician payments.  The congressional urge to adjourn for the holidays, however, trumped all and a temporary extenders fix was agreed to as described below.

Stalemate over Payroll Tax,  SGR and Extenders

After threats and counter-threats among House and Senate Republicans and Democrats over the form, cost and budget offsets for extending unemployment benefits and the payroll tax cut, the Senate left town until January 23, 2012, after setting aside the House-passed version of the bill and voted 89-10 to send H.R. 3630 back to the House for its approval early this week.  The Senate amendment only provides for a two-month reprieve of the January 1st Medicare physician payment cut of 27.4% and for extending unemployment benefits and the payroll tax cut for two months as well.  The $33 billion cost of the two-month extension would be covered by increasing the fees Fannie Mae and Freddie Mac charge lenders to guarantee mortgages.  Democrats argued for a millionaire tax to substantially cover the $200 billion cost of a full-year extension while Republicans resisted any tax increase, thus creating a stalemate which was overcome only by thrusting the controversy into next February.  Republicans won their argument to include a provision requiring the President to make a decision within 60 days regarding a go-ahead for the Keystone pipeline construction, but this issue will also likely be revisited next year.  President Obama praised the Senate for keeping the payroll tax cut alive for another two months but said it would be “inexcusable” if Congress failed to extend it again, for the full year.  However, Speaker Boehner announced on Sunday, after having a conference call with rank and file House members, that the House would not pass the Senate package. Majority Leader Cantor underscored the Speaker’s remarks by saying the House would not pass the bill, “because — to put it simply — we owe the middle class, employers and doctors better than a two-month extension.”  On Monday, the House could vote on the Senate bill or a new counter proposal of the extenders package that will include a one year extension of the physician payment formula, the payroll tax, and other extenders.  If such a bill passes, the Senate would then have to come back to Washington to approve the new House version this week to put an end to the 1st session of the 112th Congress.  The original bill that the House passed on a 234-193 vote, the Middle Class Tax Cut Act of 2011, would increase Medicare payments for physicians by 1% in 2012 and 2013 at a cost of about $39 billion, but result in a scheduled 37% cut in 2014.  Key offsets, described in last week’s newsletter, would involve other federal health programs.

Other Legislation

Before voting on the megabus bill, the Senate marked time by voting down two different versions of a balanced budget amendment to the U.S. Constitution. The House also approved H.R. 3672, legislation to provide $8.1 billion in disaster relief that was modified to pay for the legislation by adding an additional 1.83% across-the-board cut to all FY 2012 base discretionary spending other than for the Department of Defense, Military Construction and Veterans Affairs accounts.  However, the Senate rejected the cost offsets.  The Senate also approved the conference report on H.R. 1540, the FY 2012 Defense Authorization Act.  If Congress adjourns this week, as expected, both chambers will have to again confront the $1.2 trillion in sequestered spending for discretionary defense and non-defense spending beginning January 2, 2013.  House Armed Services Committee Chairman Buck McKeon unveiled legislation to delay sequestration for one year by cutting the federal workforce, through attrition, by 10% over ten years.  Also, Senators John McCain and Jon Kyl said they are working on a plan to avoid the mandated defense cuts.  However, Reps. Chris Van Hollen and Peter Welch said they oppose an end-run around the sequestration for the Pentagon and urged Congress to achieve a balanced plan that would include both defense and non-defense cuts, something that the Joint Congressional Deficit Reduction Committee was unable to achieve.



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