The Democrats Engage in March Madness [03-19-10]

Filed under: Industry Updates — Editor @ 12:33 pm

216 is the Magical Number for House Democrats.  With yesterday’s release of the House’s budget reconciliation package known as the Health Care and Education Affordability Reconciliation Act of 2010, House Majority Leader Steny Hoyer (D-MD) has indicated that the House could vote on both the Senate’s current proposal of H.R. 3590 and the House’s reconciliation package as early as Sunday afternoon. 

Sunday is My Day!

Combined with a number of student loan provisions, this reconciliation package is the House Democrats’ best effort to reach a compromise with the current Senate proposal while being constrained by the ability to only make changes to budget-related items.  This restriction on budget-related items is due to House Democratic leadership’s decision to move forward  on health care reform by building upon the existing Senate proposal rather than through new legislation.  And with the loss of a 60 seat majority by Democrats in the Senate, Senate Republicans now have the ability to filibuster any entirely new legislation brought before them.  So while relying on the budget reconciliation process means that the House is unable to make changes to non-budget-related items, such as the Senate’s current language regarding abortion funding, sticking to budget-related items means that Senate Democrats will only need 51 votes to pass the House’s reconciliation package.

Because the House’s reconciliation package cannot become law unless the Senate’s proposal is also enacted by the House, what is unknown at this point is how House Democratic leadership will proceed on a vote.  The House may attempt to push a vote on each measure independently or utilize a House parliamentary procedure referred to as the “deeming” or “self-executing” rule (or the “Slaughterhouse rule” depending on which side of the aisle you stand).  In a nutshell, this rule would permit the House to hold a vote directly on the reconciliation package and by effect this vote would “deem” the Senate bill as passed.  Perhaps figurative, using this rule would seemingly permit House Democrats to avoid a direct vote on legislation unfavorable to them or their constituency.

I love to fly on Air Force One!

Democratic leadership has acknowledged that they do not currently have the 216 votes necessary to pass the reconciliation package.  But, they are proceeding under the belief that the votes will be secured by Sunday afternoon.  This belief follows support coming earlier this week from previous holdouts: the entire Congressional Hispanic Caucus and Representative Dennis Kucinich (D-OH).  An acknowledgement by them that some version of reform is better than none, along with adjustments to subsidies and tax-related provisions, apparently helped to garner these votes.  Still on the fence are several Representatives affiliated with Representative Bart Stupak (D-MI) who believes that restrictions on federal funding for abortions is not strong enough in the current Senate proposal.  To shore up additional votes for Speaker Pelosi (D-CA), the Senate Democratic Caucus has been working diligently to present a letter jointly signed by its members that promises to approve the House’s reconciliation package if passed by the House.

As expected, House Republicans are in a full-court press by evaluating challenges to the procedural steps being taken by Democrats on constitutional and parliamentary procedure grounds.  Rumor has it that Republican leadership is also strategizing the possibility of a repeal should Republicans regain the House at the mid-term elections.  And despite the possibility that House Democrats may prevail in passing its reconciliation package this weekend, Senate Republicans have stated they are committed to derailing the budget reconciliation package when it enters their chamber.  Stay tuned.

Noteworthy provisions in the House budget reconciliation package that reflect changes to the current Senate proposal include:

Coverage Provisions

Would raise the percentage of income subsidies to those individuals who earn up to 400% of the federal poverty level;

For those individuals who choose to remain uninsured, a monetary assessment would exempt those earning below 100% of the federal poverty level, lower the flat payment amount, and raise the percentage for the alternative payment amount;

Employers with more than 50 full-time employees who do not provide coverage would be required to pay a fee of $2,000 per employee if any of its employees receive a federal subsidy.  The first 30 employees and employees in a 90-day waiting period would be exempt from this calculation;

I want you to vote for reform!

Medicare Provisions

Would provide a $250 rebate for all Medicare Part D enrollees who entered the so-called prescription drug “doughnut hole” in 2010 and attempt to close the hole by 2020 through increases in the manufacturers’ discount;

Disproportionate share payment cuts to hospitals would move ahead to 2014 (from 2015), but lower the 10 year reduction by $3 billion;

Physician owned hospitals that are under development would receive a slight cushion in their Medicare certification deadline from August 1, 2010 to December 31, 2010.  There would also be the addition of “high Medicaid hospitals” to those hospitals that may qualify for an expansion of their baseline number of operating rooms, procedure rooms, and beds (with baseline being the date of the bill’s enactment);

Diagnostic imaging payments beginning in 2011 would use a set utilization rate of 75% for determining the practice expense portion;

Medicaid Provisions

Nebraska would be out in the first round by elimination of the permanent 100% federal matching rate for Nebraska;

The federal government would cover 100% of states’ Medicaid costs of services to newly eligible individuals 2014 and 2016 with slight percentage reductions through 2019 and reduces the states’ share of costs for covering nonpregnant, childless adults from 50% in 2014 to 90% in 2018 (excludes expansion states);

Would require that Medicaid payment rates to primary care physicians be no less than 100% of Medicare payment rates in 2013 and 2014 and states would receive 100% federal funding for the difference (assumes a Medicaid beneficiary influx in 2014);

Fraud and Abuse

Would increase federal funding for the Health Care Fraud and Abuse Control Fund by $250 million over the next decade;

Would impose a 90-day payment withhold period for claims submitted by initially enrolled durable medical equipment suppliers where a significant risk of fraud is identified;

Revenue
The tax on so-called “Cadillac” health plans would be scaled back by raising the taxable portion for individuals from $8,500 to $10,200 and for families from $23,000 to $27,500.  Further, the tax would not begin until 2018.  These changes would reduce anticipated tax revenue by 80%;

The Medicare tax would be modified to include net investment income (interest, capital gains, and dividends, etc.), unless adjusted gross income is less than $250,000 for joint returns and for individuals; and

Would delay the excise tax on medical device manufacturers by 2 years to 2013 with certain device exemptions.

A copy of the Health Care and Education Affordability Reconciliation Act of 2010 is available here.
Additional information is available at Speaker Pelosi’s website here.
And Republican responses can be found here.

And the CBO Says…

The Congressional Budget Office’s (“CBO”) preliminary cost estimate for the House’s budget reconciliation package was also released yesterday.  The CBO estimates that the Senate proposal (H.R. 3590) with the House’s budget reconciliation amendments would cost $940 billion over 10 years and cut the federal deficit by $138 billion from 2010-2019.  This amount is $20 billion more than the CBO’s previous estimate of the Senate proposal alone.  The cost estimate further provides that “the reconciliation proposal would probably continue to reduce budget deficits relative to those under current law in subsequent decades.”

The CBO cost estimate for the H.R. 3590 with application of the House budget reconciliation measures can be found here.

This post courtesy of Hall Render.

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