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.


House Sets Budget Mark for Post-Election Negotiations

After the House Budget Committee wrapped up consideration of the House Republican approach to 2013 sequestration cuts under the Budget Control Act and FY 2013 budget reconciliation, the House voted 218-199, mainly along party lines, to pass the combined measures under H.R. 5652 (the Sequester Replacement Reconciliation Act of 2012).  As passed by the committee, H.R. 5652 provides for reconciliation pursuant to section 201 of the concurrent resolution on the budget for FY 2013 (H. Rept. 112-470).  However, this portion was modified in the Rules Committee to drop the Energy and Commerce Committee medical malpractice provisions while retaining the similar Judiciary Committee provisions that would cap non-economic and punitive damages at $250,000.  

As adopted under fast-track reconciliation procedures, the bill makes spending reductions in programs under the jurisdiction of six committees totaling about $315 billion over the ten year budget window.  The following are the major health program related 10-year budget savings: t$23.5 billion from Medicaid and SCHIP, including scrapping the PPACA maintenance-of-effort requirements; 

  • $43.9 billion by allowing the recapture of all overpayments of PPACA subsidies; 
  • $14.1 billion by eliminating HHS authority to award PPACA health insurance exchange grants; 
  • $10.9 billion by eliminating the PPACA Prevention and Public Health Fund; 
  • $300 million by cancelling unobligated balances for the Consumer Operated and Oriented Plan (CO-OPs); 
  • $4.2 billion from hospital disproportionate share payments; 
  • $11.3 billion by lowering from 6% to 5.5% the threshold for state and health care provider hold harmless agreements; and
  • $6.3 billion by eliminating increased Medicaid payments to territories.   
The addition of H.R. 4966 to the combined measure would prevent about $78 billion of the $109 billion in across-the-board cuts scheduled for FY 2013 defense and non-defense spending accounts under the BCA.  In general, this provision would largely protect defense spending but would retain many of the BCA mandated cuts to domestic programs, including Medicare.  CBO projects that the net effect of all changes would result in deficit reduction of about $242 billion over ten years.  The bill would also reduce the $1.047 trillion BCA 10-year discretionary spending limit by $19.104 billion, thus eliciting the ire of Democrats and the White House.  

Senate Majority Leader Harry Reid declared the bill dead on arrival in the Senate.  The White House Statement of Administration Policy (SAP) recommended a veto of the legislation, stating “The approach advanced in this bill only addresses a portion of the pending sequester, and does so in a way that imposes far greater cuts than the sequester would entail.  The bill would break the agreement on discretionary spending made in last summer’s budget agreement; advancing the House Budget Resolution’s approach to increase defense spending and reduce non-defense spending relative to the levels agreed to in the BCA….”  

With the Senate in gridlock over budget matters until after the November elections, Senate Republicans will nonetheless propose several budget plans as a reminder that the Senate has not passed a budget resolution in three years.  The success of negotiations on budget matters after the election will likely ride on the election results.  The Senate legislative gridlock over budget and other matters has led Senate Majority Leader Harry Reid to threaten changing Senate rules to prevent filibusters.  If Congress fails to defer or override the BCA mandated cuts beginning next January 2nd, the cuts for health agencies would be significant--about $2.4 billion for NIH; $445 million for CDC; $191 million for the FDA; etc.

FY 2013 Appropriations
The House Appropriations Subcommittee on Military Construction and Veterans Affairs released a draft that would provide an overall funding level similar to FY 2012, as follows: military construction: $10.6 billion, including $927 for medical facilities; and $60.7 billion for Veterans Affairs, including $41.4 billion for medical services.  The House also passed the Commerce, Science, Justice appropriations bill, thus setting up the first of the potential spending spats with the Senate.  The House Armed Services Committee also approved an FY 2013 defense authorization bill which may further challenge pentagon spending plans.

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