Hot Button Blog: A Bipartisan Government Relations Firm

Last week, HHS announced the first round of 26 Health Care Innovation Awards, CMS published the names of providers that have demonstrated meaningful use of electronic health records, and New Jersey Governor Chris Christie vetoed a bill to establish a health insurance exchange in his state.

AT THE AGENCIES

CMS published the names of Medicare providers that have demonstrated meaningful use of electronic health records and received incentive payments as of March 2012.

On Tuesday (5/8), HHS announced the first round of 26 Health Care Innovation Awards totaling $122.6 million. The next batch will be announced in early June. The awards support innovative projects throughout the country that are expected to save money, deliver high quality medical care and enhance the health care workforce.

CMS is encouraging states to control Medicaid costs by overhauling dual-eligible programs instead of cutting provider pay.

ON THE HILL

On Thursday (5/10), the Senate Finance Committee convened a group of former Medicare administrators to discuss the sustainable growth rate formula. The group talked about setting the sustainable growth rate close to the physicians’ own practices and moving away from a fee-for-service model.

IN THE STATES

On Thursday (5/10), New Jersey Gov. Chris Christie vetoed a bill from the majority Democratic state legislature that would have set up a health insurance exchange in the state. Gov. Christie said that if the Supreme Court upholds the Affordable Care Act, he would reconsider.

Illinois currently pays more than $800 million each year for retirees' health care, and 90 percent of those retirees pay nothing toward their health-insurance premiums. The Illinois Senate approved a measure that would end this taxpayer-subsidized benefit.

THIS WEEK         

On Tuesday (5/15) at 10:00 a.m., in the Capitol Visitors Center Room SVC212-10, The National Coalition on Health Care held a forum on innovative private sector strategies to curb health costs.

On Wednesday (5/16) at 10:00 a.m., the Senate Health, Education, Labor and Pensions Committee will hold a hearing titled "Identifying Opportunities for Health Care Delivery System Reform: Lessons from the Front Line."

To view our compilation of recent health care reform implementation news, click here.

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Great post (http://bit.ly/JgeuB6) on the GigaOM Apple Blog today about Apple's lobbying efforts -- or lack thereof. Like Microsoft, Google, and other heavyweight companies, Apple will have to become more active in Washington. They've simply become too big, and they have an ever increasing target on their backs. But "active" doesn't have to mean blanketing Washington with money. Like all things Apple, the company can craft and execute a carefully considered strategy, leveraging the strength of their brand, to connect with policy makers in DC. 

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Over the past two weeks developments on the Hill have been mostly behind the scenes as members return to town this week to begin conference meetings  on a long term transportation reauthorization bill.  An agency report showed that the transportation sector lost 17,000 jobs in April, despite an overall increase in job growth in the United States, and five states received invitations to advance to the next stage of this round of the TIFIA program.

On the Hill

This week Congress returns to Washington after a week of recess to begin conference work on a transportation reauthorization bill.  The 47 member conference comprises 14 Senators (eight Democrats and six Republicans) and 33 Representatives (20 Republicans and 13 Democrats).  Earlier this year, the Senate passed a two-year, $109 billion bill and the House passed a 90-day extension with provisions that included approval for the Keystone XL pipeline, state regulation of coal-ash and environmental streamlining.  While many of these provisions have drawn bipartisan support in the past, Democrats have spoken of their preference to keep any legislation focused solely on transportation funding in order to keep from jeopardizing viability for a long-term bill.  House Republicans have made clear that they want any bill to include the House-passed measures.  Conference meetings will begin this week as members try to compromise before current funding ends on June 30.

This week the House of Representatives plans to vote on legislation to extend the Export-Import Bank’s authority to help finance export sales for three years and raise its lending limit to $140 billion by 2014. Officials project the bank will reach its $100 billion lending cap by the end of May. Manufacturers, including Boeing, had supported extending the bank’s authority and raising its lending cap.

At the Agencies

Statistics released Friday by the Bureau of Labor Statistics showed the nation's economy added 115,000 jobs in April.  However, the job growth did not extend into the transportation sector, reporting a loss of 17,000 jobs in the month of April.  Many hope that these new statistics will urge Congress to pass a long-term reauthorization bill before the November elections.

The U.S. Department of Agriculture announced that rural electric cooperative utilities in 10 states will receive $334 million in loan funds from the USDA’s Rural Development Rural Utility Service.  The loans will be spent developing smart grid technology and improvements to power infrastructure.

U.S. Transportation Secretary Ray LaHood today announced the release of Federal Railroad Administration (FRA) guidance for railroads and public transit agencies to help keep pedestrians safe near train stations.  As required by the Rail Safety Improvement Act of 2008, FRA developed the document, Pedestrian Crossing Safety at or Near Passenger Stations, in consultation with rail safety partners in government, industry and labor.

In the States

New York:  On May 4, Governor Andrew Cuomo announced that a second round of $750 million will be available in competitive awards for the state's 10 Regional Economic Development Councils.   Last year, New York awarded $785 million in economic development grants to the 10 regional development councils.  Additionally, Governor Cuomo announced the members of the NY Works Task Force – a 13-member panel that will oversee the state’s infrastructure projects. The federal government has declined New York’s request to give the state a low-interest loan to help fund the new Tappan Zee Bridge.  Earlier this year, the state requested a $2 billion TIFIA loan (Transportation Infrastructure Finance and Innovation Act) to help cover the cost of the $5.2 billion dollar project.  TIFIA loans are used for large-scale state infrastructure projects ($50 million or more) and are not to exceed 33 percent of total project costs.  Despite this setback, New York officials are optimistic that the project will receive federal assistance in the next round of TIFIA funding. 

Oklahoma:  On April 25 the Oklahoma Senate passed legislation to create an infrastructure bank to receive and distribute federal funds for state infrastructure projects.  The bank is slated to receive funds through the federal TIFIA program and then the bank will approve loans and grants to in-state transportation infrastructure projects. 

Missouri:  The Missouri  Senate has killed a bill that would have permitted tolls along most of Interstate 70 in Missouri.  The bill would have allowed a private company to collect tolls in exchange for financing improvements to I-70.  However, the bill faced strong opposition from the state’s trucking and gas station industries, along with citizens who were against further increasing the cost of driving.  The Missouri Senate instead chose to form a committee to study all of the state’s infrastructure needs over the course of the next year.

California:  The widening of the Riverside Freeway was one of five projects across the nation to receive a low-interest TIFIA loan.   The Riverside Freeway is one of California’s busiest highways and connects Riverside and Orange counties. The project will add an additional lane in each direction, extend the 91 Express Lanes, and make general improvements to nearby streets.  The TIFIA loan will be $444 million and the entire project is slated to cost approximately $1.3 billion. 

Upcoming Events

On Wednesday, May 9 at 9 a.m. the Energy and Power of the House Energy and Commerce Committee held a hearing on Environmental and Grid Reliability and Hydropower Development.

On Thursday, May 10 at 9:30 a.m. the Energy and Environment Subcommittee of the House Science, Space and Technology Committee will hold a hearing titled "Supporting American Jobs and the Economy through Expanded Energy Production: Challenges and Opportunities of Unconventional Resources Technology."

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Last week, the Obama administration announced that it would likely give Oregon $1.9 billion to get a new Medicaid initiative started and that it would provide $10.4 million to 70 grantees for rural health care and $728 million to more than 400 community health centers. Also last week, Massachusetts House leaders released their first version of legislation to reform the state's health care financing system by setting a target for the rate at which health spending should rise.

IN THE COURTS

On Friday (5/4), a federal appeals court ruled that Texas cannot ban Planned Parenthood from receiving state funds, at least until a lower court has a chance to hear formal arguments. As background, last year Texas legislators passed a law to effectively remove Planned Parenthood and other abortion providers from the Texas Medicaid Women's Health Program, and Planned Parenthood clinics sued the state to maintain funding.

AT THE AGENCIES

On Thursday (5/3), the Obama administration announced that it has tentatively agreed to chip in $1.9 billion over five years to help Oregon get a new health care initiative off the ground. Through the new program, the roughly 600,000 Oregon Medicaid enrollees will gain access to "coordinated care organizations," which are designed to help patients maintain their health and stay on top of treatments for chronic medical conditions.

On Wednesday (5/2), HHS Secretary Sebelius announced that rural health care providers across the country will receive over $10.4 million to provide direct health care services to their communities. Each of 70 grantees will receive approximately $450,000 over a 3-year period.

On Tuesday (5/1), HHS announced plans to provide more than $728 million in funding for more than  400 community health centers nationwide. Through the Patient Protection and Affordable Care Act, this funding will support 398 renovation and construction projects at community health centers.

On Wednesday (5/2), federal authorities charged 107 doctors, nurses and social workers with Medicare fraud as part of a nationwide crackdown on unrelated scams.

IN THE STATES

On Friday (5/4), Massachusetts House leaders released their first version of legislation to reform the state's health care financing system in order to bring health care costs under control. The bill proposes setting a target for the rate at which health spending should rise.

Kentucky Gov. Steve Beshear said that if the Supreme Court upholds the health care law, he plans to issue an executive order establishing a Kentucky health benefit exchange, which would allow individuals and small businesses to shop for health plans online and compare coverage, provider networks and costs.

In Oregon, enough health care providers have signed up for Gov. Kitzhaber's Coordinated Care Organization Medicaid plan that 90 percent of Medicaid recipients will be covered.

IN THIRD PARTIES

According to a new report from the Commonwealth Fund, the United States spends more than 12 other industrialized countries on health care, but does not provide superior care. The report's authors said that the cause of the higher costs is unnecessary and inefficient medical services.

THIS WEEK

On Monday (5/7) at 2:00 p.m. in 210 Cannon, the House Budget Committee was scheduled to mark up pending legislation on an alternative to the budget sequester.

On Wednesday (5/9) at 8:30 a.m. in the Falk Auditorium at 1175 Massachusetts Ave. NW, The Brookings Institution will host an event titled "Bringing Health Care into the 21st Century."


To view our compilation of recent health care reform implementation news, click here.

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Last week, the Medicare Board of Trustees released its annual report, the House of Representatives voted to take money from the healthcare overhaul to extend low interest rates for federal student loans, and the House Energy and Commerce Committee approved a proposal package that aims to save the federal government about $114 billion over 10 years by repealing several Affordable Care Act provisions.

AT THE AGENCIES

On Monday (4/23), the Medicare Board of Trustees released its annual report. The report shows that the hospital trust fund, or Medicare Part A, has an insolvency date of 2024. The trustees said that without the Affordable Care Act, the insolvency date would be 2016.

On Tuesday (4/24), CMS released a proposed rule that updates payments to acute-care and long-term-care hospitals for 2013 and includes several provisions that aim to improve quality. The American Hospital Association expressed disappointment that CMS used outdated data and a flawed methodology to implement coding cuts and also said CMS failed to account for the sequester, which is scheduled for January.

According to a final rule issued by CMS on Tuesday (4/24), all providers and suppliers who qualify for a National Provider Identifier (NPI) will be required to include the NPI on any enrollment applications to Medicare and Medicaid. An NPI is a 10-digit number that identifies a health care provider. CMS says that this requirement will save Medicare about $1.6 billion over 10 years. According to CMS, this rule will enable it and the states to link provider claims to the ordering or certifying physician or eligible professional and to check for suspicious ordering activity.

ON THE HILL

On Friday (4/27), the House of Representatives voted mostly along party lines to take money from the health care overhaul to extend low interest rates for federal student loans. The House sent the measure to the Senate, where Democrats are likely to reject it.

On Wednesday (4/25), the House Energy and Commerce Committee approved a proposal package that aims to save the federal government about $114 billion over 10 years by repealing several Patient Protection and Affordable Care Act provisions. Some of the proposals included in the package would repeal the law's Prevention and Public Health Fund, repeal HHS' unlimited direct appropriation to establish state health exchanges, cut funding for the Consumer Operated and Oriented Plan program, which would provide government loans to nonprofit health plans and repeal Medicaid maintenance-of-effort requirements.

On Thursday (4/26), Republicans on the House Energy and Commerce Committee released a report titled "Higher Costs, More Confusion, Less Coverage." The report says that some companies anticipate their health care costs will increase because of higher taxes, fees and administrative burdens under the reform law. House Democrats accused Republicans of creating a "fundamentally misleading" report.

On Monday (4/23), the GAO released a report saying that the Medicare Advantage demo is expensive, poorly run and should be canceled. CMS responded to the GAO report saying that the demo "will lead to faster and larger quality improvements" and that the project has helped the agency to improve its star-rating system so that it places "greater emphasis on clinical outcomes and beneficiary experience measures."

IN THE STATES

Colorado is beginning to expand its Medicaid roles. It is one of the few states that is expanding the program before 2014, when the Affordable Care Act requires it.  Beginning in mid-May, Colorado will start offering Medicaid to those at 10 percent of the federal poverty level. It will not, however, be able to enroll everyone who meets this threshold in the program.  Those who can become Medicaid beneficiaries will be chosen by a lottery in each county.

IN THIRD PARTIES

One of the first Affordable Care Act provisions to go into effect is the "medical loss ratio" provision, which requires that insurers spend at least 80 percent of every premium dollar on medical costs. U.S. health insurers will pay $1.3 billion in rebates to consumers and employers this year due to this provision. According to a new report from the Kaiser Family Foundation, almost a third of people who bought their own health insurance last year will get rebates averaging $127.

THIS WEEK

On Friday (5/4) at 1:00 p.m. in Brookings' Falk Auditorium, the Brookings Institute's Campaign 2012 project will hold a discussion on health care reform, the fifth in a series of forums to identify and address the 12 most critical issues facing the next president.

On Friday (5/4) at 12:15 p.m. in 902 Hart, the Alliance for Health Reform and the Centene Corporation will sponsor a luncheon briefing to address the question, "Behavioral Health: Can Primary Care Help Meet the Growing Need?"

To view our compilation of recent health care reform implementation news, click here.

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After the House passed a new short-term transportation funding extension, which included provisions important to House Republican leaders, both chambers have signaled that they will attempt to compromise on a longer term funding bill through conference negotiations. Current federal transportation funding is set to expire at the end of June. The Department of Transportation continues to work within budget constraints to give states and municipalities more flexibility with regards to funding and permitting processes. And individual states are following suit with new and innovative funding models, such as in Virginia where a private venture company will help finance the construction of a new tunnel in exchange for the right to collect toll revenue for a set period of time.

On the Hill

Last week the House of Representatives approved the 10th extension of transportation funding since 2009. The proposed extension would extend funding from its current deadline of June 30 to September 30. Now the short-term legislation moves to the Senate where negotiations will begin in the upcoming weeks. Members of the Senate conference committee will try to reconcile the House’s bill with the Senate’s previously passed two-year transportation reauthorization legislation. Senate and House leaders could name members to their conference committees starting as soon as this week. 

One of the more controversial measures in the House’s new funding extension was the approval of the Keystone XL oil pipeline. The White House has already threatened a veto should a bill coming out of the Senate and House conference maintain the pipeline approval provision.

On Wednesday April 18, the House Water Resources and Environment Subcommittee, chaired by Congressman Gibbs (R-Ohio),held a hearing with the Army Corps of Engineers, shippers, and industry officials on the importance of preserving the reliability of the Inland Waterways System. House Republicans said they hope to attract more private investment funding to help pay for much needed maintenance to locks, dams and inland water ways. Industry witnesses gave their support to the WAVE4 Act, introduced by Congressman Whitfield (R-Ky.), which would revise the cost-sharing arrangement between the federal government and the barge industry to provide needed maintenance of waterway infrastructure.   However, the bill has been criticized for increasing the federal government’s subsidy of barge shipping transit.

This week, the House will consider four cybersecurity bills. The different pieces of legislation intend to help address urgent security needs, including promoting information sharing and protecting critical infrastructure and communications. According to the Republicans, one of the bills, the Cyber Intelligence Sharing and Protection Act (CISPA) introduced by Mike Rogers (R- Mich.), would establish an information-sharing mechanism between the intelligence community and the private sector to defend against attacks from foreign elements. On a voluntary basis, the private sector would be able to pass information on specific cyberattacks along to federal agencies with a guarantee of liability protection and freedom from proprietary and privacy concerns and agencies would be able to provide key threat information to companies to help them defend themselves. A competing Senate bill, sponsored by Senator Lieberman (I-Conn.), would instead mandate information sharing through government regulation. The Senate bill is supported by President Obama.

At the Agencies

Last week, U.S. Department of Transportation Secretary Ray LaHood announced that the agency will lead the effort to help expedite federal permitting for a 1,000 mile pipeline modernization project by NiSource, Inc. The project will modernize NiSource, Inc.’s Columbia Gas Transmission, LLC gas transmission and storage system by replacing aging infrastructure that serves communities in six states, including the Marcellus shale gas production region, where the majority of the pipeline infrastructure is more than 40 years old and running on inefficient platforms. This project will take place in Kentucky, Maryland, Ohio, Pennsylvania, Virginia and West Virginia.

On April 20, Secretary LaHood announced that rail car manufacturers across the country will have an opportunity to submit bids to produce the first American-made, standardized passenger rail cars. The $551 million request for proposals to manufacture approximately 130 new bilevel passenger rail cars in America comes from a groundbreaking multistate effort to jointly purchase standardized rail equipment to be used on Amtrak’s intercity routes in California, Illinois, Michigan, Indiana, Missouri, and potentially Iowa. The funding is being provided by the Federal Railroad Administration’s High-Speed and Intercity Passenger Rail Program.

Selected transit agencies in 175 budget constrained municipalities may now use certain Federal Transit Administration funds to cover the cost of the gas, diesel, and electric power that keeps buses, light rail, streetcars, and other transit vehicles up and running. The recipients benefiting from this spending flexibility appeared in the April 12 Federal Register. The provision, part of Congress’s fiscal year 2012 appropriations legislation, allows transit operators to use a portion of their allocated funds specifically for this purpose.

In the States

New Jersey: A report released by the Office of Legislative Services concluded that the New Jersey Transportation Trust Fund is locked in an “unsustainable pattern” of borrowing to pay for transportation projects. New Jersey is the second biggest transportation funding borrower in the country, trailing only Texas. This year marks the first time that money from gas, sales, and other taxes earmarked for transportation spending ($895 million) did not cover debt payments. By mid-2012 the New Jersey Transportation Trust Fund is projected to be $13.4 billion dollars in debt. 

New York: On April 16, Governor Andrew Cuomo announced an almost $27 million investment for NY Works projects that will allow for flood control and dam repair projects in the Southern Tier. The "New York Works" was a cornerstone of the final 2012-2013 state budget and intends to create jobs through infrastructure development. 

New York City has launched a $250 million construction project to boost economic development in New York Harbor. The project will remove existing underwater structures in the Anchorage Channel (which connects Staten Island and Brooklyn) so that the waterway can be dredged and deepened to accommodate increased cargo volumes and larger vessels in the future. The Port of New York and New Jersey is the largest on the East Coast and accounts for 40 percent of the East Coast shipping trade.

Tennessee: Tennessee Gov. Bill Haslam and the Tennessee Department of Transportation (TDOT) released a three-year transportation program featuring approximately $1.5 billion in infrastructure investments. TDOT is unique as it is only one of five state departments of transportation that do not borrow money to fund projects. The three-year program funds improvements to the interstate highway system, including the addition of truck climbing lanes, ramp enhancements and interchange reconstruction projects.

Virginia: On April 16, Governor Robert McDonnell announced that the commonwealth has obtained the necessary funding to go ahead with a public-private partnership bridge project. The Elizabeth River Crossing project includes a third tunnel built under the Elizabeth River between Norfolk and Portsmouth and upgrades to existing tunnels. The P3 is a partnership between the commonwealth and Elizabeth River Crossing, a private venture. Under the terms of the agreement, the Virginia Department of Transportation will maintain ownership of the infrastructure and the private venture will finance and build the facilities, as well as operate and maintain them for a 58-year period in exchange for the right to collect toll revenue from traffic using the tunnel. 

Upcoming Events

On Wednesday, April 25 at 12:00 p.m. the Courts, Commercial and Administrative Law Subcommittee of the House Judiciary Committee held a hearing on legislation that would overhaul the federal permitting process, including environmental assessments and environmental impact statements.

The Coast Guard and Maritime Transportation Subcommittee of the House Transportation and Infrastructure Committee will hold a hearing on Thursday, April 26 at 9 a.m. titled "Regulation of the Maritime Industry: Ensuring U.S. Job Growth While Improving Environmental and Worker Safety."

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Last week, the House Ways and Means Committee marked up a proposal that calls for those who receive tax subsidy overpayments due to the Affordable Care Act to repay them, and a new study by The Commonwealth Fund shows that 26 percent of American adults were uninsured at some point in 2011.

IN THE COURTS

The Maine Equal Justice Partners and the American Civil Liberties Union of Maine Foundation brought a lawsuit in Maine on behalf of a man who lost his health care benefits while battling cancer and seeks class status for an estimated 500 others who lost coverage due to waiting periods for benefits.

ON THE HILL

On Wednesday (4/18), the House Ways and Means Committee marked up a proposal that could affect how the government implements the Affordable Care Act's health insurance purchase tax subsidy provision. If it is upheld in the Supreme Court, the law would create a new system of refundable income tax credits that people will be able to use to buy health insurance. Congressmen have noted that the mechanics of the law may end up giving some taxpayers bigger health insurance subsidies than they are entitled to receive. The new proposal calls for those who receive overpayments to repay them in full.

On Wednesday (4/18), the Judiciary Committee got close to adopting medical malpractice legislation capping non-economic damages at $250,000. The committee recessed before it took a final vote.

IN THIRD PARTIES

According to the latest Quinnipiac University poll, 49 percent want the court to strike down the Affordable Care Act, while 38 percent do not.

A new study by The Commonwealth Fund shows that 26 percent of American adults were uninsured at some point in 2011. The leading cause of lack of insurance was job loss or job switch. The report goes on to say that the Affordable Care Act will help close these gaps by making it easier for individuals to buy insurance when they do not have access to an employer-based policy.

IN THE STATES

On Friday (4/20), the Arkansas Legislative Council endorsed a plan for the state to use a $7.7 million federal grant to fund planning for the Affordable-Care-Act-required state insurance exchange.

THIS WEEK

On Tuesday (4/24) from 8:30 a.m. to 11:30 a.m., AEI hosted  an event titled "The Future of Medicare: A Reality Check." The agenda can be found here http://www.aei.org/events/2012/04/24/the-future-of-medicare-a-reality-check/.

On Tuesday (4/24) at 10:00 a.m. in 215 Dirksen, the Senate Finance Committee held a hearing titled "Anatomy of a Fraud Bust: From Investigation to Conviction," focusing on a recent Justice Department sting operation that resulted in charges against 91 people accused of defrauding Medicare for nearly $300 million in false billings.

On Wednesday (4/25) at 10:00 a.m., the Senate Veterans' Affairs Committee will hold a hearing titled "VA Mental Health Care: Evaluating Access and Assessing Care."

To view our compilation of recent health care reform implementation news, click here.

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Action on the hill is currently quiet as Congress is in the midst of their spring recess. Prior to skipping town, both houses passed a 90-day extension of federal transportation funding. Even though President Obama had hoped House Republicans would back the Senate’s two-year bill, the House wanted more time to work on their own multi-year bill. This extension is the ninth continuance of the last multi-year transportation bill. Elsewhere in Washington, demand for the TIGER Grant program is vastly outpacing supply and limited infrastructure funding has been made available for states that have had assets destroyed in natural disasters. At the state level, Maryland, Texas, and New York are all looking towards public-private partnerships as a way to launch new infrastructure projects in the midst of constrained budgets.

On the Hill

On March 30, President Obama signed a short-term, 90-day transportation funding extension. Passed quickly before the spring recess by both chambers in order to avoid a funding gap, the measure extends current funding levels until June 30. Although the Senate recently passed a bipartisan two-year transportation bill, the House was unable to pass its own funding legislation and refused to take up the Senate bill. This is the ninth continuing resolution of the last multi-year highway legislation that was originally set to expire in 2009.

Representative Ed Whitfield (R-Ky) has introduced legislation that would adopt a plan for fixing the nation’s locks, dams and waterways. The Waterways are Vital for the Economy, Energy, Efficiency, and Environment (WAVE4) Act would revise the cost-sharing arrangement between the federal government and the barge industry and provide needed maintenance of waterway infrastructure such as locks, dams, and levees. The bill comes at a point of contention between the administration and industry, as the president has put forward a plan to raise fees on shippers to pay for necessary maintenance through raising an additional $1 billion over 10 years.

On March 21 Senators Jeff Merkley (D-Ore.) and Richard Lugar (R-Ind.) introduced the Rural Energy Savings Program Act (S. 2216), which would create a new loan program through the Rural Utilities Services, an area of the Agriculture Department that helps to fund electric infrastructure such as power plants and transmission lines. The legislation would expand the government’s ability to provide loans to rural electric cooperatives to assist with performing energy efficient upgrades.

In two different Capitol Hill hearings on March 28, both Democrats and Republicans in the House Energy and Water Development Appropriations Subcommittee and the Senate Energy and Water Appropriations Subcommittee criticized the administration’s 2013 budget proposals for the Army Corps of Engineers and the Bureau of Reclamation. The president’s budget proposes a 5.4 percent reduction in the Army Corps fiscal year 2013 budget. Both subcommittees felt that this level of funding was inadequate to achieve necessary infrastructure and maintenance investment. 

At the Agencies

On April 2, U.S. Transportation Secretary Ray LaHood announced nearly $62 million in funding for seven states to help cover the costs of repairing roads and bridges that have been damaged by natural disasters or catastrophic events. The states receiving funds are Alabama, Alaska, Kentucky, Maine, South Carolina, Washington, and Wyoming.

Demand for Transportation Investment Generating Economic Recovery (TIGER) Grants continues to greatly outpace supply, with the Department of Transportation receiving application requests for $10.2 billion in funds. According to a statement from the Department of Transportation last week, requests are more than 20 times the $500 million available for the grant program, which funds projects that promote environmental and economic sustainability.

In collaboration with the Department of Energy and other agency participants, on March 30 the Obama administration issued a Memorandum of Understanding with the governors of Illinois, Michigan, Minnesota, New York, and Pennsylvania to announce an effort to streamline the efficient and responsible development of offshore wind resources in the Great Lakes. The memorandum will enhance collaboration between federal and state agencies to expedite the review of proposed projects.

On March 30, the U.S. Department of Transportation’s Maritime Administration awarded a $34.6 million contract for the design and construction of a new facility near Beaumont, Texas to house eight of the largest government ready reserve fleet cargo ships.

In the States

Maryland: Maryland Governor Martin O’Malley has proposed a bill to make it Maryland policy to seek out private partners to build, operate, and maintain public assets. The House of Delegates has already approved the controversial bill, which includes a committee amendment that would expedite the legal process for the defendants of public-private partnership lawsuits. On April 4, the Senate Budget and Taxation committee questioned members of the O’Malley administration about the amendment’s retroactive effect on a lawsuit filed by Baltimore business owners against a $1.5 billion State Center project. 

Texas: The city of Fort Worth is considering entering into a public-private partnership to design, build, and finance a new public safety center that will include facilities for the city’s police and fire departments. Fifteen teams have responded to the request for proposals and Fort Worth will begin the interview process this week. Fort Worth believes that the use of a public-private partnership will result in a shortened delivery time with a fixed date of completion.

New York: Continuing with the public-private partnership theme, New York Governor Andrew Cuomo is seeking legislation that would allow private equity firms to help finance public projects. Such a bill would authorize the state to lease existing infrastructure assets to help pay for the construction, maintenance, and operations of new infrastructure, including the new Tappan Zee Bridge.   While the New York State Senate has already passed legislation that would allow public-private partnerships, the State Assembly has yet to vote on their version of the bill.

On April 3, New York announced the infrastructure projects that will be financed by the New York Works program. The New York Works program, which was part of the same legislation that allowed design-build construction projects in New York, will fix and repair 2,000 miles of roads and 110 bridges using a mix of existing state and new federal money. Specific projects include $145 million in bridge work over the Hudson River near Albany, $85 million for the Peace Bridge toll plaza in Buffalo, $81 million for the Newburgh-Beacon Bridge southern span deck replacement in Orange and Dutchess counties, $32 million for replacing the Patterson Bridge in Corning, and $13 million for the Major Deegan Expressway in the Bronx. Cuomo said that the money spent in connection with the New York Works program will be in addition to money spent on core transportation projects.

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As the government works on a budget for fiscal year 2013, the press has been emphasizing the differences between the various budgets that have been proposed. The President is required to submit a yearly budget to congress and in early February he released his plan for fiscal year 2013. The Senate and House budget committees then release their own budgets, drawing from or purposely deviating from the President’s. Paul Ryan (R-WI) released his own budget last week, which is backed by House Republican leaders. The Ryan budget was touted as being in stark contrast to the President’s budget, spending less on an entitlements and transportation initiatives than the Administration’s proposal. And to further complicate onlookers, just this week House Democrats released their $3.6 trillion budget. Although the Democratic plan has no chance of passing the House, it is an important signal about how their priorities differ from House Republicans. The introduction and press around these different budgets signal disagreement and opposing priorities between the different political parties and chambers- a situation that is pretty much inherent to the 112^th Congress.

Despite the press around how different the various budget proposals may be, the facts remain; every year the government will continue to spend money, there are actually many points of overlap in “competing budgets”, and the budget serves mostly as a blueprint for the various appropriation committees which allocate the actual money. In fact, if you look at side by side comparisons of the various proposals, it is possible to see where they are in agreement and where programs seem to be caught in the political crossfire. More often than not, you can predict what programs are in jeopardy by reading the proposals and engaging with relevant leaders who are involved with the appropriations process. While the budget process may be a highly politicized procedure, programs will continue to be funded and areas of agreement will remain, despite the many media reports suggesting otherwise.

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As Congress heads towards a two-week break surrounding the Easter holiday, little has been resolved surrounding the major issues facing how the nation will fund major infrastructure and transportation safety programs over the coming years. While the Senate was able to pass a bill to authorize major programs and outline funding priorities for a two-year period, the House has been unable to make any progress and will most likely pass another short term extension before heading home for the break. Set against what seems to be a gridlock in Congress, the administration and broad coalition of U.S. business interest are calling for action on a longer term funding measure that states need to plan. To support these calls, the administration released a new report pointing to the gap between current levels of investment and what is actually need to just maintain our current highway and transit system and states continue to focus on innovative financing for a wide range of infrastructure projects.

On the Hill

On March 14, the Senate passed its two-year, $109 billion, transportation reauthorization bill, Moving Ahead for Progress in the 21st Century Act (MAP-21). The bill passed by a vote of 74 to 22, with 22 Republicans voting to pass the legislation. The reauthorization bill provides transit agencies increased flexibility to spend federal money during times of economic hardship and streamlines the “New Starts” program, which eliminates duplicative steps and allows smaller projects ($100 million or less) to complete an expedited review process.

After both supporting their long-term transportation reauthorization bill, which would have tied transportation funding to revenues gained from expanded oil drilling, and rejecting the Senate passed bill, House Republicans introduced a three-month, short term transportation funding extension. House leaders hope that over the 90-day period they can rally more support for a long-term bill. The short-term bill would continue to fund transportation at current levels and would be the ninth extension since a long-term bill was passed.

Complicating the situation, Senator Majority Leader Reid (D-Nev.) has said he is “not inclined” to support a short term extension.   In the event no bill is passed and funding comes to a halt, Democrats estimate that thousands of projects across the country will be put on hold, threatening countless American jobs. They maintain that any funding shutdown for transportation will cause colossal problems in comparison to last year’s partial FAA shutdown.

As the government works through its process for determining a fiscal year 2013 budget, House Budget Committee Chairman Paul Ryan (R-Wis.) introduced his budget plan, which is backed by House Republican leaders. The plan seeks to shrink the deficit to $3.13 trillion over 10 years, undo 2010 health care reform, and modify entitlement programs. Ryan’s legislation was introduced in contrast to President Obama’s budget which was introduced last month. The Republican bill would cap discretionary federal spending at $1.029 trillion, which is $18 billion dollars less than is provided in the president’s budget, and would spend 25 percent less on infrastructure than the president’s plan.

At the Agencies

On March 16, Department of Transportation Secretary Ray LaHood announced the completion of a new report on the status of America’s transportation infrastructure. The report, 2010 Status of the Nation’s Highways, Bridges and Transit: Conditions and Performance, points to a sizeable gap between current spending and projected levels of investment needed to maintain the nation’s highway and transit systems. The report projects that the United States will need $101 billion annually, plus increases for inflation, from all levels of government for the next 20 years to keep the highway system in its current state. It also identifies significant opportunities for investments to improve the current state of highways and bridges that could total up to $170 billion a year.

Last week President Obama, in collaboration with the Department of Energy, announced a new Executive Order on Improving Performance of Federal Permitting and Review of Infrastructure Projects, which will require agencies to make faster permitting and review decisions for vital infrastructure projects while protecting the health and vitality of local communities and the environment.

The Department of Transportation announced $25 million in competitive funding to help communities advance local transit options. The funds are available through the Federal Transit Administration’s Alternatives Analysis grant program. The notice of funding availability can be found here.

On March 20, Secretary LaHood announced $9.98 million in Department of Transportation grants for 15 small shipyards through the country to pay for modernizations that will increase productivity and competitiveness.

In the States

Illinois: The Chicago Infrastructure Trust continues to be lauded as an innovative approach to infrastructure investment. Although private financing is a key component of the Chicago Infrastructure Trust, selected infrastructure projects will remain in public control. Avoiding putting public assets squarely in the hands of private companies may alleviate a traditional public concern of public-private partnerships.

New York: The New York Thruway Authority is in the process of negotiating a deal with unions that will save the state $300 million and help accelerate the construction progress of the new Tappan Zee Bridge. The deal would save the state money by “unifying work rules, implementing a no-strike clause, providing a flexible work week [and] allowing the contractor to control work sequencing and operations.” There are still four consortiums competing to win the $5.2 billion bridge project.

Delaware: A $3.7 million grant was approved to help pay for a runway extension project at Sussex County Airport in Georgetown, Delaware. The grant money comes from the Delaware New Jobs Infrastructure Fund. The Infrastructure Fund was set up in 2011 to help finance transportation improvements such as roads, utilities and airports.  

California: Discussions are heating up in California over the state’s controversial high-speed rail plan. At a Senate hearing on March 13, Dan Richard, the head of the California High-Speed Rail Authority, claimed that the project will cost less than the initial estimate of $98 billion. Within the next two weeks, the California High-Speed Rail Authority intends to release a final business plan that will be evaluated by the state Legislature. The Legislature will then vote on whether to spend $2.7 billion to match $3.3 billion in federal funds to start building in the Central Valley in early 2013. Richard has also recently attended several town hall meetings across California to discuss the project’s financing, environmental impact, and potential economic benefits. 

Vermont: The Vermont House Transportation Committee has proposed a $639.4 million spending package on roads, bridges and other forms of transportation infrastructure. The budget allocation, which is the largest ever and $103 million more than last year, is primarily due to the increase in federal funding in the wake of damage caused by Tropical Storm Irene.

Upcoming Events

On Tuesday, March 27th at 10:00 a.m. the House Water Resources and Environment Subcommittee will hold a hearing on "A Review of the President's FY2013 Budget Request for the Army Corps of Engineers."

On Wednesday, March 28th at 2:30 p.m., the Energy and Water Development Subcommittee (Chairwoman Feinstein, D-Calif.) of Senate Appropriations Committee will hold a hearing on the fiscal 2013 appropriations for the Army Corps of Engineers.

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With the media and American public focused on the presidential race and never-ending drama of the Republican primaries, Congress has been largely shielded from the spotlight these past few weeks. Whether or not the public is paying attention, Congress has countless issues to deal with before and immediately following the election, and we should not expect the next few months and lame duck session to be any quieter than the current presidential primaries. Tax reform, the expiring Bush tax cuts, once again raising the deficit ceiling and passing a comprehensive budget are all issues that need to be dealt with in the upcoming months. Issues that we all know bring contrasting views from all sides.

Perhaps most notably left off of our current national radar has been the impending sequestration brought on by the Budget Control Act of 2011. Unless the Congress works together to change the effects of the Super Committees failure to reach a deal, we will see across the board cuts starting just as a president assumes office in 2013. The deficit reduction sequester was designed to achieve savings of $1.2 trillion through 2021. The majority of the savings come from discretionary programs that are funded by annual appropriations legislation as opposed to mandatory programs, which are also known as direct spending, or entitlement spending. The required savings are to come half from defense programs and half from non-defense programs.

Arguably most important is that for 2013, all programs will be subject to cuts on an individual basis unless they have already been exempted (for example many programs that benefit low-income beneficiaries). While these issues may be currently out of sight, out of mind, we must remember that the cuts are very real and have fast approaching implications for individuals and businesses that depend on and are accustomed to funding from the federal government. The budget discussion will undoubtedly return to the spotlight over the upcoming weeks and months; however, now is the time to be discussing and make heard the probable consequences.

 

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In the past week, HHS released the final rule for health insurance exchanges; the White House coordinated events to be held outside the Supreme Court during the March 26-28th arguments; and New York State warned health insurers that they would lose state contracts if women on Medicaid were denied their choice of higher-cost, brand-name contraceptives.

IN THE COURTS

On Wednesday (3/7), White House officials summoned leaders of nonprofit organizations that strongly back the Affordable Care Act to help coordinate plans for a prayer vigil, press conferences and other events outside the Supreme Court during the arguments, which begin in two weeks.

AT THE AGENCIES

On Monday, HHS released the final rule for health insurance exchanges. The long-awaited regulation stresses state and federal flexibility. The regulation lays out state functions: certifying "qualified health plans"; operating a website for comparing plans; running a toll-free hot line for consumer support; providing grants to "Navigators" for consumer assistance; determining eligibility of consumers for enrollment in qualified health plans; and helping with enrollment.

On Friday (3/9), Farzad Mostashari, the national coordinator for health information technology at the U.S. Department of Health and Human Services, said the government is proposing that medical providers have the capability to exchange patient data by 2014.

IN THE STATES

A report released on Monday (3/5) by nine state attorneys general says the Obama administration has broken the law and overstepped constitutional bounds 21 times.

On Tuesday (3/6), in a speech to the Greater Boston Chamber of Commerce, Massachusetts House Speaker Robert DeLeo offered business leaders a preview of state legislation aimed at reining in health care costs. Rep. DeLeo predicted the House proposal would make "aggressive" changes in disclosure requirements for the industry, give consumers and businesses more ability to make informed health care choices, and encourage employers to offer health and fitness incentives for workers.

On Thursday (3/8), Texas Gov. Rick Perry directed state officials to begin looking for money to fund the Medicaid Women’s Health Program in case the Obama administration revokes federal funding amid a fight over clinics affiliated with abortion providers.

According to a new report and accompanying white paper from the National Governors Association, Top IT Actions to Save States Money and Boost Efficiency, states could make better use of information technology to be more efficient and improve services.

On Monday (3/5), New York State warned health insurers that they would lose state contracts if women on Medicaid were denied their choice of higher-cost, brand name contraceptives unless cheaper, generic methods “fail first.”

THIRD PARTIES

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Washington, D.C., continues to arm wrestle over transportation funding legislation, as the Senate and House work to move competing legislation.  Last week saw support for the House bill crumble away, even as leaders tried to work out contentious provisions in their bill. Meanwhile, the Senate has compromised on a series of amendments and says they will finish work on their bipartisan bill by the end of this week.  Despite the glacial pace on the Hill, there has been much activity and many funding announcements at the agencies and on the state level.  Very noteworthy was Chicago’s announcement that it will create an Infrastructure Trust, which will leverage private investment to retrofit buildings in the city for greater energy efficiency.

On The Hill

This past week the Senate moved closer to passing a bipartisan transportation bill. The bill, combining work from the Senate Banking, Commerce, Finance and Environment and Public Works committees, would reauthorize transportation funding for two years at $109 billion.

After weeks of negotiations Senate Majority Leader Reid (D-Nev.) and Senate Minority Leader McConnell (R-Ky.) agreed to consider 30 amendments, 18 of which actually relate to provisions in the 1500 page bill. At the end of last week, senators had voted on nine of the amendments, passing four and rejecting five.  Included in the rejected provisions were proposals to expedite the approval of the Keystone XL pipeline.  The Senate resumes voting on the remaining amendments this week with a vote on final passage expected Tuesday.

On the other hand, the past two weeks saw the House of Representatives moving farther, and farther away from passing the House Republican Leaders’ original 5 year, $260 billion transportation reauthorization.  In hopes of passing the bill, Rep. Boehner (R-Ohio) had restored dedicated transit funding but kept out many other provisions considered to be controversial, such as new revenues through expansion of domestic drilling and spending levels that many conservatives in his own party considered too high.

After failing to gather support for the original proposed five year legislation, Republican leaders also attempted to work with an 18 month bill, but it quickly became clear that a shorter, extension type bill would not pass the House either.  As passage of the Senate bill looks likely, many believe that the House’s only option is to take up the two year Senate bill or draft its own legislation that is very similar.

In other Hill news, last Thursday the House Appropriations Subcommittee on Transportation held a hearing on the Department of Transportation’s Fiscal Year 2013, $74 billion budget request.  Secretary Ray LaHood testified on funding needs for surface transportation and aviation. Subcommittee Chairman Rep. Tom Latham (R-Iowa) highlighted what he described as problems with the proposed budget. Latham said the administration's proposal would not be able to pass the House of Representatives.

At The Agencies

U.S. Department of Transportation Secretary LaHood announced that 12 cities and states will share $16.9 million to relocate, replace, and improve segments of railroad track under the Federal Railroad Administration (FRA)’s Rail Line Relocation and Improvement competitive grant program. The FRA received more than $67 million in state and local government requests for these funds, which will be used to enhance safety, livability, and economic development in American communities.

U.S. Department of Agriculture Secretary Tom Vilsack announced that rural electrical cooperative utilities in eight states will receive a share of almost $250 million in funding to install smart grid technologies and make improvements in generation and transmission facilities.

U.S. Department of Transportation Secretary LaHood announced the availability of $500 million in funding for transportation projects in the fourth round of the TIGER (Transportation Investment Generating Economic Recovery) Discretionary Grant program.  TIGER grants are awarded to transportation projects that have a significant national or regional impact.

Last month Secretary LaHood also announced that the overwhelming demand for TIFIA (Transportation Infrastructure Finance and Innovation Act) program loans has greatly exceeded the dollars available. The Department of Transportation received 26 TIFIA letters of interest exceeding $13 billion. The high number of applicants for TIFIA credit assistance in response to a Notice of Funding Availability (NOFA) for 2012 follows the trend in recent years of overwhelming demand for the program. Requests in 2010 were more than $12 billion and more than $14 billion in 2011. In light of the increased demand, the president's FY 2013 budget proposes to increase the program's funding level to $500 million which will leverage into approximately $5 billion in TIFIA loans.

In The States

New York:  New York Governor Andrew Cuomo has begun holding public hearings on the soon to be constructed new Tappan Zee Bridge.  Some of the major issues thus far are mass transit and bus lanes, noise due to construction, and the aesthetics of the new bridge.

Illinois:  Chicago Mayor Rahm Emanuel announced the creation of the Chicago Infrastructure Trust, which will leverage private investment for retrofits to help achieve greater energy efficiency.  The private financing will be provided by five organizations: Citibank, Citi Infrastructure Investors, Macquarie Infrastructure and Real Assets Inc., J.P. Morgan Asset Management Infrastructure Investment Group and Ullico.  The trust’s first project, Retrofit Chicago, will retrofit municipal buildings to reduce energy consumption by 20 percent.  The mayor and his administration maintain that the program will create an estimated 2,000 jobs.

Kansas:  U.S. Transportation Secretary Ray LaHood announced a $54.6 million loan to Kansas City Southern Railway Company for the purchase of 30 new General Electric locomotives.  The loan is from the Federal Railroad Administration’s Railroad Rehabilitation and Improvement Financing (RRIF) Program.  This program provides direct loans for eligible borrowers to acquire, improve, or rehabilitate rail and rail-related intermodal equipment and facilities.  There is currently up to an aggregate of $35 billion available in the RRIF program for these types of projects. 

Massachusetts:  Massachusetts Governor Deval Patrick filed a $1.5 billion bond bill authorizing the state’s first infrastructure bank.  The bank will leverage private investments to help fund transportation infrastructure.  The bill includes $1 billion for statewide road and bridge improvements and $311 million for improvements to rail and transit infrastructure.  Although the bill only provides funding for one year, Patrick intends to introduce a five-year bond bill to help finance long term transportation infrastructure projects. 

Indiana/Kentucky:  Indiana Governor Mitch Daniels and Kentucky Governor Steve Beshear have signed an agreement to finance the construction of the $2.6 billion Ohio River Bridges Project signed an agreement to finance the construction of the $2.6 billion Ohio River Bridges Project.  The two states will evenly divide the financing and the construction of the project. Kentucky will use a design-build approach to construct a new Interstate 65 bridge and will finance the project through toll-revenue bonds.  Indiana will construct an East End bridge between Utica, Indiana and Prospect, Kentucky and will use a private-sector team for financing, construction, and long-term maintenance.   

Events This Week

On Thursday, March 15 at 9:00 a.m. the Senate Appropriations Committee will hold a hearing on the 2013 budget for the Department of Transportation.

On Wednesday, March 21 at 10:00 a.m. the House of Representative’s Transportation, Housing and Urban Development, and Related Agencies Subcommittee of the House Appropriations Committee will hold a hearing on appropriations for fiscal year 2013 for the Department of Transportation and HUD. Shaun Donovan the secretary of Housing and Urban Development will testify.

On Wednesday, March 21 at 10:00 a.m., the House Transportation and Infrastructure Committee Subcommittee on Water Resources and Environment will hold a series of hearings titled "Review of Innovative Financing Approaches for Community Water Infrastructure Projects."

On Thursday, March 22 at 10:00 a.m., the House of Representative’s Transportation, Housing and Urban Development, and Related Agencies Subcommittee of the House Appropriations Committee will hold a hearing on appropriations for fiscal year 2013 for Federal Aviation Administration, Federal Highway Administration, Federal Railroad Administration, and Federal Transit Administration. The heads of each administration will be present to testify.

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In the past week, HHS reported that the Affordable Care Act has eliminated lifetime limits on coverage for more than 105 million Americans; a U.S. House subpanel approved a measure to repeal the Independent Payment Advisory Board (IPAB); and House Ways and Means Committee Chairman Rep. David Camp (R-Mich.) requested that the Obama administration explain the additional $111 billion it has requested to implement health reform.

IN THE COURTS

There are now only three weeks until the Supreme Court hears Florida v. Department of Health and Human Services.

AT THE AGENCIES

On Monday (3/5), HHS Sec. Sebelius released a report on how the health reform law has eliminated lifetime limits on coverage for more than 105 million Americans. Before ACA, many Americans with serious illnesses, such as cancer, risked hitting the lifetime limit on the dollar amount their insurance companies would cover.

The Centers for Medicare & Medicaid Services (CMS) is preparing to collect health insurance exchange construction progress reports from the states. Comments on the information collection activity will be due 60 days after the official Federal Register publication date.

Dr. Jacques Roy of Texas is charged with engaging in Medicare fraud that cost the system $375 million by recruiting homeless and fake patients to register for care that was not provided.

On Friday (3/2), federal officials announced that next month, New Hampshire will be the first state to receive ACA funds to keep seniors out of institutions and in their home communities.

ON THE HILL

On Wednesday (2/29), a House subpanel approved a measure to repeal the Independent Payment Advisory Board (IPAB). Two Democrats, including the panel's ranking member, joined Republicans in voting to get rid of the IPAB.

House Ways and Means Committee Chairman Dave Camp (R-Mich.) requested that the Obama administration explain why it needs an extra $111 billion to implement part of the health care reform law.

Sen. Roy Blunt (R-Mo.) proposed an add-on to the transportation bill that would require religiously affiliated hospitals and universities to provide birth control without co-pays to employees. HHS Secretary Kathleen Sebelius said this proposal is "dangerous and wrong" and that "...decisions about medical care should be made by a woman and her doctor, not a woman and her boss." On Thursday (3/1), the Senate rejected Sen. Blunt’s measure.

IN THE STATES

On Thursday (3/1), the Washington State Senate voted 27-22 to set new rules for the state's health care exchange.

On Tuesday (2/28), the Wyoming Senate voted to discontinue funding the Healthy Frontiers Medicaid expansion project.

Oregon Governor John Kitzhaber signed legislation that will allow the state to move forward with plans to overhaul its Medicaid Program. The new health law would allow officials to assign certain Medicaid patients to caseworkers who would manage all aspects of their care, with the goal of eliminating redundant tests and procedures and reducing expensive hospital stays.

Idaho House Republicans voted in favor of a panel to scrutinize how the Affordable Care Act is adopted in Idaho. The bill is now headed to the Senate.

On Monday (2/27), legislation was approved in New Jersey to create a state health insurance exchange.

THIRD PARTIES

On Monday (2/27), the American Medical Association (AMA) reiterated its support for Republican-led efforts to repeal the IPAB, created by the Affordable Care Act. The AMA said the IPAB is the wrong way to control health care costs.

Kaiser Health News reports that 63 percent of Americans said they support the Obama administration's requirement that health insurance plans supply free contraceptives as a preventive benefit for women.

A USA Today/Gallup Poll of the top dozen swing states found considerable opposition to the health reform law. The states surveyed were Colorado, Florida, Iowa, Michigan, Ohio, Pennsylvania, Nevada, New Hampshire, New Mexico, North Carolina, Virginia and Wisconsin.

THIS WEEK

On Tuesday (3/6) at 10:00 a.m. in 1100 Longworth, the House Ways and Means Subcommittee on Health held a hearing on the impact of the Independent Payment Advisory Board (IPAB) on medicine.

To view our compilation of recent health care reform implementation news, click here.
 

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Over the past month, there has been a considerable amount of infrastructure action at both the federal and state level. The House and Senate have advanced competing transportation bills and it appears that a decision regarding the future of both bills will be reached in the upcoming days and weeks.   At the federal agencies, the Department of Transpiration has started the fourth round of the TIGER grant program and the Department of the Interior has recently announced the availability of funding for water infrastructure projects. On the state level, the new Tappan Zee Bridge project continues to progress thanks to the help of favorable legislation that allows design-build projects, a scathing audit of the Port Authority of New York & New Jersey criticizes the organization’s leadership and highlights escalating World Trade Center costs, the Governor of Maryland proposed raising the state gas tax to help fund infrastructure projects, and California is launching an innovative program to invest pension funds in global infrastructure assets. 

 On the Hill

On February 3^rd, the House Transportation and Infrastructure Committee approved the American Energy and Infrastructure Jobs Act. The bill would authorize new domestic drilling for oil and gas to pay for highways, rails and bridges. 

The bill includes an amendment that prevents any of the money from being used on California’s proposed high-speed rail system. California is currently in plans to build a high-speed rail system that would extend from Anaheim to San Francisco at a cost of about $98 billion. 

Additionally, the bill would divert almost $25 billion in fuel tax revenue from the Mass Transit Account in order to help fund highways. The Mass Transit Account would be removed from the Highway Trust Fund and replaced with a one-time appropriation of $40 billion. If passed, the bill would mark the first time in over 30 years that there would be no guaranteed funding for public transit. 

While the House was able to pass the energy and new drilling portion of the legislation before the President’s Day recess, lawmakers must now deal with many issues relating to the larger bill, such as finding a new offset for funding. The previous offset (what was it) has been taken off the table through the payroll tax extension.  Right before the break, House leadership delayed a vote on the final $260 billion complete reauthorization bill due to dissention within the Republican Party. Speaker Boehner says he will now consider scaling back the five year reauthorization legislation and will most likely take out the proposal to remove transit funding from the highway trust fund.

Meanwhile, the Senate is in the process of advancing its own transportation bill - the Moving Ahead for Progress in the 21st Century bill (S. 1813). On February 9, the Senate voted 85-11 to allow the bill to proceed to debate. Supported by the Obama Administration, the bill ties together pieces of work from the Senate Environment and Public Works Committee, the Senate Finance Committee, Senate Commerce and the Senate Banking, Housing and Urban Affairs Committee. 

The bipartisan legislation was expected to move more easily though the entire chamber than the House bill, but last week a Senate procedural vote to move forward with voting on the entire bill failed. Numerous amendments from Republicans - including those on unrelated topics such as aid to Egypt and contraception - have tied up the bill over the past few weeks. However, bipartisan compromise on pretax benefits and grants for freight infrastructure programs has Senate leaders in both parties optimistic about the passing of the entire bill once all the amendments have been considered.

The Senate bill is financed by $9.6 billion in offsets from closing tax loopholes as well as $36 billion per year from the federal gas tax, the traditional funding source for transportation bills.  This differs greatly from the House bill’s method of financing, which involves tying spending to revenue the federal government would gain from expanded domestic oil-and-gas drilling.

In other Congressional infrastructure news, The Senate Finance Committee accepted an amendment to the Internal Revenue Service code to lift the volume cap (the amount of tax-exempt financing available for certain projects) on private activity bonds for water and wastewater projects and permit Indian tribes to issue tax-exempt private activity bonds for water infrastructure. This move is projected to open up $2-5 billion annually in private capital for water infrastructure projects, often in the form of public-private partnerships.

On February 15, President Barack Obama signed the FAA Modernization and Reform Act of 2012 (H.R. 658). The law provides $63.4 billion in FAA funding over four years, including about $11 billion toward modernization the nation’s air traffic control system.  The legislation is a long-term funding bill which will provide the FAA with the necessary funding to ensure stability, improve aviation safety, and upgrade critical infrastructure.  The newly passed bill is the first long-term FAA reauthorization measure since 2007.   

On February 13, President Obama released his Budget for Fiscal Year 2013 this week which proposes spending $476 billion on highway, bridge and mass transit projects through 2018. The transportation spending is funded in part by ending the wars in Iraq and Afghanistan.  The President’s six-year transportation proposal would also expand inter-city passenger rail and add new funding for road and bridge repair.  Additionally, it would create a National Infrastructure Bank which would offer broad eligibility and unbiased selection for large-scale ($100 million minimum) transportation, water, and energy infrastructure projects.

Republican Senators announced their intent to introduce competing legislation to Senator Joe Lieberman’s (I-CT.) Cybersecurity Act of 2012. The bill would increase government oversight of some private networks like electric grids, water systems, or transportation, which could be at risk of cyber-attacks. The Department of Homeland Security would be responsible for determining which businesses should be considered critical infrastructure. 

At the Agencies

U.S. Department of Transportation Secretary Ray LaHood announced the availability of funding for transportation projects in the fourth round of the TIGER (Transportation Investment Generating Economic Recovery) Discretionary Grant program.  TIGER grants are awarded to transportation projects that have a significant national or regional impact.

Secretary LaHood also recommended $2.2 billion in funding to begin or advance construction of 29 significant rail and bus rapid transit projects in 15 states. The Administration claims that the projects, included in President Obama’s proposed Fiscal Year 2013 budget, will put thousands of Americans to work building the vital infrastructure the nation needs to improve access to jobs while reducing U.S. dependence on oil and spurring new economic development.

Department of the Interior Secretary Ken Salazar announced $50 million for Western water infrastructure projects, $30 million of which will be directed to rural areas. The money will help maintain aging systems, restore aquatic habitat and meet increasing water demands of the region. Six rural water projects selected by the Bureau of Reclamation will receive funding under the agency's 2012 appropriation.

The U.S. Department of Transportation has announced a $3.5 million grant to a four-university consortium for research and education on sustainable transportation topics. The consortium, led by Portland State University, also includes the University of Oregon, the Oregon Institute of Technology, and the University of Utah. This new, two-year grant builds on prior work done by OTREC (the Oregon Transportation Research and Education Consortium).

In the States

California: The California State Teachers’ Retirement System (“Calstrs”) is investing $500 million in infrastructure assets across the globe. Calstrs has partnered with Industry Funds Management Pty. Ltd., an Australia-based firm that specializes in infrastructure investments.  Budget strain at both the federal and state level has led to opportunities for privatization of infrastructure assets.

New Jersey/New York:  On February 7, the first phase of an audit of the Port Authority of New York & New Jersey was released. The audit found that the bi-state agency needs a “top-to-bottom overhaul” due to “a lack of consistent leadership, a siloed underlying bureaucracy, poorly coordinated capital planning process [and] insufficient cost controls.” The Port Authority, which at its core is a transportation infrastructure organization, had seen World Trade Center project costs balloon from an estimated $11 billion in 2008 to $14.8 billion.  

New York: On February 9, the New York State Thruway Authority and the New York State Department of Transportation released the list of qualified competitive bidders for the new Tappan Zee Hudson River Crossing Project.  The four qualified consortiums are the Hudson River Bridge Constructors, Kiewit-Skanska-Weeks Joint Venture, Tappan Zee Bridge Partners (a Bechtel/Tutor Perini Joint Venture), and Tappan Zee Constructors. These qualified groups will have the opportunity to bid on both the design and construction contract for the new bridge. The Infrastructure Investment Act, passed by the New York State legislature in late 2011, allows certain state agencies to use design-build for capital projects relating to physical infrastructure projects. 

Maryland: Maryland Governor Martin O’Malley has introduced a six percent increase in the state gas tax as a way to raise money for the state’s transportation infrastructure needs.  The proposed legislation would be phased in over the span of three years and could potentially generate over $600 million for the state.   However, so far the plan has received a “chilly” reception with state lawmakers.

Events This Week

On February 28 at 10:00am, the House Transportation and Infrastructure Committee will hold a series of hearings titled "Review of Innovative Financing Approaches for Community Water Infrastructure Projects."

On February 28^th at 10:15am the House Energy and Commerce Committee will hold a hearing titled "Critical Infrastructure Cybersecurity: Assessments of Smart Grid Security."

On February 26^th through 29^th the American Association of State Highway and Transportation Officials will hold a Transportation Policy Conference at the Washington, D.C. Hyatt Regency Hotel.

On February 28^th at 10:00am the Senate Environment and Public Works Committee will hold a hearing on the wastewater and drinking water infrastructure needs of local municipalities, rural communities and other similar jurisdictions, focusing on approaches to expand the ability of these communities to maintain and improve their water systems.

On March 1^st at 10:00am the Transportation, Housing and Urban Development, and Related Agencies Subcommittee of the Senate Appropriations Committee will hold hearings on proposed fiscal 2013 appropriations for departments, agencies and programs under its jurisdiction.

On March 8th at 9:00am the Americas Society will hold a panel discussion titled "Transportation and Communication Infrastructure in Latin America: Lessons from Asia."

On March 8th at 9:30am the House Appropriations Committee's Transportation, Housing and Urban Development, and Related Agencies Subcommittee will hold a hearing on proposed fiscal 2013 appropriations for the Department of Transportation, Secretary Ray LaHood will testify.

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President Obama's recess appointment of Richard Cordray to run the Consumer Financial Protection Bureau is a bold political act, but its significance goes far beyond politics. I remarked today to a key Democratic strategists that this was a declaration of political war with the congressional Republicans. He responded that it's the President's response to a war begun by the Republicans. We both were correct, but the truly remarkable thing about what the President has done here is to strongly assert his constitutional executive power and to undermine the constitutional power of the Senate -- the body from which he rose to national prominence. That's not about Ds or Rs, but about the power of the office of the President of the United States. Decisions like the one the President made have ramifications far beyond the term of the current occupant of the office. They reverberate for years.

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On December 1st I had the opportunity to give a speech at ParenteBeard’s annual Audit Committee Forum. The speech focused on the private sector’s management of political risk at the local, state and federal levels. With the lively discussion and frank questions that followed my presentation, it is clear that there is significant concern from a business perspective on how best to mitigate political risk. The q and a got very lively and there was significant concern among the audience regarding the role that the government has assumed in the private sector. The audience also had a number of questions about the European debt crisis, and whether we have people (Republicans and Democrats) in office today in the US Government who have the wherewithal to make the tough decisions that need to be made to move the country forward. We will post a link to the speech shortly.

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November 7, 2012

That's the date on which the determinative discussions about the Budget Reform Act of 2011 will begin. We all know that this Act created the so-called Super Committee to propose a deficit reduction plan. We also of course know that should the Committee not reach a recommendation or should Congress not enact the Committee's recommendation, then the automatic cuts to defense and entitlements are triggered. The theory of the trigger is that neither side of the aisle will allow sequestration of such a drastic extent to cut into its agenda.

The Committee members are no doubt doing their very best to accomplish their mission. They are - to a man and woman - serious and dedicated public servants. They are also tasked with a hugely challenging assignment and the best thinking du jour is that no deal emerges by the deadline. Further, given the extreme polarity in the Congress, there is no guarantee that a Committee recommendation actually passes both chambers.

That does not, however, mean that the trigger is in fact triggered. Indeed, Congress delayed the effective date of the automatic cuts until January 1, 2013. That provision permits Congress an entire year to pre-empt the sequestration. And 2012 is not just any year - it's the presidential Olympics. The likelihood that a Congress in which every House member and a third of the Senators are running for re-election (with an Armageddon election raging above them) will achieve legislation is remote.

So what happens? What happens is the lame duck session. Win or lose, the President has the leverage of the lapse of the bush tax cuts on December 31, 2012 to drive a deal. The Republicans, with or without the President-Elect, have the automatic entitlement cuts as a hammer. So you heard it here first: A deal will get cracked between November 7 and December 31 2012. A good result? A bad result? Reasonable men and women may differ but good or bad that's where we're headed.

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Between the Penn State abuse scandal, the Herman Cain harassment allegations, and reports regarding the handling of American soldiers’ remains at Dover Air Force Base, this week’s top new stories have been disturbing, sad and overwhelmingly depressing. Largely overshadowed by these ongoing controversies, the results of this past Tuesday (Election Day) seemed to be under-reported and under-analyzed by the usual pundits and news programs. Although not nearly as significant as last year’s mid-term elections, Tuesday brought wins and political victories for both parties, and signaled that voters are in some ways finding middle ground.
 

In Ohio, voters both rejected provisions of the President’s health care law and the Republican Governor’s anti-union law. In Arizona, state legislator Russell Pearce who has been spearheading the state’s anti-immigration movement was defeated by another member of his own Republican party. In Mississippi a ballot measure that would extend personhood to fertilized eggs lost. And closer to the capital, voting showed that the Virginia Governorship and State Legislature will be controlled by Republicans, making the state more problematic for Democrats running in 2012.
 

There is no doubt that voters across the country are still extremely angry. While Tuesday’s voters did not send the same tone of anger towards a particular party as in the 2010 elections, the results did send the message that voters are tired of what they see as government overreach and the translation of a political position into a pass to blindly follow party agendas. And while each party is claiming victory from Tuesday, in truth, the results did not signal a clear leader for 2012. Nevertheless, Election Day’s results do restore some sense that the middle is more common than the prevailing news would like us to think. 
 

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Every American is aware of the partisan bickering in Washington. As this election year really gets underway we can only expect that to get worse. For those of us that are on Capitol Hill and meeting with staff and members, we have seen the uptick in harsh rhetoric about the "other side" and we expect it to increase. Sometimes however the “other side” has little to do with Republican vs. Democrat but more so to do with House vs. Senate. When you look at the House and Senate calendars this congressional session, this is apparent more than usual.

According to the official schedules of the House and Senate the two chambers have only been in town at the same time for 25 weeks out of this year. Many members argue that this time away from Washington is key; it allows them to meet with their constituents and see the real problems that their districts are facing. No one can argue that it is important for representatives to meet frequently with those that they actually represent, but it would seem that a coordination of the two chambers in session schedules would be conducive to getting work done. Thankfully staff members are in town and attempting to work with both opposing party member staff as well as their opposite chamber counterparts. But this lack of cohesive scheduling still creates logistical impediments to drafting and passing much needed legislation. This is only exacerbated by the aggressive party politics of our time and it is clear that as a result the work isn’t getting done. Thus far this session the meager work production proves that. At this point, in an average congressional session, twice as many bills would have been signed into law and Congress has yet to pass a single spending bill for 2012.

During these uncertain times it's important to bring our Nation together and our elected officials should be setting an example of that. Perhaps next session leaders of both chambers and both parties can sit down with their calendars and attempt to coordinate, it will only serve to serve the people they represent all that much better.

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Yesterday “The Atlantic” magazine held an event for their “Women of Washington Series” featuring Senator Lisa Murkowski (R-Alaska) on stimulating the global economy through energy innovation. Senator Murkowski supports a reasonable and balanced approach to America’s energy future and spoke of our need as a country to both keep existing jobs and lower costs, while also exploring new energy capabilities and technologies. Additionally, unlike many of her Republican counterparts, Senator Murkowski outwardly supports a federal loan guarantee program and also discussed freely the changes she and her constituents see occurring over time in their natural Alaskan environment. Not only do these views on energy policy cast the Senator in a unique light, but Senator Murkowski’s historic write-in election win in 2010, has only added to her aura of independence.

After losing in the Republican primary to Tea Party backed candidate Joe Miller, Murkowski staged a write-in candidacy and won the general election. Perhaps it’s because she is one of 17 female Senators, or maybe it’s because she is from the remote state of Alaska, but the event highlighted Senator Murkowski’s independent thinking in an age of staunch partisanship. Colleagues on both sides of the aisle are outspoken in their praise of the Senator, and her willingness to do what she believes is right. In discussing her 2010 victory, Murkowski said she believes her win last year gave people in the middle the feeling they had a voice, and a say, in the United States’ political process. As the country gears up for the 2012 Presidential election, and the Tea Party and Occupy Wall Street movements seemingly dominate our media outlets, Senator Murkowski’s career and most recent victory serve as a powerful example of what is possible when our elected officials do right by their constituents rather than simply by their party.
 

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As the 12 members of the Joint Committee for Deficit Reduction begin another week of secret meetings, rumors abound regarding the progress or lack of progress being made towards reaching the basic goal of $1.2 trillion in deficit savings over the next 10 years. As the clock ticks towards the panel's November deadline, aides to members on the panel have reportedly indicated the goal is to broker a deal before October's end to allow time for scoring and other review. While it was clear from the start that the timeline set for the Committee was going to be tough to meet, some have started to question the timeline and implying that this can be blamed for the lack of public insight to the work of the Committee.

While an open government is always the best approach, the work of the super committee may be the exception. It became clear from the Committee's initial round of public hearings that those called before the panel to give testimony and put forth opinions were not going to put aside politics and special interest concerns and do what is best for our Nation. This view was reinforced last week as congressional leaders and committee members of both parties submitted recommendations for cuts to the super committee, that for the most part, represent partisan views and protect one group or another. Views that we have seen time and again over the last few years. Views that have lead to grid lock throughout Congress and much of the federal government. Views that if accepted by the Committee's members would not produce results.

By closing the doors, keeping out of the meetings all but select few staff members and agreeing not to publicly comment on the negotiations, Members of the Committee have allowed themselves the opportunity to address the tough questions without being pushed and pulled in all directions. They are forcing themselves to depend on their own knowledge and understanding of our nation's deficit problem. These Members were appointed to the Committee because Congressional leadership believed that individually they have the knowledge and experience it will take to seek out the solutions needed, at what all agree is one of the most difficult times faced by our country. They accepted the appointment because they are willing to do the work.

The most important question that remains is are they up to the challenge and will they do their duty? While duty has many definitions, one is simple - doing what ought to be done, when it should be done, without being told to do so, and with a spirit of service. It is fair to believe that by focusing on the task at hand and yes, going behind closed doors to work, the super committee has given itself a real opportunity. An opportunity to do what is right for our country, to do it now, to do it without undue outside influence and to do because it is their duty.
 

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The only immutable law of the universe, political as well as physical, is the law of unintended consequences. History is replete with examples of leaders heading off in one direction only to find themselves elsewhere. It's sort of Heisenberg's uncertainty principle applied to human behavior. Once we form a plan its very existence changes the facts on which the plan, is based and sends us sideways.

Witness for example the President's decision to pursue aggressively healthcare reform in the first months of his first term. (Yes, Virginia, there will be a second term). This decision sent Congress home for the summer recess with healthcare the focus of a fierce blowback against Washington that literally roared into the town hall meetings of August. It was in the cauldron of those meetings that the inchoate anger amongst a largely exurban swath of the American public bubbled up into an organized Tea Party movement. In the most American manner imaginable, the Tea Party asserted itself, sent scores of followers to Congress in 2010 and changed Washington in an unintended and consequential manner.

In a confirmation of the immutability of this law of unintended consequences, Occupy Wall Street is now taking the Tea Party's success and challenging its supremacy. Just as the Tea Party arose from the healthcare debate, so too has Occupy arisen from the ashes of the debt ceiling debacle. It is no coincidence that OWS began as a postscript to the August spectacle of the Tea Party caucus holding the country hostage as it demanded spending cuts without revenue enhancement. We were subjected to the sad spectacle of the President's efforts at a Grand Bargain being destroyed by a minority of the Republican majority in the House. Can it be doubted that this pathetic pageantry was a tipping point for those who are now occupying Wall Street and elsewhere?

And so it goes. Plan begets changed facts that beget unintended consequences that beget a new plan that begets etc. Fasten your seat belts, America, as we see what unintended consequences Occupy Wall Street spawns.

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The response to our recent op-ed in the Washington Post, http://wapo.st/n31RE7, has been fantastic. We've had calls from a number of members of Congress and from people looking to invest in US infrastructure.

The piece is resonating for a couple of reasons. First, because it's actually a good idea. Ex-Im has the skills and know-how to get a federal infrastructure finance program off the ground more quickly than any other institution. Many people have asked whether the Bank has the resources to execute such a mission. Fair question. There's no doubt that the Bank would need more personnel to meet an expanded mission. But the Bank is a lean and efficient organization, so we're not talking about creating some bloated government bureaucracy.

The second reason that the op-ed has resonated is that people are attracted to the idea -- in the age of deficit reduction -- of finding ways for government to serve the people without reinventing the wheel. Why build something new when that something already exists?

Stay tuned.

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This week the House Judiciary Committee held a hearing on consideration of a “balanced budget amendment” to the constitution. The concept of a balanced budget amendment has become a popular topic in the political landscape, especially in the recent partisan squabbles over the debt ceiling. Conceptually a balanced budget amendment would mandate that the federal government not spend more than it takes in. Proponents often use the metaphor of us who balance their checkbooks each month when paying bills and budgeting expenses to illustrate this point. However we also all know that the federal government’s budget is far more complicated than a simple check book balance. Currently there are a few legislative proposals on the table, but none of which any of the hearing witnesses would emphatically support in their current state.

The hearing continued along the same path as many others by quickly devolving into partisan squabbling between members. Each period of bickering was fraught with anecdotal “evidence” from each side to support their positions, often involving stories of wanting to protect their grandchildren or suffering seniors in their district. But perhaps the most frustrating aspect of the hearing involved a discussion of when any sort of balanced budget amendment would actually effect the federal budget directly, without even taking into consideration the amount of time it would take Congress to actually pass a bill and then ratify the constitution, this alone will take years. But even after ratification most members of the panel agree that a balanced budget amendment would need to be “eased in” and should take 5-10 years before implementation. 5-10 years? On top of the years it will take for ratification? What about right now?

We are facing a double-dip recession, unemployment is at disastrous levels, Congress can barely pass even small continuing resolutions without the threat of yet another shut down and here we are debating an issue that right now is simply a conceptual conversation. The bickering throughout the hearing, and the divisive tone throughout member and witness statements only tells us that healthy debate between partisan members is seemingly impossible. What do Americans have to do to convince their representatives that this is the last thing we need right now? We need something, anything to support the hope that Congress is at least attempting to work together to solve our economic crisis. But all too often, hearings like these, simply degrade our hopes even further.
 

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It only took only hours for the "$16 Muffin" to enter the Washington political lexicon – right beside the $500 Pentagon hammer and the Bridge To Nowhere. The diatribes about government waste came fast and loud, from the halls of Congress to the pages of the Post and Times. The only problem: it wasn’t true.

The source seemed impeccable: the well-respected Inspector General of the Department of Justice, whose 148-page audit report mentioned the muffins nine times. The IG reported that taxpayer money was squandered on muffins served at a Washington hotel for a five-day conference in 2009 for the Justice Department to train 534 judges, lawyers and paralegals on the rules for deporting immigrants.

It turned out the cost for the muffins -- along with a full continental breakfast and afternoon snack -- was under $15 per person daily. The same continental breakfast alone cost guests at that hotel twice as much, even without the snack.

It turned out the bagels, crossaints, cookies, brownies and chips that came with the morning muffins were mistakenly listed on the hotel invoice for the afternoon snack. So the muffin math didn't initially add up for the auditors. By the time they recomputed, “Muffingate” was already viral. Small-print corrections won’t do much for the hotel kitchen staff who lose hours as federal agencies suspend future conferences to review menu costs. And if that old $500 hammer is any indication, we’ll hear for years -- or at least until next November -- about $16 federal muffins as yet another symbol of federal excess.

This isn’t an argument for bloated federal perks. Far from it. From the Tea Party to MoveOn, Americans are angry at a political elite that can’t or won’t tell the truth about our problems. The message is: debate the solutions aggressively. Maybe that’s even why we elected a divided government. But before ranting, get the basic facts right.

In this case, the misinformation came not from agenda-driven politicians, but from a usually responsible source. But whether it’s about stale conference muffins, global warming or Social Security -- the more careless hyperbole in our public rhetoric, the less likely Washington will ever get anything worthwhile done.

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Later today the Senate will vote on “S. 1619, The Currency Exchange Rate Oversight Reform Act of 2011”. The bill, which is directed towards combating China’s manipulation of the Yuan, would make it easier for the Commerce Department to investigate currency manipulation and hinder the United State Treasury’s ability to avoid the issue. A similar bill was passed, with support from both parties, in the House last year but failed to move once reaching the Senate. However, a continuing worry about the fragile economy and jobs being lost to overseas competitors has prompted a new bipartisan backing in the Senate towards the issue.

Despite a lack of support from the Obama Administration, the legislation appears to have a good chance of passing in the Senate and then moving to the House where Republicans and Democrats alike are known to support the issue. However, in spite of this rare camaraderie in Congress, new questions are casting doubt on the legislation’s success. After a letter last week, sent from Senate Finance Committee Chairman Senator Orrin Hatch (R-UT) requested an official position by the Administration, the White House stated it is currently “reviewing” the legislation. Until the Administration takes a position on the bill (an action they were able to avoid when the issue was up in the House last year), it is unknown if the President will use, or threaten to use, his veto power to keep relations with China at a relative calm.

But perhaps almost as important as the outcome of an official White House position on the bill is the position expressed by the Club for Growth, which released a statement urging lawmakers to oppose the measure. This very influential, conservative group’s pressure is undoubtedly directed at Democrats and Republicans alike. In addition to taking a position against what they believe is an anti-trade bill, the Club for Growth has also recognized this as a “key vote” which they will use in their annual review of Congressional Members. After helping to promote fiscally conservative Republicans in the 2010 elections, the Club for Growth and other organizations’ influences are worrisome to Democrats and more centrist Republicans up for reelection. This afternoon will prove to be extremely illustrative as pressure from the Administration and conservative organizations may break down a rare bipartisan bill, which just a few days ago appeared to have sufficient votes to become law.

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It's hard to believe that Congress is again playing chicken over another government shutdown. Do they actually think they can keep doing this and that it's going to do anything other than further damage public confidence? Lost in the the discussion is the fact that yet again Congress has failed to pass a budget on time. The temporary spending measures that Congress is now tossing back and forth between the House and Senate isn't even a budget. It's a kick-the-budget-down-the-road measure to give Congress more time to not do its job.

But this time a shutdown just might happen. The House Republicans, while they have done a lot to advance the cause of fiscal restraint, are overplaying their hand. A Government shutdown backfired in 1994, and it may well backfire again. I don't think that the President will compromise this time. The debt Super Committee has until November to do its job of considering alternatives to reduce our debt. The President can say, "the Committee is working, this is premature."

Given the fragility of public confidence, these tactics just don't make sense for the country. They come at a time where the markets are stumbling and the economy is sputtering. I hope that I am wrong, but I fear that I am right. While the country clearly is behind the concept of fixing the national balance sheet, that shouldn't be confused with a blanket approval from the public to play chicken every couple of months.

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As the "Super Committee" wraps up a second week of work towards meeting its November 23 deadline for voting on a deficit reduction plan, edicts on what they should and should not consider and what they can and cannot propose continue to fly from both sides of the political spectrum. House Majority Leader Boehner has declared no tax increase, President Obama's new deficit plan to fund his jobs legislation makes it clear the entitlements are off limits, veto threats have been made, and many Members of Congress are individually pushing the 12 members of the Committee to support their favorite programs and spare them from cuts. The all or nothing approach taken by both sides has done nothing but make the work of the "Super Committee" that much harder and has eroded the likelihood of success. While all agree the deficit, the economy and jobs creation are issues that must be addressed, and addressed fast, there is once again a big road block ahead just like we saw in July with the Deficit Reduction Act.

Despite recent polls by the New York Times, Public Policy Polling, Rasmussen and many others showing that a majority of Americans support a balanced approach from Washington in these very tough economic times, leaders of both parties don't seem to hear that message. They know they have a problem, they just can’t put aside instinct and work together to solve the problem.

If the Administration and Members of Congress - not just the 12 members of the "Super Committee" - put aside instinct and long held political positions and take a tough look at the problem, they may just find a solution that would lead the Committee to timely success. A number of bipartisan groups, including the Deficit Commission and the Gang of Six, have already taken extensive looks at the political tools available to address our nation's ills and have presented what for the most part are balanced solutions that a majority of Americans say they want. While these solutions would certainly take some work, it could be very useful to the timely success of the " Super Committee", and for all those involved, to take a serious look at both the problem and the solutions already on hand. It might just lead to a proposal that works.

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With the President’s announcement this week of his intent to propose new minimum income tax rules for individuals who make over $1 million a year, the heated debate over whether this is “class warfare” or simply “good math” will no doubt pick-up. Whimsically naming this proposal the “Buffet Rule” – an attempt to highlight Warren Buffet’s recent criticisms of tax breaks for himself and his other fellow millionaires – has not made it more palatable to Speaker Boehner and other Republican leaders. No doubt we will continue to see this diversion of visions continue possibly through and beyond the upcoming election. As political pundits discuss whether this is simply a foundation for the President’s campaign platform or if he sincerely believes that this proposal has any chance in some form of passing, will likely be discussed ad nauseam.

However, in the meantime, less reported but perhaps more important tax changes may be taking place. New tax proposals, initiatives, congressional hearings, and legislation focused on tax code reform are increasing. Is this a sign of something that hasn’t occurred in 25 years? Is there potential for a complete overhaul of the entire tax system?

Not since Republican President Ronald Reagan worked with what was then a Democratic congress have we seen an extensive evaluation, new legislative agenda and then, a subsequent complete reform of the U.S. tax code. At the time it was the most extensive reform of the tax code in our Nation’s history. As with any giant overhaul, mistakes can be expected, but there is no doubt that it was a bipartisan victory for our government in 1986 and one that right now seems impossible.

In spite of this view, some in Congress are working right now towards tax code reform. The Democratic-run Senate Finance Committee has conducted numerous hearings in the last few months that deal with various aspects of the tax code and the potential costs and benefits of reform. And just this week, the Republican-run House Ways and Means Committee will hold two hearings on the tax code, both involving an analysis of specific portions of the tax system and on the system as a whole.

As we are inundated with opinions from both sides on the President’s new proposal for a new tax minimum on the wealthy and mandates from both sides on tax proposals being sent to the new so-called “Super Committee” it will be prudent for us to pay attention to the less “flashy” but perhaps just as important work of our congressional tax writing committees. The tax code reform of 1986 might seem almost pale in comparison if such a bipartisan initiative were successful today.

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Unlike previous Congressional hearings, including one in which Representative Patrick McHenry (R-NC) famously called Elizabeth Warren “a liar”; last week’s Senate Banking Committee Hearing on President Obama’s nomination of Richard Cordray to direct the newly created Consumer Financial Protection Bureau, proved a much calmer affair. With the departure of Elizabeth Warren, who recently announced her candidacy for Senate, a more rational dialogue was able to occur regarding the new Bureau and its powers.

The Consumer Financial Protection Bureau (CFPB) was created last year through the Dodd-Frank Wall Street and Consumer Protection Act of 2010. And since its formation has been the subject of incredible partisan debate. Over the past year, Elizabeth Warren served as the Assistant to the President and Special Advisor to the Secretary of the Treasury, and was responsible for setting up the Agency, from scratch. Also credited with the idea for the CFPB, many were unable to separate Warren from the issues they took with the Agency’s structure and powers. The CFPB was officially launched in July 2011, and although having certain freedoms to move forward without the consent of Congress, many of the Bureau’s legislated powers will remain inactive until a Senate confirmed director is in place.

Republicans in the hearing did not take much issue with Cordray, but rather the structure of the agency. In fact, many viewers were almost surprised at what could be interpreted as vague support for Cordray and his background throughout the hearing. Since its inception, Republicans have pushed for a 5 member panel to replace a single director, claiming the CFPB lacks the proper oversights of a government agency. It appears the air has been somewhat cleared since the parting of Elizabeth Warren from the Bureau. However, it is almost impossible to think of a scenario in which the CFPB is able to become a legitimate agency without legislative fixes that are currently being pushed by Republicans. With “consumer protection” meaning many different things depending on one’s vantage point, it is hard to imagine a single person being permitted to determine what is harmful to consumers and the economy, and which should sacrifice for the sake of the other.

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Last night the President laid out for Congress and all Americans a new plan aimed at getting the country back on track after years of a struggling economy and more to his point, to put those out of work, back to work.  While a necessary step based on the country's current economic woes and his own political future, last night's speech served to create more questions than to provide answers.  Pundits and economic experts will struggle over the coming days and weeks to determine if the President's proposal will achieve it's aimed goals.  They will scrutinize everything from the timing of the proposal, to how many jobs will actually result from the proposal.  While these are all important questions, perhaps the most important question will be whether or not the proposal succeeds in getting the support of the American people.

While members of Congress from both parties will be quick to jump in to provide opinions on the President's speech and his proposal, the American Jobs Act, only time will tell if they will take his call to "pass this now" to heart.  Members from both sides will also work to add their own stamp to the proposal should it move forward in the legislative process.  While this will take some time, we should be remember that this is what is supposed to happen; Congress must act as a check on the President's proposal and time is needed for due consideration.  That does not mean Congress should sit like the thinker and ponder all possibilities.  All sides seem to agree that action must be taken to turn around the country and time is short.  Both sides should, as is often said about Congress, roll up their sleeves and get to work.  To put aside partisan views and work to address the country's most pressing needs.  If they do, the President's proposal has a chance to succeed and make a difference.    Most Americans today understand this is the way Washington should work in tough times.

The President called on Congress "to act" seventeen times in last night's address, but it is not his call that will make them act.  So what will?  There is not one clear answer, but with little doubt, it is clear that every American has the choice to make a difference.  As we saw in late July with regards to the debt reduction negotiations, when individuals across the country expressed their view that Members of Congress and the President get something done, individuals did make a difference.  The President will leave Washington behind for a while to talk with average Americans about supporting the Americans Job Act.   Members of Congress will do the same to try and get support for their views on the President's proposal.  How these messages will be received remains to be seen.  What seems more certain today is that the message back from the average American to all sides will be we hear you, we understand, now get it done.

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Back in July, the President’s chief political adviser inside the White House, David Plouffe, told Bloomberg, “the average American does not view the economy through the prism of GDP or unemployment rates or even monthly jobs numbers. People won’t vote based on the unemployment rate, they’re going to vote based on ‘How do I feel about my own situation? Do I believe the president makes decisions based on me and my family?’”

A look behind last week’s unemployment numbers for August reveals a bleak picture. While the continuing 9.1% unemployment rate gets all the press, it’s a few other statistics that really stand out. For example, two constituencies that heavily supported the president in the 2008 election continue to suffer. The rate of unemployment among African-Americans and Hispanics average – 16.7%, and 11.3% respectively – continues to far exceed the national average. Also, the August jobs report showed that the number of “underemployed” Americans (i.e., people who are taking part time jobs because they can’t find full-time jobs) is increasing – up 400,000 in August. So 400,000 more people in August aren’t counted as “unemployed,” but they are unable to fully replace the income that they’ve lost.

Notwithstanding the political calculation back in July that unemployment statistics don’t impact voting behavior, it’s clear two months later that continued high unemployment is impacting the American psyche. And the Administration has moved from voters-don’t-vote-based-on-statistics to clear concern about the President’s re-electability and a speech on job creation this week before a joint session of Congress.
 

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On August 9, 2011, Howard Schweitzer, a principal of Cozen O'Connor Public Strategies and former U.S. Treasury official appeared on CNBC's Squawk on the Street to weigh in on Standard & Poor's recent downgrade of the U.S. credit rating.  For more about the impact of these recent events and to see the video segment, see http://video.cnbc.com/gallery/?video=3000038174.

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A national debate is brewing over the future of federal support for infrastructure maintenance and development, and the President’s home state of Illinois suddenly has become the center of attention. In the past several days, Illinois Senators Dick Durbin (D) and Mark Kirk (R) each have introduced separate, dueling legislative proposals that highlight the stark differences in Washington regarding the federal government’s role in infrastructure finance. Durbin’s proposed bill would establish significant hurdles to privatization while Kirk’s proposal would ease federal restrictions on privatizing transportation assets.

Sen. Durbin’s bill, the Protecting Taxpayers in Transportation Asset Transfers Act, introduced last Thursday, would require repayment of federal funds used to support local transportation infrastructure projects prior to local and state governments privatizing transportation assets. The bill would attach a federal lien on all transportation projects until the federal funds are repaid.. Sen. Durbin’s bill also would increase transparency and encourage public involvement before privatization deals are completed.

This Monday, Sen. Kirk introduced the Lincoln Legacy Infrastructure Development Act, citing President’s Lincoln’s legacy in fostering private investment in the transcontinental railroad. Sen. Kirk’s proposal would ease federal restrictions on public-private partnerships which would make it easier for local and state governments to sell and lease transportation assets to private bidders. The legislation also would support additional federal financing for infrastructure project financings.

Beyond the Durbin and Kirk bills, there are a multitude of legislative options on the table regarding infrastructure finance, not the least of which is President’s Obama’s proposal to create a national infrastructure bank. What happens in the short term? In a word, nothing, until we get past the current round of negotiations regarding the debt ceiling and entitlement programs. But looking out a couple of years to 2013, I expect to see a national infrastructure plan emerge in the first 100 days of the next presidential term – regardless of who is elected President – with additional federal support, most likely in the form of federal loan guarantees, and facilitation of public-private partnerships. There are viable solutions to our infrastructure challenge that also protect the U.S. taxpayer. Businesses that want to influence this debate need to engage now.
 

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It may be anomalous to use a blog to make this point, but here goes: even in this era of social networking, nothing beats face-to-face conversation. Especially on Capitol Hill.

Grudgingly, congressional offices have finally learned to use 21st century communication tools. It’s a cultural change that didn’t come easily. When some current members of Congress were first elected, there were still daily ice deliveries to each office, vegetable carts wheeling down the corridors, and Fuller Brush salesmen knocking on House and Senate doors. The technology of choice was the mimeograph machine.

That was the context for the kind of persuasion that occurred beneath a Lyndon Johnson bear hug or at Tip O’Neill’s poker table.

Inundated by robocalls, autofaxes and Astroturf campaigns, the Congress began to adjust by filtering out non-constituent spam as well as potential health hazards. Incoming congressional mail is now x-rayed so aggressively that it arrives yellowed and crumbly, if at all. Consequently, many Congressmen and Senators today base their political strategy on Twitter, Tele-TownMeetings and similar outgoing tools to reach the largest possible audience. Notwithstanding the occasional misfired (or hacked) Tweet, it’s effective and economical. And the message can be tailored further to narrow demographics.

Social networking has helped launch revolutions. And it's essential in any enterprise today to master these tools. But for all the dialogue it appears to encourage, it still requires someone on the other end to reply. And often that someone is drowning in incomings.

That’s why when it comes to lobbying the Congress to achieve actual results, it’s still ultimately about showing up. You can email and fax and tweet; and you can generate a thousand parroted letters from “constituents”; and everyone you know is doing all the same things, aimed at the same audience. The net effect is to elevate volume, accelerate pace and distort nuance – and the resulting din is now orders of magnitude louder than in the past. To be heard above it, as a lobbyist or even as a Member of Congress trying to connect with colleagues, still requires old-fashioned foot leather.

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United States Senate Majority Leader Harry Reid of Nevada recently told Matt Lauer in a televised interview that the Tea Party would fade from prominence and eventual existence as soon as the economic recovery reached a satisfactory level of prosperity. Whether Senator Reid was channeling early American history or not, his prediction about the modern Tea Party movement coincides correctly with the chronology of the original Tea Party in pre-revolutionary times.

The original Tea Party arose in the streets of Boston in response to a succession of British taxes. The rallying cry was, as every elementary school student of history knows, “no taxation without representation.” The Tea Party reached its apogee with the dumping of tea into Boston Harbor to avoid the British tea tax. Although recent historians have questioned the independence of the Tea Party and wondered whether Boston merchants were responsible for its organization and promotion, the Tea Party lore – and the Tea Party facts - is that these men were patriots in the vanguard of the American Revolution.

The colorful history of the Tea Party was in fact very short-lived. Once the level of hostilities between the colonies and the British spread from New England throughout the Atlantic seaboard, the leadership of the American movement steadily evolved into the hands of the men we now know as the Founding Fathers. The Tea Party itself, and its leaders, became less prominent as matters became more confederate and complicated. Without predicting the longevity of today’s Tea Party, the historical precedent from which they look for their name and their rallying cry is that of an important but short-lived movement. This may not be what the Majority Leader had in mind but it is an historical precedent for his prediction.
 

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On Wednesday March 16, 2011, the House of Representatives Financial Service Committee’s Subcommittee on Financial Institutions and Consumer Credit held a hearing titled “Oversight of the Consumer Financial Protection Bureau.” Elizabeth Warren, the hearing’s witness, is currently serving as Assistant to the President and Special Advisor to the Secretary of the Treasury. She is tasked with helping to set up the new agency. The Consumer Financial Protection Bureau (CFPB) was created last year through the Dodd-Frank Wall Street and Consumer Protection Act of 2010.  The CFPB is described in Title X of the bill and is currently a part of the United States Treasury.  In July 2011 it will become its own independent agency.  This new federal agency was created, as Warren described, to be “a top cop on the beat for consumer financial issues.”  The hearing was filled primarily with partisan debate over key issues surrounding the CFPB.  Republicans opposed the initial creation of the agency and are now hoping to limit its funding and rulemaking authority.  Most Republicans consider the agency a government overreach and an unchecked threat to a strong and diverse economy.  On the other hand, Democrats argue that the agency will be able to look out for consumers; a group whose interests, they argue has often been overshadowed by large banks and lenders.

In her testimony and responses, Warren described the goals of the CFPB and the vision for what its role will be in the U.S. government and the U.S. economy.  She expressed that the CFPB will, as its first priority, ensure choices and prices are clear to consumers.  She stressed that the CFPB will not dictate what choices must be made available to consumers, but rather that they are clear and defined.  Furthermore, the law says that the CFPB cannot require a financial institution to provide any particular product. According to Warren, the CFPB will try to create more efficient systems and regulations for consumers and banks, specifically easing paperwork burdens on small and community banks.  As an example, Warren explained that one of the agency’s first jobs has been to merge two different mortgage forms that have an 80 percent overlap in content.  Other regulators have unsuccessfully tried to complete this task for 15 years.  Also, starting in July, the CFPB will take over regulating 18 different consumer protection authorities, which are currently under the jurisdiction of 7 different federal agencies.

Starting July, the CFPB will also begin to be funded by the Federal Reserve, which places the agency outside of the congressional appropriations process.  This was a large topic of concern in the hearing as many Republicans fear a lack of congressional oversight due to the agency having independent funds.  In his remarks, Chairman of the full Committee, Spencer Bachus (R-AL) cautioned that the CFPB could be the most “powerful agency” ever created.  Adding to Republicans’ anxiety regarding lack of oversight of the CFPB, is the fact that the agency will have one appointed executive director.  Representative Bachus added, “It’s not a commission.  It’s one single person, and it will regulate all providers of credit, savings, payment and consumer financial products and services.”  Republicans suggested that a board or a committee running the CFPB would be more appropriate, and ensure proper checks and balances on its rulemaking authority.  Furthermore, after the hearing, Representative Bachus announced he is introducing a bill to replace the bureau's single director with a five-member commission of bipartisan representatives.

Warren and Democrats in the hearing defended the CFPB from criticism regarding the agency’s leadership and funding.  Warren noted that the CFPB will be funded in the same way as other banking regulators, such as the FDIC.  Representative Carolyn Maloney (D-NY) explained in her opening remarks that the Dodd-Frank bill established the Financial Stability Oversight Council (FSOC). The FSOC is charged with identifying threats to the financial stability of the United States; promoting market discipline; and responding to emerging risks to the stability of the United States financial system.  It is made up of 10 members, they are as follows: the Secretary of the Treasury, the Chairman of the Federal Reserve, the Comptroller of the Currency, the Director of the Bureau of Consumer Financial Protection, the Chairperson of the U.S. Securities and Exchange Commission, the Chairperson of the Federal Deposit Insurance Corporation, the Chairperson of the Commodity Futures Trading Commission, the Director of the Federal Housing Finance Agency, the Chairman of the National Credit Union Administration Board, and an independent member who is appointed by the President and confirmed by Congress. Most relevant to the debate in the hearing, the FSOC has the authority to nullify any rulemaking done by the CFPB through a 2/3 vote.  Warren went as far as to describe the Agency as the “most constrained and most accountable agency in government.”

In addition to the criticisms of the leadership structure of the CFPB, there was much discussion over Warren’s current role at the agency and her involvement in its construction.  In the hearing, Warren explained her role. She stated that prior to the appointing of an official director of the CFPB (who must be congressionally confirmed); the Secretary of the Treasury has the authority to appoint an assistant to help with the setting up of the agency.  Many Democrats voiced their desire to see Warren herself eventually appointed as the first director of the CFPB.  On the other hand, Republicans in the hearing pressed Warren on her current position, its legal authority, and also the delay in a director being named by the Administration.  Like others at the hearing, Representative Patrick McHenry (R-NC) used his questioning to ask about the validity of Warren's work in setting up the CFPB without having been confirmed as the director.  Republicans warned that the Administration’s delay in nominating a head of the CFPB while the construction of the agency and its eventual independence in July takes place, will have many negative consequences on the agency’s effectiveness and credibility.

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In my travels around Washington this past week, that's a word I heard everywhere and in a number of different contexts. The budget screws are being tightened, and the Executive Branch is taking it very seriously. While all official Washington knows that they have to deal with entitlements to really dent our dangerous course of national borrowing, there is recognition and the political expectation that we cut non-entitlement government spending as well. And there's plenty to be cut.

The consolidation that is underway in the Executive Branch involves an examination of which agencies to consolidate with one another and which functions within and between agencies to consolidate. Some of our cabinet departments are vast bureaucracies with massive duplication of administration. The Department of Energy, for example, has well over a hundred components, each with its own contracting staff. There are literally hundreds of different systems that agencies deploy for financial reporting purposes. The federal government is in some sense like a state with hundreds of small towns, each with its own trash collection, mayor, school system, etc, resulting in massive duplication in administration. There's no doubt that there is significant savings to be had by consolidating functions. The challenge will be in cutting with a surgical knife, not a cleaver. It's important to set a tone of savings, but it's equally important to look at deploying resources in a manner that most effectively serves the taxpayers. Some agencies, for example, make money for the government, and if you cut their budgets you seriously harm their ability to generate revenue. So not taking a one size fits all approach is absolutely key to getting this right. There is room to save billions. Now is the time. But these cuts (this consolidation) has to be very thoughtfully considered and then very effectively executed.

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Women in the workforce with small children at home have extraordinary demands on their time (no matter how helpful their husbands). This fact becomes especially public when the woman in question is a United States Senator. All Senators travel between their states and their jobs in Washington. Further, Senators, unlike Representatives, in theory and in practice represent both their states and national interests. And when in session, the Senate works long hours and places great stress on its members. For a young mother of young children, all of this adds up to a remarkable schedule. I recently had the opportunity to watch such a schedule in operation.

Kirsten Gillibrand, the junior Senator from New York, has been in the news a lot lately. During the lame duck session she was instrumental in the passage of the Don’t Ask Don’t Tell repeal and the 9/11 Responders legislation. More recently and more tragically, she is a good friend of Gabby Giffords and has spent significant time at her friend’s side in Tucson. Less visibly, she has all the duties of the Senate and the concomitant need to be constantly raising money. It was in pursuit of this latter objective that I spent some time with Senator Gillibrand in Los Angeles.

She had flown from Washington to San Francisco the day before for events in Northern California. She flew from San Francisco to Los Angeles for our meeting and at least three subsequent sessions. The Senator then got up early the next morning to fly back to Washington to be at her desk during the day and with her family (visiting from New York) at night. This sort of schedule is not partisan. Republicans and Democrats alike in the Senate work this hard. Yes, the prestige and power (although not the pay) that come with a seat in the Senate are exceptional. Nonetheless, the hard work required is enormous and something we should be appreciative of.

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Listening to the State of the Union address two weeks ago, I was struck by the wisdom of my friend Brian’s recent rant about political dialogue in this country. According to Brian, the dominant political figure in the United States today is still Ronald Reagan. We live still, according to the Brian’s school of thought, in the Age of Reagan and we debate our policies and positions in the vocabulary and framework that President Reagan established thirty years ago. I have to admit that he has a point.

While the President’s address was, I believe, dignified in tone and substantive in content, it is true nonetheless that he interwove in his discussion an acknowledgment that we must constrain government, for fiscal and moral reasons, from over-reaching and over-spending. In a manner unthinkable in an FDR fireside chat, President Obama was addressing – articulately and intelligently – the implied question whether government is the problem or the solution, and the President’s answer was that it is both. Remarkable. This is the framework that Ronald Reagan established. You can almost hear the Gipper giving the Republican response to President Obama’s State of the Union and opening with a “there you go again.”

In one sense, this of course has been the core issue in political philosophy in the western world since the ancient Greeks. Surely, this framework of debate would come as no surprise to the Founding Fathers; indeed, the Constitution itself is a compromise between the two poles of this dialectic. On the other hand, the fundamental legitimacy of the modern welfare state has been a given in western political thought since the time of Bismarck in the late 19th century. To hear this question asked and answered again in the 2011 State of the Union is a tribute to the enduring power of President Reagan to shape the debate.
 

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On Thursday, February 10, 2011, Cozen O’Connor Public Strategies Principal Howard Schweitzer was a panelist at Capital Roundtable’s Masterclass, “Private Equity Investing in Regional & Community Banks -- How Investors Can Thrive From the Surge in Consolidations.”  Howard spoke on a panel regarding Dodd-Frank that was focused on the Consumer Financial Protection Bureau (CFPB).  The panel also included the recently departed Minority Chief Counsel for the Senate Banking Committee, a consumer financial protection attorney, and an investment banker.

The panelists agreed that the CFPB is likely to decrease the profitability of regional and community banks and that uncertainty with respect to the CFPB’s future activity creates significant compliance and regulatory risk for financial institutions.  Although the CFPB has limited supervisory authority over banks with assets of less than $10 billion, rules promulgated by the CFPB will still apply to these smaller banks.  Several of the panelists highlighted the Durbin Amendment, which drastically reduces debit card interchange fees, as a prime example of a Dodd-Frank provision that may pose a significant risk to banks’ profitability.

Howard, the former Chief Operating Officer of the Troubled Asset Relief Program (TARP), pointed out the irony of Dodd-Frank creating significant regulatory uncertainty and potentially forcing small banks out of business, just a short time after TARP invested hundreds of billions of dollars to stabilize the banking sector and keep banks in business.  He further noted that while Dodd-Frank was passed in light of banks being “too big to fail,” it may have created a segment of banks that are “too small to succeed.” 

Cozen O’Connor Public Strategies will continue to monitor the CFPB as Treasury prepares to transfer the Bureau to the Federal Reserve on July 21, 2011.  For more insight on the CFPB, visit http://www.copublicstrategies.com/Industries/Consumer-Financial-Protection-Board.

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As the 112th Congress gets down to business and the new arithmetic of the Republican House becomes a fact, President Obama is receiving advice from the pundit class that he should emulate the 1995 “move to the middle” strategy of President Clinton. Like Obama, President Clinton got a “shellacking” in the 1994 mid-terms. Like Obama, Clinton faced a backlash to his healthcare reform efforts (which, unlike Obama’s, did not result in transformational legislation). In the face of this challenge, Clinton is credited with “triangulating” his politics and policies towards the center that anchors the American electorate. In 1996, he defeated Bob Dole and earned a second term.

Without in any manner disrespecting the political genius of Bill Clinton; I suggest that two other factors were as instrumental in President Clinton’s re-election as was his triangulation. First, Clinton enjoyed an increasingly prosperous economy that was in a roaring recovery from the recession that he inherited from the first President Bush. Second, Clinton benefited from his opponents’ choice of an opponent for him. Bob Dole is an authentic American hero and deserves our gratitude for a decades long career of exceptional public service. However, as a Presidential candidate, he was no match for Bill Clinton.

As we approach the 2012 Presidential election, we would do well to consider the Clinton history and its lessons for the current Administration. One can wonder whether President Obama will be dealt a hand of similar circumstances to those that Clinton held: will unemployment steadily sink? Will the GOP offer up an imperfect candidate? If so, then four more years would be quite likely.

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Recently, I was discussing the Obama Administration with an old friend. He comes at the question from the progressive side of politics and he was frustrated with the President’s 2010 performance. I recited the usual litany of accomplishments (healthcare; financial reform; DADT; START; etc) and expressed much more satisfaction with the year in review then did he. Finally, my friend looked at me with an admixture of surprise and disappointment and exclaimed: “Since when did you become such a darn pragmatist?”

I've been thinking since then about that question.  Since when did being a "pragmatist" become an indictment in American politics?  At the turn of the century the leading minds in America proudly proclaimed themselves Pragmatists.  William James in philosophy; John Dewey in education; Oliver Wendell Holmes in law; etc.  Rejecting the absolutism of 19th century thinking and the tyranny of social Darwinism, these men (and too few women) pioneered a philosophy of change and growth grounded in science and the fact that even the smallest organism in nature is either growing or dying.

The President was elected to bring change we can believe in. I think it’s highly revealing of a hardening of the attitudes in our politics that President Obama is pilloried for changing his position or approach. Change is neither good nor bad; it is ineluctable. Change shouldn’t be the condemnation of a politician. Pragmatism should be reinvested with the respect it once received.

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Last Tuesday's state of the union was remarkable, not because of what it was, but rather because of what it wasn't.

It wasn't filled with a laundry list of promises -- soon to go unfulfilled. The President didn't proclaim until the end of the speech that "the state of our union is strong." The speech lacked any remarkable rhetoric, like the phrase "axis of evil," that often comes with the State of the Union and forever sticks out in the public's mind. The speech also wasn't interrupted by the thunderous, ceremonial applause that usually goes along with the State of the Union. Maybe it was Tucson. I think it's more likely the realization that the U.S. has very serious problems that both parties now own.

I read an advance copy of the speech and the text itself was dull. The President gave a much better speech than his speech writers wrote. He remains a compelling figure. And the basic message -- innovation, education, fiscal responsibility -- represent a strong agenda on which to govern.

Two years ago the speech would have been visionary. And, of course, the President was fighting all sorts of fires when he came into office. His critics would say that instead of governing he was the legislator in chief and focused his energy on health care reform rather running the country. Time will tell whether the President made the right bet.

Regardless of whether this may have been the right speech for the wrong time, the President now has to execute on his vision. We need a "Manhattan Project" type effort on everything he mentioned last week. That's why I, along with former Senator Bob Kerry and my partner Mark Alderman, advocated recently in the Washington Post that the President should create the position of Chief Operating Officer to drive key national priorities.

I've been at the center of one such effort during my time as Chief Operating Officer of the Troubled Asset Relief Program at the U.S. Treasury from 2008-2009. While TARP is often criticized, it's not for lack of effective execution. We executed that program by bringing in the right people, focusing them day in and day out on our mission of stabilizing the financial system while protecting the taxpayer. Change and adaptability were ingrained in our culture. And we stressed accountability to our stakeholders. While TARP is often misunderstood because of its complexity, it is the most transparent and overseen program in the history of the United States Government.

No Member of Congress, given the politics around the TARP, would say we need a TARP-like effort to execute the national priorities that the President identified in the State of the Union. But we need a TARP-like effort nonetheless. While the 2012 campaign looms, and no doubt motivates some of the President's focus and attention the President and his team need to make this happen. They need to govern. Call it what they will, history will judge this President based on how he governs and what he gets done.

Actions speak louder than words.
 

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In the aftermath of the Tucson tragedy considerable debate has been devoted to a discussion of the vitriolic and venomous nature of our political rhetoric.  Two observations about that particular focus are instructive.  First, at least two other factors were serious contributors to the scope and nature of the Tucson tragedy.  The gun control laws in Arizona and this country have been cited appropriately as a factor in how the tragedy played out.  Likewise, the mental health system has been strenuously identified as a core failure in the descent of Jared Loughner into homicidal hell.  Rhetoric alone was not the cause.

A second observation concerning this focus on the tone of American politics today is that, as Sarah Palin pointed out, the rhetoric in the past has been far more severe.  The Adams-Jefferson election of 1800, for example, produced violent rhetoric unmatched in American history by any until the Civil War.  However, the greater distinction between today’s political vitriol and that of 1800 lies not in the more violent rhetoric then, but rather in the near absence of an honest debate now.  Notwithstanding the venom of 1800, Federalists and Anti-Federalists simultaneously conducted a highly intellectual, highly articulate, and highly honest debate about the role of government.  We are, after all, talking about Adams and Jefferson!  Such integrity of debate barely exists today.  Yes, we should of course endeavor to discuss our differences with more respect and civility.  Even more critical, however, is that we discuss our differences in a framework of honest and careful thinking about the meaning of our remarks and the consequences of our positions.  The caliber of political discourse in the early days of the American Republic, and even in the run-up to the national tragedy of civil war, was of a level not often seen in world history.  That bar may be too high to cross today; nonetheless, we can do better than this.

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The American public clearly is dissatisfied with government, but not, I believe, because the public understands what the government is doing and disagrees with it. The public is at odds with the "bureaucracy" because government is fundamentally inaccessible and nearly impossible to understand.

While in government, working as chief operating officer of the financial crisis program at Treasury and as general counsel of the Export-Import Bank, I would often stop meetings, including some very large meetings with some very important people, when colleagues started tossing around acronyms that I knew no one else around the table understood. Sometime people inside government don't even understand the language of government. When you're on the outside, it's practically incomprehensible and there's a lot of translation needed.

Just this morning, while doing some background work for a client project, I clicked on one federal agency's drop down menu for one tab on its website and found no less than 15 acronyms. And this was a web page that was supposed to make it easier for small businesses to work with government!! As one of my mentors once said, "Language defines culture." The language of government is arcane, cryptic, and foreign. Policy makers ought to stop fighting about the size of government and the bureaucracy and start talking about increasing government's accessibility.

Many people in and around government don't want that to happen. They make their living off of that language barrier and speaking an "exclusive" language makes them feel important. But the citizens of this country would feel a lot better about their government and government could do a lot more for the people if there was a concerted effort to bridge the gap and to make government more user-friendly.

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Government contractors sharpen your knives.  You’re going to be competing for fewer dollars.  The President has frozen federal employee pay.  The Republicans are waging war on government spending. The President's Deficit Reduction Commission has been hard at work trying to create a blueprint for a better fiscal future.

While entitlements -- social security, Medicare, etc. -- are the linchpin of fiscal reform, cutting other federal spending matters a great deal in terms of the optics of deficit reduction.  This adds up to the need for government to do more with less. That's certainly true at the state government level as well.

Businesses that depend on government for business need to be more competitive when it comes to bidding for government contracts. I recently wrote an article (click for link) published on law360.com entitled, "How to Win Government Contracts." The article provides a road map for contractors that need to sharpen their focus in this environment. In short, companies can gain a huge leg up on their competitors with a combination of marketing, information gathering, strategically drafted proposals, and sound contract management. Sound simple?  It's easier than you think. 

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On Monday, December 13, a federal court in Virginia ruled that key parts of the Patient Protection and Affordable Care Act (PPACA) are unconstitutional. U.S. District Judge Henry E. Hudson, a George W. Bush appointee, said PPACA’s requirement that most Americans carry insurance by 2014 or pay a fine "exceeds the constitutional boundaries of congressional power." The lawsuit, brought by Virginia Republican Attorney General Ken Cuccinelli, is the first court ruling against the law since President Barack Obama signed it in March.

Also this week, Congress passed legislation that postpones a cut in Medicare reimbursement rates to doctors for another year. The measure (HR 4994) blocks a 25 percent reduction in pay rates that was due to take effect January 1 for doctors who see Medicare patients. It instead extends current payment rates through 2011, at an estimated cost of $14.9 billion over 10 years. The American Medical Association and President Obama will be working closely with Congress to develop a more long-term solution.

On Wednesday, December 8, the Florida Senate revived a proposed constitutional amendment designed to block the portion of the PPACA that requires people to buy insurance or face a penalty. The proposed amendment for the 2012 ballot easily passed the Senate Health Regulation Committee along party lines, and is the first measure the legislature has taken up in preparation for the spring lawmaking session.

In Arkansas, legislation filed by a pair of Republican lawmakers also proposes blocking the portion of the health care overhaul that requires people to buy health insurance.

Elizabeth Edwards passed away on Tuesday, December 7. In Obama's statement on her death, he said, "She was a tenacious advocate for fixing our health care system and fighting poverty, and our country has benefitted from the voice she gave to the cause of building a society that lifts up all those left behind."

Also this week, a few sources, including the New York Times, highlight Arizona’s decision to eliminate coverage for certain heart, liver, lung, pancreas, and bone marrow transplants. The articles highlight that the health rationing Republicans have warned the new health care law will cause is already occurring in pre-reform health care, and that in Arizona it is being carried out by Republicans.

Arizona Governor Jan Brewer said Thursday she will ask for a waiver under the federal health care overhaul so Arizona can reduce its Medicaid rolls to lower costs that Brewer and fellow Republicans say the cash-short state cannot afford. If approved, the change could mean the loss of government-funded health care for hundreds of thousands of people. Brewer also is taking two other approaches to seek relief from the health care overhaul's mandates. One is to ask Congress to change the federal law, and the other is participation in a multistate lawsuit challenging the overhaul.

On Thursday, December 9, the Department of Health and Human Services (HHS) offered new guidance on "mini-med" health plans, making clear that only under two limited circumstances can insurers who have received waivers continue offering limited-benefit health plans. Additionally, HHS said it would require companies to alert consumers that such insurance does not meet the minimum coverage standards required under the health care overhaul law.

This Thursday, December 16, Health Affairs will hold a conference titled "Innovations in Health Care Delivery." On Friday, December 17, the the Health Information Technology Standards Committee will meet to discuss reports from its workgroups. On Monday, December 20, the Center for American Progress will hold a panel discussion titled "Moving Our Health Care System Forward: Accountable Care Organizations and Beyond."
 

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On Friday, December 3, the Medicare Payment Advisory Commission (MedPAC) released its draft recommendations for fiscal year 2012. MedPAC recommends that hospitals receive a 1 percent net increase in inpatient and outpatient payment rates and a 1 percent increase in physician payments. The commission will vote on these and other recommendations in mid-January before releasing its report to Congress on March 15.

Last week President Obama signed legislation that will avert for one month a 23 percent cut in Medicare reimbursement rates for physicians. The cuts were scheduled to take place starting December 1, 2010.

On Wednesday, December 1, President Obama’s National Commission on Fiscal Responsibility and Reform released its final report, “The Moment of Truth.” The report proposes overhauling the way Medicare pays its physicians through holding off future cuts and ultimately reducing the reimbursement rate by 1 percent. The Commission suggested that the Centers for Medicare and Medicaid Services (CMS) refigure both how physicians are paid and the value of the services they provide. Other suggestions included in the Commission’s proposal were the restructuring or repeal of the long term care insurance program created in the new law, raising the Medicare eligibility age, and placing dual-eligible beneficiaries in Medicaid managed care plans. Though the proposal earned a majority in the Commission with an 11-7 vote, it failed to achieve the 14 votes necessary to send the proposal to Congress.

In a December 2 letter to CMS, the American Medical Association submitted comments on recommendations for structuring the Accountable Care Organizations (ACOs) that will be created under the new health care law. The letter includes recommendations to create new payment methods, increase access to loans and grants for small physician practices, ease antitrust restrictions that prevent physicians from collaborating, and increase timely access to quality data.

Reaction to the Patient Protection and Affordable Care Act (PPACA) continues at the state level. In Wisconsin, Republican Governor elect Scott Walker wrote to President Obama requesting maximum state flexibility in meeting the healthcare reform law's coverage requirements. In South Carolina, Republican Governor elect Nikki Haley stated on Wednesday (December 1) that she will ask President Obama to allow states to opt out of the new federal health care law. In Louisiana, State Secretary of Health and Hospitals, Bruce Greenstein, said that Louisiana is struggling over whether it will set up its own health care exchange or call on the federal government to do so. Further, some states are complaining that the expansion of Medicaid under the health care law will impose so many new costs and regulations that they are considering opting out of the program altogether. On a related note, Senator Roger Wicker (R-Miss.) is planning to introduce a bill that would allow state officials to file legal briefs challenging the constitutionality of proposed regulations during the time when they are open for comment.

A report released December 3, 2010, by the state of Texas found that Medicaid and CHIP are taking a large toll on the state’s budget. However, the report also found that opting out of the federal programs would destroy Texas’s healthcare delivery system. The report explains that many of the methods for fixing Medicaid spending in Texas will require acts of Congress to give the state greater flexibility in how the programs are run and a greater share of the national Medicaid financing. The report also suggested that the federal government should take over 100 percent financing of health care for non-citizens in Texas, which it said is costing the state program more than $500 million a year.

On December 2, the Department of Health and Human Services (HHS) unveiled Healthy People 2020, a new 10-year plan to improve the health of all Americans. As part of the plan’s rollout, HHS announced a competition called "myHealthyPeople.” The competition asks application developers to create and submit easy-to-use software applications to support the initiative. The closing date for application developers to submit their technology is March 7, 2011.

Virginia Attorney General Ken Cuccinelli is considering filing a petition with the United States Supreme Court asking that the case regarding the state’s lawsuit over the federal health care overhaul be allowed to bypass the appeals court process and go straight to the Supreme Court for a ruling. Regardless of that outcome, many believe the case will end up before the Supreme Court.

On November 30, Administrator Donald Berwick announced management changes at CMS. Julie Boughn will be the new Acting Deputy Director of the newly created Center for Medicare and Medicaid Innovation. Dr. Berwick also announced Tony Trenkle as the acting head of the Office of Information Services. Trenkle had previously been serving as director of the Office of E-Health Standards and Services and will be replaced by Karen Trudel. Additionally, Joe McCannon and Vish Sankaran will serve as senior advisors to Dr. Berwick

On Thursday, December 2, the U.S. Treasury Department released guidance for The Affordable Care Act’s Small Business Tax Credit. The changes included are intended to make it easier for companies to apply and qualify for the tax credit. The Congressional Budget Office estimates that the tax credit could save small businesses as much as $40 billion dollars by 2019. The credit is available to businesses with less than 25 full-time employees, whose annual wages average to below $50,000 and that also pay at least 50 percent of their employees’ insurance premium costs. Among the new changes announced by the Treasury is the ability for employers to use a new one-page IRS form (Form 8941) to claim the credit for the 2010 tax year and also the allowance for employers who use a range of arrangements to pay for their workers’ coverage to be eligible for the credit.

According to a November 30 report released by the Employee Benefit Research Institute, medical costs for retirees fell in 2010. Some of these decreased costs were attributed to changes in Medicare prescription drug costs given by the healthcare law. Despite these lower costs, the study found that for a 65-year-old man to retire in 2010 with a 50 percent chance of having enough money saved for health expenses, he would need $65,000 in savings, and a woman in the same circumstances would need $93,000. Additionally, in order to have a 90 percent chance of having enough money to cover expenses, the report suggests that men with average health care expenditures should have $124,000 set aside, while women would need $152,000.

On November 29, CMS released its final rule on Section 6003 of the Patient Protection and Affordable Care Act, which amends the Stark Law. The Stark Law currently prohibits physicians from referring patients for certain designated services to any entity in which the physician or the physician’s family has a financial interest. The new changes will require physicians who refer beneficiaries for in-office MRIs, CT and PET scans to provide patients with a list of at least five other suppliers of these tests in the area. The rule also specifies that a written notice of other supplies must be provided each time a referral for a MRI, CT or PET scan occurs.
 
 

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On Monday, November 29, the Senate failed to repeal the new tax reporting rules of the Patient Protection and Affordable Care Act (PPACA) even though both Democrats and Republicans agreed they needed to be abandoned to prevent businesses from being overwhelmed with undue tax paperwork. Caught in a partisan dispute over how to proceed with eliminating new tax reporting rules, the Senate twice was unable to reach an agreed-upon threshold of 67 votes to eliminate the provision. Senate officials said they expected that another vote on repeal would come soon.

On Monday, November 22, Judge David Dowd of the U.S. District Court for the Northern District of Ohio issued a split ruling in a case brought by the conservative U.S. Citizens Association. Dowd rejected three claims but agreed to hear arguments that the law's individual mandate — the requirement that people buy insurance — violates the Constitution's Commerce Clause. In his ruling, Dowd made clear that he expects the Supreme Court to get involved. This decision marks the third time a legal challenge to the Patient Protection and Affordable Care Act has been allowed to go forward.

The New York Times reported this week (November 26) that officials are bracing for the possibility that Judge Henry E. Hudson of Federal District Court in Richmond may rule that the Affordable Care Act is unconstitutional. Judge Hudson has promised to rule by the end of the year on the constitutionality of the law's individual mandate.

Rep. Joe Barton (R-Texas) wrote to CMS Administrator Donald Berwick requesting that he brief the House Energy and Commerce Committee before the end of the lame-duck session. In his letter, Rep. Barton said he was glad to see Berwick testify before the Senate Finance Committee, but his time there was too short.

In a different letter to Dr. Berwick this week, The Medicare Payment Advisory Commission (MedPAC) argued that accountable care organizations (ACOs) should face financial risk if doctors, hospitals or other providers fail to manage quality and costs. MedPAC suggested that Medicare create a "two-sided" risk, one that offers a bonus for achieving cost and quality goals, but also “leaves providers on the hook if costs exceed targets.” The general idea would be for the ACOs to bear some risk for the costs of patients they treat.

The Centers for Medicare & Medicaid Services (CMS) will reduce cardiac PET (positron emission tomography is a form of diagnostic imagining) reimbursement by 23 percent, effective January 1, 2011, as part of its final rule for the Hospital Outpatient Prospective Payment System (HOPPS) and Ambulatory Surgical Center services.

As the National Committee for Quality Assurance (NCQA) determines precisely how a well-run accountable care organization ought to function, the National Association of Chain Drug Stores is urging policymakers to remember the role of pharmacists in care coordination and cost control. In comments to the NCQA, the association said model ACOs should include pharmacists on its list of key stakeholders, governing body members and patient-care teams.

Congress agreed Monday (November 29) to a one-month delay in Medicare payment cuts to doctors, giving a short-term reprieve to a looming crisis over treatment of the nation's elderly. In approving the bill passed by the Senate earlier this month, Congress postponed a 23 percent cut in doctors' pay scheduled to take effect December 1.

The Wall Street Journal reports this week that hospitals and doctors around the country, spurred by incentives in the federal health-overhaul law, are beginning to create new entities that aim to provide more efficient health care. Some critics are raising concerns that the new organizations may risk increasing costs, particularly when they involve hospitals bulking up through mergers, acquiring doctor practices, or hiring more doctors to better coordinate care.

Republicans have been fighting the PPACA in the court, with congressional actions to withhold funding, and by engaging their allies in the states to resist its implementation. They are now planning to use another tool to prevent the implementation of PPACA: the rarely used Congressional Review Act (CRA), a 1996 law that gives Congress a narrow window in which to kill a regulation after it’s been proposed by an agency.

Rep. Gary Ackerman (D-NY) is offering a series of six bills that would roll back key portions of the law, including prohibitions on barring pre-existing conditions, lifetime insurance limits, expanded dependant coverage, and banning the practice of insurance companies dropping sick customers. Ackerman is calling the package of repeals HIPA-CRIT (Health Insurance Protects America - Can't Repeal It). Rep. Ackerman favors health reform and says he is offering these bills to give Republicans a chance to do what they promised. He suggested that Republicans would not dare to vote to do away with them despite their campaign promises. 
 

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On Monday, November 22, 2010, the Department of Health and Human Services (HHS) issued its long-awaited regulations on medical payouts required under the health care law, a standard known as the medical loss ratio (MLR). The new rules say that HMOs must spend 80% (for individuals) or 85% (for groups) of all premium dollars, net of taxes, on health care. So if one pays $15,000 a year for family coverage, on average, $12,000 must go to doctors, pharmacies, hospitals, or for other care. The rest can be spent on insurance company marketing, overhead, and profits. If these MLRs are less than 80% or 85%, HMOs must provide a refund to their plan members. HHS Secretary Kathleen Sebelius estimates 9 million people will get refunds under the MLR rules next year. The rebates may aid Democrats attempting to fend off Republican attacks on the Patient Protection and Affordable Care Act (PPACA).
 
Sen. Olympia Snowe (R-Maine), the only Republican senator to vote for a version of President Obama's health care bill, has signed onto an amicus brief challenging the law's individual mandate in the federal court in Florida. Sen. Snowe was joined by Sen. Susan Collins (R-Maine) in the effort lead by Senate Minority Leader Mitch McConnell (R-Ky.), who has now secured the signatures of 32 Senate Republicans.

Sens. Ron Wyden (D-Ore.) and Scott Brown (R-Mass.) introduced the “Empowering States to Innovate Act.” The legislation would allow states to develop their own health care reform proposals that would preempt the federal government’s effort. If a state can think of a plan that covers as many people, with as comprehensive insurance, at as low a cost, without adding to the deficit, the state can get the money the federal government would have given it for health-care reform but be freed from the individual mandate, the exchanges, the insurance requirements, the subsidy arrangement, and more.

HHS is awarding $8 million in federal funding from PPACA for existing community health center cooperatives. According to HHS, the organizations may use the funding for, among other things, meaningful-use health IT. Starting in 2011, the Health Information Technology for Economic and Clinical Health (HITECH) Act will spend $36 billion+ to encourage providers to use health IT such that their electronic medical records meet the government’s test for “meaningful use.”

On Tuesday, November 16, officials at CMS launched the Center for Medicare and Medicaid Innovation (CMI) that aims to fulfill the goals of improving individual care, coordinating between providers, and promoting prevention. The launch involved a stakeholder meeting including representatives from the health care industry, consumers, states and employers. The goal is to improve care in settings such as hospitals, nursing homes, and doctors' offices while also addressing chronic issues such as obesity and heart disease. CMS also announced the beginning of new demonstration projects that will support efforts to better coordinate care and improve health outcomes for patients.

Eight months into the new law there is a growing frenzy of mergers involving hospitals, clinics and doctor groups eager to share costs and savings, and cash in on the incentives. They have deployed a small army of lawyers and lobbyists trying to persuade the Obama administration to relax or waive a body of older laws intended to thwart health care monopolies, and to protect against shoddy care and fraudulent billing of patients or Medicare.

On Wednesday, November 17, CMS Administrator Donald Berwick testified before the Senate Finance Committee, reflecting his strong support for PPACA, but the expected fireworks never materialized as Republicans were given only a few minutes to ask questions and treated Berwick gently.

At least two newly elected House Republicans say they won't accept the congressional health insurance program, just days after Democrats highlighted that the new members campaigned on repealing the health care reform law. Another freshman Republican, Andy Harris of Md., has complained about the length of time it will take for his new coverage to take effect, prompting additional pressure from Democrats who want to see reform naysayers forfeit their federally provided insurance coverage.

Next Thursday, The Alliance for Health Reform will hold a discussion titled “The Health Workforce Dream Team: Who Will Provide the Care?” This briefing will explore the question of how to ensure enough health care workers given the growing, aging population and its ever-increasing chronic care needs.  Next Thursday and Friday, the Office of the National Coordinator for Health Information Technology will hold a Web meeting on standards, implementation specifications and certification criteria for the electronic exchange and use of health information for purposes of adoption, consistent with the implementation of the Federal Health IT Strategic Plan.
 

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On Wednesday (11/10), an official with the National Governors Association told insurance executives at a conference hosted by America's Health Insurance Plans that the challenges states face in creating health insurance exchanges, coupled with the changed political landscape, may lead a number of states to delay legislative action to create health care marketplaces until 2012. In keeping with this prediction, this week, Wisconsin's Governor-elect Scott Walker (R) asked outgoing Governor Jim Doyle (D) to temporarily freeze any new implementation of the federal health care law, including the establishment of exchanges. After Walker is inaugurated, Wisconsin will join 20 states in the lawsuit filed in the Northern District of Florida to stop the health care reform.

Friday (11/12) was the deadline to request permission to submit amicus briefs in the case of State of Florida v U.S. Department of Health and Human Services (the 20-state legal challenge to the health care reform law). U.S. District Judge Roger Vinson granted requests by Senate Minority Leader Mitch McConnell (R-KY) and seven other Republican U.S. senators, Rep. John Boehner (R-OH), Minnesota Gov. Tim Pawlenty (R), and 35 organizations. The organizations side with the Obama administration, arguing that health reform is “essential to constraining the growth of health care spending and providing security to all Americans.” The Republican officials argue that Congress does not have the legal authority to "regulate commerce" by taxing the absence of having health insurance.

Some Republican officials at the state level have vowed to do everything in their power to resist implementation of the Patient Protection and Affordable Care Act (PPACA). Two states, Alaska and Minnesota, have refused to apply for Affordable Care Act grant funding to begin designing exchanges. Some states have refused to participate in other reform components, like insurance programs for high-risk individuals. An article in Time argued that state opposition may not have the desired effect – it may invite more federal control over the implementation of reform in states where leaders do not implement PPACA.

Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee and a leading architect of the reform law, vowed Friday to introduce legislation killing a part of PPACA that imposes new tax-filing requirements on small businesses. Sen. Baucus said a provision requiring businesses to report more purchases to the IRS will impose undue paperwork on companies at a time when they can least afford it.

HHS announced Monday (11/15) a slight relaxation of rules issued in June implementing the health care legislation. Consistent with President Obama’s promise that, “if you like your health plan, you can keep it,” the law says health plans that were in existence when the law was enacted are exempt from some of its requirements. The law left to the administration the decisions of how much a health plan could change without forfeiting the exemption. The U.S. Departments of Health and Human Services, Labor, and Treasury issued a regulation in June, which said employer group health plans would lose their grandfathered status if they changed insurance companies. Only self-funded plans, mostly at large companies, would have been able to switch insurance administrators without losing the grandfathering protections. Under the change announced Monday (11/15) though, employers can now shop around and switch insurers without having to come under the new rules, as long as they do not make other big changes to their benefits.

Finally, last Wednesday (11/10), the National Commission on Fiscal Responsibility and Reform released a proposal for reducing the national debt. Among the possible solutions offered was creating a public health insurance option. The draft by the co-chairmen of the White House-sponsored National Commission on Fiscal Responsibility and Reform calls for, among other things, increasing cost sharing for enrollees of Medicare and Medicaid, lowering payments to health-care providers that participate in Medicare, and cutting payments to lawyers as part of an effort to curb medical malpractice lawsuits.

This Wednesday (11/17), the Senate Finance Committee will hold a hearing entitled Strengthening Medicare and Medicaid: Taking Steps to Modernize America’s Health Care System. Congressional Quarterly reports that members of the Senate Finance Committee are eager to ask questions of Donald M. Berwick, Administrator of the Centers for Medicare and Medicaid Services (CMS), at his first congressional hearing as Medicare chief. On Friday (11/19), the Office of the National Coordinator for Health Information Technology Policy Committee will meet to hear reports from its workgroups. Next Monday (11/22), the National Academy for State Health Policy will hold a webcast titled "State to State Exchange on Health Insurance Exchanges." The webinar is an opportunity to hear directly from two states (Maine and West Virginia) about where they currently stand on key exchange design issues.
 

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In the week following the midterm elections, House and Senate Republicans have made known their intent to “repeal and replace” the Patient Protection and Affordable Care Act (PPACA). Senate Minority Leader Mitch McConnell said Republicans in Congress should “repeatedly” seek votes on “straight repeal” of Democrats’ health care overhaul. He said that because Republicans could not expect the president to sign off on repeal, they would have to work in the House to deny funds for implementation and in the Senate on votes against its “most egregious provisions.” Rep. John Boehner (R-OH), who is expected to be the next speaker of the House of Representatives, vowed on Wednesday to repeal health care reforms signed into law by President Obama.  

In last week's elections, Republicans added ten medical professionals to the House and two to the Senate.  

Even with the House changing hands and more Republican governors holding governorships, health insurers, drug companies and hospitals say they are making plans as if the law will stick. President Obama and Senate Majority Leader Harry Reid have both said they are open to “tweaks” of the Affordable Care Act. Notwithstanding this concession, President Obama said, “We’d be misreading the election if we thought the American people want to see the next two years spent re-litigating” the law. A number of sources reported that Republicans are likely to have a difficult time repealing PPACA with President Obama holding the veto pen. While many have taken part in this debate about what will happen to PPACA in Congress, others have advised that we should look, not to Congress, but to the states, as newly elected governors and state legislatures will be charged with carrying out crucial parts of the law and may put pressure on the White House to scale back some plans.

Still, an analysis issued by HHS on Thursday estimates that, under the Affordable Care Act, average savings for those enrolled in traditional Medicare will amount to more than $3,500 over the next 10 years. Further, Peter Orszag warned in a New York Times article, “To Save Money, Save the Health Care Act,” that many of the provisions the Republicans want to reform are the ones that will save the country money. Though PPACA may help to save money in some areas, the Director of the Congressional Budget Office said in a letter to Rep. Ryan (R-WI) on Thursday that PPACA would raise the costs of prescription drugs.

Also on Thursday, the United States Department of Health and Human Services (HHS) said states will be able to receive federal dollars to cover 90% of design and development costs and 75% of operating and maintenance costs of Medicaid eligibility systems. In addition, the Centers for Medicare & Medicaid Services and the Office of Consumer Information and Insurance Oversight at HHS have made available "initial technical guidance" to help states with the design, development and implementation of new or improved IT systems for state Medicaid, children's health insurance and the new health insurance exchange programs.

A Grant Thornton survey, whose results were released last Monday, showed that nearly 1/3 of CFOs in the United States are eyeing health care cuts for their work force. In addition, 30% plan on cutting health care benefits, 23% intend to decrease bonuses and 18% will be reducing stock options and or equity-based compensation. The vast majority, 84%, cited benefits such as health care and pensions as their worst cost guzzlers, up from 68% six months ago.

Finally, the U.S. Supreme Court rejected the first preliminary challenge to PPACA, an appeal from a former Republican state lawmaker in California. It is not yet clear whether the rejection is indicative of the justices' opinion on the case or if the rejection was due to the fact that the case had not yet been heard in the lower courts.
 
 

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Much of the health care news this week focused on the effect the election may have on PPACA. Many think major Republican gains could mean significant hold-ups in the legislation’s implementation, or possibly even repeal. Democratic pollsters warned Republicans that if they interpret the midterm results to be a directive to repeal and replace health care law, they would suffer for it in 2012.

PPACA requires that all states have health insurance exchanges, through which consumers can compare insurance plans and purchase coverage, by the year 2014.  The exchanges are intended to make it simpler for individuals and small companies to buy health insurance and determine if they qualify for PPACA’s tax credits or other state assistance, such as Medicaid.  States see this project as a tremendous undertaking because it requires them to design a system, develop information technology and put it in action in just three years. Due to these concerns, HHS unveiled a new competitive grant program that will give five states money to develop Internet-based insurance exchanges. Funding will go to states that are willing and able to lead the race in developing IT systems that can support this activity.

HHS said it will award nearly $30 million in consumer assistance grants to help states and territories either establish or strengthen programs that provide direct services to patients related to their health insurance.  HHS Secretary Kathleen Sebelius announced the grants to 35 states, four territories and the District of Columbia at a news conference.
Donald M. Berwick, administrator for the Centers for Medicare & Medicaid Services said recently that the planned Center for Medicare and Medicaid Innovation (CMI) has the potential to be the “jewel in the crown” of the Patient Protection and Affordable Care Act.  The CMI, established by PPACA and expected to be in place by January, will be dedicated to testing innovative approaches to improving healthcare delivery, payment and quality.

HHS also announced this week 1) nearly 700 additional employers and unions will receive help providing coverage to early retirees and their families, bringing the total number of organizations participating in this program to nearly 3,600; 2) the availability of up to $335 million to boost access to primary health care in community health centers; and 3) the availability of $3.9 million to support families of children with special health care needs.

A panel of experts advising the government will meet in November to begin considering what kind of family planning preventive care should be covered for women at no cost to the patient, as required under PPACA. Sen. Barbara Mikulski (D-MD),  author of the women's health amendment, says the clear intent was to include family planning. The debate is over whether birth control should be considered preventative medicine. U.S. Catholic bishops and the National Catholic Bioethics Center argue that pregnancy is not an illness, but rather a healthy condition, and that birth control is not a form of health care, but rather a lifestyle choice. Planned Parenthood is leading the free birth control initiative.
 
 

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 Last Monday, a federal judge in Virginia said he would rule before the end of the year on whether the health reform legislation violates the Constitution. The judge conceded that his ruling would likely be just a small step on the legislation’s way to the Supreme Court.

HHS said it will award nearly $30 million in consumer assistance grants to help states and territories either establish or strengthen programs that provide direct services to patients related to their health insurance. HHS Secretary Kathleen Sebelius announced the grants to 35 states, four territories and the District of Columbia at a news conference.

Donald M. Berwick, administrator for the Centers for Medicare & Medicaid Services said this week that the planned Center for Medicare and Medicaid Innovation (CMI) has the potential to be the “jewel in the crown” of the Patient Protection and Affordable Care Act. The CMI, established by PPACA and expected to be in place by January, will be dedicated to testing innovative approaches to improving healthcare delivery, payment and quality.

On Thursday, the National Association of Insurance Commissioners endorsed a proposed federal regulation that would guarantee a certain portion of health-insurance premiums are spent on medical care. Insurance companies see the proposed rules as a setback because they did not include any insurance-company-proposed amendments.

On Friday, Reps. Joe L. Barton (R-TX), Michael C. Burgess (R-TX), and John Shimkus (R-IL) wrote Health and Human Services Secretary Kathleen Sebelius with a series of questions about the temporary exemptions from PPACA’s $750,000 floor on annual benefits granted to 30 groups, including McDonalds, Jack in the Box and the United Federation of Teachers Welfare Fund. In their letter, the representatives asked: which companies were granted annual limits waivers and how many employees would be affected, whether any companies were denied such a waiver, whether any companies have asked for a medical loss ratio waiver and whether any were granted, and how the waivers affect the budget outlook for the healthcare reform law since they affect predicted coverage requirements and penalties for non-compliance.

Numerous reporters and commentators continue to point out that while few Democrats are using PPACA as a campaign plank, many Republicans are. There was also some speculation in the news as to whether Republican victories in statehouses next week might lead to more states “climbing on the health care lawsuit bandwagon.”


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