Hot Button Blog: A Bipartisan Government Relations Firm

Last week the House Committee on Ways & Means Health Subcommittee held a hearing on Medicare overhaul proposals affecting post-acute care; the Congressional Budget Office (CBO) wrote to House Budget Committee Chairman Paul Ryan announcing that it will not update its 10-year budget baseline in August, which extends the low cost estimate of the Medicare Sustainable Growth Rate from February; the Medicare Payment Advisory Commission (MedPAC) released its annual Report to the Congress on Medicare and the Health Care Delivery System; proposed rules from the Centers for Medicare & Medicaid Services on exchange, SHOP, premium stabilization programs and market standards were filed; the Arizona legislature passed Medicaid expansion; and the Obama administration decided to stop its attempts to block over-the-counter access to the morning-after contraceptive pill.

ON THE HILL

On June 13, Sen. Ron Wyden (D-Ore.), who could take over the Senate Finance Committee in 2015, announced  that he is planning to tackle Medicare reform by focusing on chronic disease. He suggested that ACOs should be encouraged to specialize in particular chronic conditions.

On June 14, the House Committee on Ways & Means Subcommittee on Health held a hearing focused on reforming payment for care delivered after a hospitalization in the Medicare program.

On June 12, Sens. Marco Rubio (R-Fla.) and Orrin Hatch (R-Utah) offered several immigration amendments, one of which would limit immigrants’ access to health subsidies under the Affordable Care Act. Immigrants who came to the United States illegally and go through the legalization process would be prevented from getting these subsidies for five years after they receive green card status.

The Federal Bureau of Investigation (FBI) is beginning to pay attention to congressional staffers in its pursuit of tracking down the connection between the Medicare Advantage rate announcement and Wall Street's early knowledge of it.

AT THE AGENCIES

On June 13, the Congressional Budget Office wrote to Chairman of the Committee on the Budget Paul Ryan saying that it will not update its 10-year budget baseline in August. This is a positive development for providers because it means the lower price of replacing the Medicare SGR unveiled in February will run through November.

The Centers for Medicare and Medicaid Services (CMS) will be publishing a proposed rule on Exchange, Shop, Premium Stabilization Programs, and Market Standards on June 19.  The proposed rule provides financial integrity and oversight standards with respect to Affordable Insurance Exchanges; Qualified Health Plan issuers in federally facilitated exchanges; and states with regard to the operation of risk adjustment and reinsurance programs. It also proposes additional standards with respect to agents and brokers.

Surgeon General Regina Benjamin announced that she plans to leave the position she has held since 2009. The Deputy Surgeon General, Boris Lushniak, will be the acting surgeon general while a replacement is sought.

On June 10, the IRS issued final regulations to implement the ACA's tax on indoor tanning beds. The Affordable Care Act includes a 10 percent tax on the use of tanning beds.

According to data released by CMS, since March 2011, CMS has expelled 14,633 providers from participating in Medicare due to fraud control efforts. The ACA established new screening and review requirements for Medicare participation.

A new report by the Department of Health and Human Services’ Office of Inspector General shows that if the U.S. Medicare program had paid the lowest rates negotiated by private insurers for lab tests instead of Medicare rates, $1 billion would have been saved in 2011.

On June 13, the Medicare Payment Advisory Commission issued its Report to Congress: Medicare and the Health Care Delivery System is available here.

IN THE STATES

On June 13, the Arizona legislature approved Medicaid expansion legislation. On June 17, Gov. Jan Brewer signed the legislation into law.

Democrats in the Pennsylvania legislature are doing everything they can to force a vote on Medicaid expansion. On June 10, Democrats tried to offer a Medicaid amendment to the state budget to this effect, however the House declined to allow a vote on the proposal. Meanwhile, Governor Corbett continues to negotiate with the Obama administration. On June 12, a coalition of 120 groups brought a delegation of medically vulnerable uninsured Pennsylvanians to Harrisburg to tell their personal stories and urge the legislature and Governor Corbett to expand the state’s Medicaid program.

On June 10, Colorado, which is one of only 16 states setting up its own health insurance marketplace, named 58 organizations to make up the state’s “assistance network” for health marketplace enrollment.

The Ohio Department of Insurance announced that it predicts health insurance premiums in 2014 to rise by 88 percent. The department estimated that the average individual premium will increase from $223 per month to $420 per month under the ACA. A study from Milliman last week suggested a similar outlook, arguing that individual premiums will increase between 25 and 40 percent under the ACA. The announcement was made shortly before President Obama announced the lower-than-expected premium rates in California.

On June 7, Alabama Gov. Robert Bentley signed an executive order to create a commission to review the Medicaid pharmacy program and make recommendations on how to contain the costs in the $600 million program. The commission is to report back to Gov. Bentley by December 1. The governor remains opposed to Medicaid expansion in his state.

Mississippi’s current Medicaid program is set to expire on July 1. Partisan disagreement over Medicaid expansion is keeping the state from moving forward on any Medicaid legislation, putting Mississippi’s current Medicaid population at risk. Democrats in the state want a vote on expansion. Republicans, on the other hand, want to reach a deal with Democrats on Medicaid reauthorization without voting on extension before the vote.

According to Gov. Neil Abercrombie’s office, HHS and CMS have approved Hawaii’s health insurance marketplace plans.  Hawaii’s online marketplace is called the Hawaii Health Connector.

On June 12, the Maine House passed a Medicaid expansion plan that would allow the state to expand Medicaid for three years, while the federal government covers the full cost.  At that point, legislators would have to vote to renew it.  Gov. Paul LePage has said he will veto this legislation.  The plan passed the House 97-51 – had there been two more votes in its favor, it would have had enough support to override the governor’s veto.

Oregon Gov. John Kitzhaber signed legislation designed to address regulatory issues related to biological medicine interchangeability.  While the U.S. Food and Drug Administration (FDA) oversees approval of biologic medicines, policies governing whether one product may be substituted in place of a doctor’s prescription and whether a pharmacist must notify a consumer are covered by state law.

California Insurance Commissioner Dave Jones is seeking to prohibit Anthem Blue Cross from operating on the state’s health exchange for small businesses because of its excessive, repeated rate hikes.

IN THE WHITE HOUSE

On June 7, President Obama made a speech in California touting the benefits of the ACA and encouraging the uninsured to enroll.  California is a crucial state for enrollment with its nearly six million uninsured individuals.  It is also the largest insurance marketplace in the United States.

IN THE COURTS

On June 11, the Obama administration decided to stop its attempts to block over-the-counter access to the morning-after contraceptive pill.  The Justice Department will now begin putting into effect a judge’s order to have the FDA certify the drug for nonprescription use, rather than appealing the judge’s ruling.

IN THIRD PARTIES

Enrollment in Medicare Advantage plans increased by close to 10 percent in 2013 compared with 2012, according to a Kaiser Family Foundation/Mathematica Policy Research study released June 10.

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

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Discussions around reforming Medicare’s sustainable growth rate (SGR) continued this week as the Committee on Energy & Commerce held a hearing to solicit input on a draft bill for replacing the current SGR formula; the Ways and Means Committee noticed a hearing on post-acute care reform for Friday 6/15; the House of Representatives approved track and trace legislation; Dr. Gilfillan’s departure from the Centers for Medicare & Medicaid Innovation (CMMI) became public; CMS released average estimated submitted charges for 30 hospital outpatient procedures; Michigan Gov. Snyder pushed state legislators to approve Medicaid expansion in the state and the Maine state House voted for expansion.

ON THE HILL

On June 5, the House Energy & Commerce Committee held a hearing to solicit input on a draft bill for replacing the current Sustainable Growth Rate (SGR) formula. The draft bill suggests pay stability until quality measures are developed for an outcomes-based pay system.

On June 3, the House of Representatives approved a track and trace bill, which legislates how the federal government will track prescription drugs moving through the distribution chain, aiming to prevent counterfeit drugs from reaching consumers.

Republicans in the House are planning to try to pass a revamped bill on the ACA’s high-risk pool later this month. House Majority Leader Eric Cantor (R-Va.) sent a memo to his Republican colleagues saying that the House would try to pass a bill in June that would kill the Prevention and Public Health Fund. The Helping Sick Americans Now Act has been reworked from earlier this spring so that it will repeal the Prevention and Public Health fund without boosting funding for the Pre-existing Conditions Insurance Plan, and it will transfer funding only to state-based pools.

Senators Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.) say that despite a recent federal ruling affirming that Medicare data should be available to the public and federal efforts to make some data publicly available, much more still needs to be done to make Medicare claims data fully transparent. The two plan to reintroduce the Medicare Data Access for Transparency and Accountability Act (Medicare DATA Act), which would require the Secretary of HHS to issue regulations to make available a searchable Medicare payment database that the public can access at no cost.

On June 5, House Democrats met with the White House’s communications adviser for health care, Tara McGuinness, about enrollment in the law's marketplaces.

On June 5, Rep. Raul Labrador (R-Idaho), who is a member of the "Gang of Eight" working on immigration reform, informed his colleagues that he would not be able to sign on to the legislation the group plans to introduce soon. He will be leaving the group because he is concerned that the bill will not protect taxpayers from having to cover the costs of undocumented immigrants’ health care.

On June 4, Sen. Marco Rubio proposed The Right to Refuse Amendment, a constitutional amendment that would undo the individual mandate requirement of the Affordable Care Act. The proposed amendment would declare that "Congress shall make no law that imposes a tax on a failure to purchase goods or services." It is not expected that this symbolic proposal will get much traction.

AT THE AGENCIES

On June 3, it became public news that Dr. Richard Gilfillan, who has led the Center for Medicare and Medicaid Innovation since its creation in 2010, will leave his position as director at the end of June. Patrick Conway, who is CMS’ CMO and director of the Center for Clinical Standards and Quality, will serve as acting director of CMMI in addition to his other roles.

On June 3, CMS released average estimated submitted charges for 30 hospital outpatient procedures, revealing big differences among hospitals in how much they bill patients for the same service. This data follows CMS’ recent disclosure of pricing for 100 common hospital inpatient procedures.

On June 4, at a hearing before the House Education and the Workforce Committee, Health and Human Services (HHS) Secretary Sebelius said that she spoke with companies her department is responsible for regulating about supporting, but not funding, enrollment organizations linked to the Affordable Care Act.

Two IRS officials – Fred Schindler and Donald Toda – responsible for implementing the Affordable Care Act have been placed on administrative leave due to their acceptance of free food and gifts.

Several publications flagged the discovery this week that Secretary Sebelius, as well as other officials at the Department of Health and Human Services and the Department of Labor, use secret email addresses not usually disclosed to the public. The Associated Press published one of Sec. Sebelius’ email addresses despite a request from her aides not to make it public.

Two HHS agencies – the Office of the National Coordinator for Health Information Technology and the Office of the Assistant Secretary for Planning and Evaluation – announced they are partnering together to develop a data-sharing plan for outcomes research. The Affordable Care Act made close to $200 million available for building this infrastructure.

IN THE WHITE HOUSE

On June 3, the Obama administration unveiled new initiatives aimed at reducing the stigma of mental illnesses. President Obama discussed bringing mental illness "out of the shadows" at a White House conference on psychological health included in a wider campaign to reduce gun violence. Also during the conference, Secretary Sebelius said that HHS officials want to finish clarifying the parity act, which would cover mental health services on a par with physical health care, by the end of the year.

IN THE STATES

Gov. Rick Snyder is prodding Michigan state lawmakers to approve Medicaid expansion in the state before the legislature’s recess begins on June 27. Snyder invited Sec. Sebelius to meet with Republican lawmakers to consider a House GOP proposal that would put a four-year lifetime cap on able-bodied adults to be on Medicaid.

On June 4, the D.C. Council voted unanimously for temporary legislation that mandates small-business owners to purchase employee health insurance through a government-run exchange. This mandate will not take effect until 2015. The temporary legislation, however, will expire in October 2014, so we expect the debate over a small-business owner mandate to reemerge then.

Pennsylvania Governor Tom Corbett wrote to Sec. Sebelius requesting an exemption to prevent close to 70,000 Pennsylvania children in the Children's Health Insurance Program (CHIP), a state-subsidized health insurance program, from having to switch to Medicaid. Community Legal Services of Philadelphia, a public interest law center, is disputing Corbett's claims.

On June 4, the Maine House approved a bill to expand the state’s Medicaid program. The amended version says the state can opt out of the Medicaid expansion if the federal government fails to live up to its promises to cover most of the cost of the added Medicaid spending.

This week, five health insurance firms announced they plan to sell insurance in Arkansas’ health insurance marketplace – Arkansas Blue Cross Blue Shield of Little Rock, National Blue Cross Blue Shield Multi-state Plan, QCA Health Plan of Little Rock (does business as QualChoice of Arkansas), Celtic Insurance Co. of Chicago (through its subsidiary NovaSys Health), and United Security Life & Health Insurance of Bedford, Ill.

IN THE COURTS

At least three circuit courts of appeal have heard oral arguments on the ACA’s contraceptive coverage requirement in the past few weeks. The cases arose when businesses challenged the requirement that they provide contraceptives to employees in their health plans. We expect that any party that loses one of these cases will appeal the ruling to the Supreme Court. The Supreme Court is more likely to consider the issue if there are split decisions in the circuit courts. Another, and possibly riskier threat to the ACA, is the set of cases that argue the Internal Revenue Service is unlawfully implementing some subsidies to help individuals buy insurance since the law as written only authorizes the agency to provide subsidies to those in exchanges “established by the state.”

IN THIRD PARTIES

Because 14 states have decided not to expand Medicaid, a study in Health Affairs, which ultimately argues that states should expand their Medicaid program, estimates that 3.6 million fewer people will get insurance, with a total of 27.9 million people uninsured, and federal payments to the state could decrease by $8.4 billion.

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

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Following the I-5 bridge collapse in Washington and the Baltimore train derailment, expect a medley of Congressional hearings, investigations and proposed legislation to address the shortcoming of the national infrastructure and what should be done to ameliorate deteriorating transportation systems. The Senate Committee on Appropriations is the first to schedule a hearing on the bridge collapse. Department of Transportation Under Secretary for Policy Polly Trottenberg and Federal Highway Administrator Victor Mendez will testify on June 13. Rep. Janice Hahn (D-Calif.) has requested the House Transportation and Infrastructure Committee, of which she is a member, to hold a hearing on bridge safety as well.

The Institute on Taxation and Economic Policy has found that since 2011, federal, state and local gas taxes as a share of total gas prices have remained static at about 14 percent. Despite this finding, polls show that voters believe higher taxes are driving total gasoline taxes up and not, as is truly the case, the cost of crude oil.

ON THE HILL

Sen. Frank Lautenberg (D-N.J.) passed away on Monday. Sen. Lautenberg was in his fifth term as senator, and became the 300th senator to die in office. He served on the Committee on Appropriations, the Committee on Commerce, Science, and Transportation, and the Committee on Environment and Public Works. He was the Chairman of the Commerce Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security.

H.R. 2217, the Department of Homeland Security Appropriations Act for FY2014, passed the House. The bill includes $38.9 billion in discretionary funding for the Department of Homeland Security (DHS), $617 million less than was enacted in FY2013 and $34.9 million less than the president requested. The bill would appropriate $5.6 billion for emergency disaster aid, $5.4 billion for Immigration and Customs Enforcement, $7.2 billion for the Transportation Security Administration, $9.9 billion for the Coast Guard, and $10.6 billion for Customs and Border Protection. The House Appropriations Committee passed the bill on May 22, and the Obama Administration issued a veto threat Monday. The Office of Management and Budget noted several areas of contention between the Obama Administration and House bill, but lauded the bill’s disaster relief spending, “including $595 million for base program activity and $5.6 billion provided as a disaster relief cap adjustment made pursuant to the Budget Control Act of 2011,” and cybersecurity funding, “including the EINSTEIN program and continuous monitoring of Federal networks for malicious cyber activity.” OMB objects to lack of additional Customs and Border Patrol officers, the use incremental funding for Coast Guard acquisition of National Security Cutter (NSC)-7 and NSC-8, and other provisions.

The House Transportation and Infrastructure Committee will hold a hearing titled “The Importance of the Northeast Corridor” tomorrow in New York. Amtrak President and CEO John Boardman, Regional Plan Association Executive Director Bob Yaro, New York Department of Transportation Commissioner Joan McDonald, and Drexel University President John Fry will testify. Later today, several members of the committee intend to ride Amtrak to New York for the hearing.

On May 30, the House Transportation and Infrastructure Committee’s Panel on 21st Century Freight Transportation held a hearing titled “How Southern California Freight Transportation Challenges Impact the Nation” in San Bernardino, Calif. Several witnesses requested that Congress create a trust fund to finance infrastructure improvements to causeways and rail lines in Southern California, using U.S. Customs revenue, Harbor Maintenance Trust Fund revenue or increased gasoline taxes. Witnesses justified the need for this influx of federal spending due to the large proportion of goods shipped through the Ports of Los Angeles and Long Beach and the toll that it takes on infrastructure.

Rep. John Delaney (D-Md.) has introduced H.R. 2084, the Partnership to Build America Act of 2013, along with 13 Republican and 13 Democrat cosponsors. The bill would create a $50 billion national infrastructure bank that would be funded by repatriated overseas tax income. The bank would sell 50 year bonds at a 1 percent interest rate, and American companies would be allowed to repatriate assets tax-free from overseas for every dollar invested in bonds.

Several aviation trade associations, including the U.S. Contract Tower Association, National Air Transportation Association, and Air Traffic Control Association, have written House Appropriations Chairman Hal Rogers (R-Ky.) requesting $150 million in dedicated funding for the contract tower program, including $10.35 million authorized for the continuation of the contract tower cost sharing program. While the FAA has received sufficient funding to continue funding contract towers for the remainder of the fiscal year, Congress has not passed any legislation to stem the effects of sequestration on the FAA Contract Tower Program in FY2014 and beyond.

Rep. Mark Sanford (R-S.C.), who recently won a special election, has been selected to fill the final vacancy on the House Committee on Transportation and Infrastructure.

AT THE AGENCIES

Amtrak CEO and President Joe Boardman has signed a two-year contract extension to continue leading Amtrak into 2015.

Transportation Secretary LaHood has stated that he will remain in office until Mayor Anthony Foxx’s confirmation is complete. Mayor Foxx had a mild confirmation hearing and is widely expected to be confirmed, but Sen. John Thune (R-S.D.), Ranking Member of the Commerce Committee, has requested that the FAA provide information with respect to further sequestration plans. The Department of Transportation submitted information to Sen. Thune Monday night, and he is weighing if it is satisfactory.

Secretary LaHood has named the members of the National Freight Advisory Committee. The Advisory Committee, created by the Moving Ahead for Progress in the 21st Century Act (MAP-21), comprise 47 voting members from outside the Department of Transportation. By statute, members serve two-year terms and meet at least three times per year. Notable members include Philadelphia Mayor Michael Nutter, former Deputy Secretary of Transportation Mort Downey, former NHTSA Administrator Joan Claybrook, and Teamsters General President James Hoffa. The National Freight Advisory Committee will provide recommendations to the Department of Transportation regarding national freight transportation programs and policy. The first meeting will be held on June 25.

The National Transportation Safety Board (NTSB) is currently investigating the I-5 bridge collapse. The NTSB investigation could take as long as a year to complete. The Federal Highway Administration had deemed the bridge “functionally obsolete” although not “structurally deficient.” This distinction indicates that the bridge does not conform to current design standards, but it was not considered unsafe.

On May 29, the Federal Transit Administration posted guidelines for nearly $4 billion in Hurricane Sandy relief in the Federal Register for the Metropolitan Transportation Authority, New Jersey Transit Corporation, the Port Authority of New York and New Jersey and the New York City Department of Transportation.

IN THE STATES

California: California’s long-awaited high-speed rail project is now expected to miss its July groundbreaking date due to eminent domain issues, prolonged contractor negotiations, and issues with a late application submitted to the federal Surface Transportation Board (STB). The STB has denied a request to extend the public comment period, and the California High-Speed Rail Authority is now awaiting the STB’s decision on its exemption request from STB jurisdiction. The California High-Speed Rail Authority is currently fighting a suit in Sacramento Superior Court that is seeking to end the project due over a year of delays and projected cost-overruns on the $69 billion project.

Maryland: Governor Martin O’Malley will nominate James T. Smith Jr. as the new transportation secretary. Smith is a former Baltimore County Executive, and the position has remained unfilled for nearly a year following the last transportation secretary’s resignation. As transportation secretary, Smith would implement the recently passed transportation law, which will bring increased revenue and higher gasoline taxes, and major transportation initiatives such as the Purple Line.

New York: The federal Department of Transportation is funding Amtrak $185 million in Hurricane Sandy relief to build an 800-foot concrete tunnel box. The project will serve as a groundwork for two future flood-resistant tunnels beneath the Hudson River between New York and New Jersey. The tunnels of this “gateway” project are estimated to cost nearly $15 billion and be completed in 2025, and add 25 train slots to Penn Station during peak hours.

District of Columbia:The D.C. Council has voted to eliminate the 23.5¢ per gallon gasoline tax in lieu of a new 8.3 percent wholesale gasoline and diesel tax. The change is aimed at protecting the District’s highway fund from market volatility and is estimated to be revenue neutral.

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Medicare Trustees released their annual report finding that the Medicare trust fund will be exhausted in 2026, two years later than was predicted last year; over the past two weeks, as Washington has investigated the Internal Revenue Service’s (IRS) use of targeting, lawmakers have been working to ensure similar targeting cannot occur at the agencies implementing the Affordable Care Act (ACA); with bipartisan support Marilyn Tavenner became the first confirmed Centers for Medicare and Medicaid Services (CMS) Administrator in almost seven years; the House of Representatives voted to repeal the ACA for the 37th time; 17 of the 27 states running their own Preexisting Condition Insurance Plans (PCIPs) decided to let the federal government take control and responsibility; and the Center for Medicare & Medicaid Innovation (CMMI) is starting to accept letters of intent from parties interested in its second round of innovation grants.

ON THE HILL

After a Treasury Department audit found that the IRS had singled out conservative groups for special scrutiny, some lawmakers have been tying the targeting to Affordable Care Act implementation. The House GOP campaign committee launched ads in some districts where Democrats are vulnerable in midterm elections claiming Democrats are planning to “Put the IRS in charge of your healthcare.” The IRS is, in fact, responsible for implementing major pieces of health reform – at least 40 provisions in the ACA add or amend provisions of the tax code. The IRS’s tasks include collecting information on who has insurance from employers and insurers, determining who qualifies for subsidies or Medicaid, and figuring out who must pay a penalty. Notwithstanding the large role the IRS will play in implementing the ACA, the Department of Health and Human Services (HHS) responded to these suggestions saying that “The Affordable Care Act maintains strict privacy controls to safeguard personal information. The IRS will not have access to personal health information.”

Sen. John Thune (R-S.D.) sent a letter to Attorney General Eric Holder and Treasury Secretary Jack Lew requesting they disclose whether Sarah Hall Ingram, the former commissioner of the office responsible for tax-exempt organizations between 2009 and 2013 had “inexplicably been promoted to oversee the IRS’ Affordable Care Act office.” Thune goes on to request that the IRS stop enforcing regulations drafted under Ingram’s supervision and that the IRS cease working on health care law regulations until the Department of Justice confirms that Ingram is not being investigated.

House Ways and Means Oversight Subcommittee Chairman Charles Boustany (R-La.), Rep. Diane Black (R-Tenn.), Rep. Ralph Hall (R-Texas) and Rep. Mike Kelly (R-Pa.) introduced the Stopping Government Abuse of Taxpayer Information Act “to protect Americans from political targeting at all government agencies charged with the implementation and enforcement of the Patient Protection and Affordable Care Act.”

On May 14, the Congressional Budget Office (CBO) released the news that the cost of repealing the sustainable growth rate (SGR) would not be as high as once expected, indicating to many that the momentum behind achieving repeal is likely to continue this year. The Medicare Payment Advisory Committee’s (MedPAC’s) Executive Director said to the Senate Finance Committee that CBO’s reduced cost estimate of repealing the SGR may alter recommendations it has previously made to Congress for transitioning the Medicare payment system. At the time MedPAC made its initial recommendations the estimated cost was $300 billion over 100 years, but the CBO has revised this estimate to $138 billion over 10 years.

The House Ways and Means Subcommittee on Health held a hearing on May 21, in which there was discussion of three ways to utilize beneficiary cost sharing in Medicare in anticipation of a deficit reduction package. The three areas identified as targets for cost sharing were increasing income related premiums for Medicare Parts B and D, increasing the annual Medicare Part B deductible, and establishing a home health copay.

The House of Representatives voted 229 to 195, largely along partisan lines, to repeal the Affordable Care Act for the 37th time. The vote gave some freshmen congressmen their first opportunity to vote for repeal, which will give them the ability to campaign on these grounds as midterm elections near.

Ways and Means Health Subcommittee Chair Kevin Brady (R-Texas) and Ways and Means Oversight Subcommittee Chair Charles Boustany (R-La.) wrote a letter to HHS Sec. Sebelius expressing concern over the potential for privacy violations by health insurance exchange navigators and non-navigator assisters. In the letter, they request further detail on what information these entities will be able to access.

At a House Oversight hearing on May 21, Center for Consumer Information and Insurance Oversight (CCIIO) Director Gary Cohen said he was confident that HHS has authority, despite lack of explicit statutory instructions, to set up navigator and assister programs to help with enrollment in state-based exchanges.

AT THE AGENCIES

On May 31, the Medicare Trustees released their 2013 report, projecting that the trust fund that finances Medicare’s hospital insurance coverage will remain solvent until 2026, which is two years beyond what was projected in last year’s report. The improved outlook can be attributed to lower-than-expected Part A spending in 2012 and lower projected Medicare Advantage program costs. At this juncture it does not appear that action will be triggered from the Independent Payment Advisory Board (IPAB). This report is likely to influence upcoming congressional debates over the debt ceiling, proposals to reduce the deficit and the future of entitlement programs.

On May 31, CMS released a final rule on Small Business Health Options Program (SHOP) exchanges along with an application that provides small employers with easy-to-understand access to health insurance options for their employees.

HHS announced a second round of Center for Medicare & Medicaid Innovation (CMMI) innovation awards, through which up to $1 billion are now available for payment and delivery system models that improve care and lower costs. Specifically, CMMI is seeking proposals in the following categories: Models that are designed to rapidly reduce Medicare, Medicaid and/or CHIP costs in outpatient and/or post-acute settings; models that improve care for populations with specialized needs; and models that improve the health of specific populations through activities focused on engaging beneficiaries, such as prevention, wellness, and comprehensive care that extend beyond the clinical service delivery setting.

On May 15, the Senate approved President Obama’s nominee to run CMS, Marilyn Tavenner. Tavenner is the first confirmed CMS administrator since 2006.

On May 29, implementing a component of the ACA, HHS finalized rules for wellness programs offered through employer health care plans. The final rule closely mirrored the proposed rule. Under the rules, employer health plans may offer rewards to workers who satisfy certain fitness goals. The rule increases the maximum possible reward for successful completion of a health-contingent wellness program from 20 percent to 30 percent of an employee’s premiums.

The Office of Management and Budget (OMB) has begun reviewing final rules on Medicaid, Exchanges, and Children’s Health Insurance Programs; Conditions of Participation for Community Mental Health Centers; Exchange Functions: Eligibility for Exemptions and Miscellaneous Minimum Essential Coverage Provisions; Inpatient Psychiatric Facility Prospective System; and Home Health Prospective Payment System Rate.

The Medicare Fraud Strike Force has found $223 million of alleged Medicare fraud, charging 89 individuals in eight cities , according to the Department of Health and Human Services.

IN THE STATES

The ACA established the Preexisting Condition Insurance Plan (PCIP) to provide health insurance coverage for Americans whose preexisting conditions made them uninsurable in the private market until 2014, when insurance that does not underwrite based on health status will become available. In February of 2013, due to the quick consumption of the program budget, HHS increased cost sharing under the program and suspended new enrollments in the federal program. Last week, HHS informed states that they would have to renegotiate their PCIP contracts and accept limited funding to continue their programs. Concerned that they would get stuck with the tab if they operated these plans themselves, 17 states opted to discontinue their programs and turn their enrollees over to the federal program, while 10 will continue to administer the PCIP in their states.

Two states that had planned to run their own state health exchanges have appealed to the federal government for help. The health insurance board chairmen in Idaho and New Mexico said they could not prepare the computer systems by October 1, 2013 and would need help from the federal government. Thirty-six states’ exchanges will now be run in full or in part by the federal government. New Mexico will run its exchange in partnership with the federal government. Though Idaho will receive assistance from the federal government, Idaho Gov. Butch Otter said it will still be a “state-run exchange.”

Pennsylvania Governor Tom Corbett pushed back last week against the Pennsylvania’s Independent Fiscal Office’s (IFO) report, which claimed Medicaid expansion would provide the state as much as $515 million in savings, revenue or underestimated costs to the state. Bev Mackereth, the Acting Secretary of the Department of Public Welfare, sent a letter to the Independent Fiscal Office explaining that the Department had “serious concerns” about some of the assumptions contained in the IFO report. One of Gov. Corbett’s top aides said that if Pennsylvania is to expand Medicaid, it likely will not happen until January 2015. Mackereth said that the administration would need that much time to negotiate with the federal government and create the program.

Four insurers – Aetna, CareFirst Blue Cross Blueshield, Kaiser Permanente and United Healthcare – are planning to offer almost 300 different health insurance policies through the D.C. Health Benefit Exchange.

On May 23, Maine’s Democratic-controlled legislature passed a bill to expand the state’s Medicaid program. Maine Governor Paul LePage (R) immediately began veto procedures.

IN THE COURTS

On May 16, Liberty University argued before the 4th U.S. Circuit Court of Appeals panel that it would face millions of dollars in penalties if it were to refuse to provide employee health insurance. Providing the required insurance, however, would violate the university’s religious beliefs because it is required to cover contraceptives and other drugs the university argues cause abortions.

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

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On May 17, President Obama issued a presidential memorandum to aid in streamline permitting processes for infrastructure projects.  The memorandum creates a steering committee whose goal is to cut project completion times in half. Among the departments participating are the Departments of Agriculture, Commerce, Defense, Energy, Homeland Security, Interior and Transportation.

ON THE HILL

The Water Resources Development Act of 2013 (WRDA, S. 601) passed the Senate on Thursday by a vote of 83-14. WRDA is estimated to cost $12 billion and provides the U.S. Army Corps of Engineers greater authority in choosing which projects will be pursued. WRDA also streamlines the reviewing and issuance of permits, including environmental permits, for new water projects and authorizes funds for deepening harbors and waterways in preparation for the Panama Canal expansion. WRDA also includes a new program based on the Transpiration Infrastructure Finance and Innovation Act (TIFIA) named the Water Infrastructure Finance and Innovation Act (WIFIA). WIFIA loans and loan guarantees will provide access to low-cost capital for water projects. Finally, WRDA creates a new national levee safety program. Differing from the version passed by the Senate Environment and Public Works (EPW) Committee, an amendment in the final bill would increase Harbor Maintenance Trust Fund (HMTF) funding for port and harbor maintenance $100 million per year for the next six years, starting at $1 billion in FY2014. The EPW version of the bill mandated that all revenues received by the HMTF be used solely for harbor and port maintenance.

Sen. Tom Udall (D-N.M.) withdrew his amendment on Wednesday that would have turned the  streamlining of infrastructure projects into a five-year pilot program. Senate Environment and Public Works Chairwoman Boxer (D-Calif.) and Sen. Udall arrived at a deal that the streamlining provisions would expire after 10 years. Sens. David Vitter (R-La.) and Mary Landrieu (D-La.) withdrew their amendment to suspend flood insurance premiums increases over the next five years after Sen. Pat Toomey (R-Pa.) placed a hold on it.  Sen. Toomey regarded the amendment as a step backwards from flood insurance reform that passed last year. Two amendments from Sen. Tom Coburn (R-Okla.) failed. One was an amendment to strike a provision in WRDA that would increase the time allowed for beach replenishment programs from 50 years to 65. The other would remove restrictions placed on the aforementioned commission to shut down floundering projects so that all Army Corps of Engineers projects are subject to shutdown from the commission.

Of the 14 senators voting nay, only one was a Democrat, Sen. Patrick Leahy (D-Vt.), who objected to the streamlining provisions even with the Boxer-Udall agreement to have them expire after 10 years. Some environmental groups have castigated the streamlining as injurious to environmental surveys. The remaining 13 nays were Republicans. Heritage Action had added the WRDA vote to its influential scorecard based on the premise that the true cost of the bill is over the Congressional Budget Office (CBO) estimation of $12 billion, among other objections. The U.S. Chamber of Commerce endorsed S. 601, and may include it on its annual scorecard. The Obama administration has been critical of the bill. On May 6, the White House released a castigation of WRDA, particularly over its streamlining of new corps projects while a $60 million backlog exists. WRDA does, however, create a commission to deauthorize projects that are no longer feasible or in the federal interest. The House Transportation and Infrastructure Committee will draft its own version of WRDA instead of taking up the Senate bill. Chairman Bill Shuster (R-Pa.) has stated that he will take up WRDA in the summer.

Tomorrow, the Senate Commerce Committee will consider the nomination of Charlotte Mayor Anthony Foxx to Secretary of Transportation.

Seventeen Republicans Senators have written a letter to FAA Administrator Michael Huerta, requesting that he explain why pre-sequester payments were given to FAA employees prior to sequestration cuts. The FAA insists that the payments were not bonuses.

Rep. Earl Blumenauer (D-Ore.) penned an op-ed recently in favor of a national vehicle miles traveled (VMT) tax, lauding Oregon’s VMT pilot program. 

This afternoon, the House Transportation and Infrastructure Subcommittee on Railroads, Pipelines and Hazardous Materials will hold a hearing titled “Understanding the Cost Drivers of Passenger Rail.” Amtrak CEO and President Joseph H. Boardman, among others, will testify.  Testimony and streaming will be available here.

On May 9, Sen. Rand Paul (R-Ky.) introduced S. 911, the Emergency Transportation Safety Fund Act.  The bill would create an emergency transportation fund to repair existing infrastructure, funded by repatriated capital at a repatriation rate of 5 percent. 

On May 7, Sen. Frank Lautenberg (D-N.J.) introduced S. 880, the Safe Highways and Infrastructure Preservation Act of 2013, which would impose an 80,000 lb. limit on the National Highway System. The bill would also render state laws that grant exemptions to such a limit powerless. 

AT THE AGENCIES

President Obama has nominated Michael Whitaker to Deputy Administrator of the FAA.

Maritime Administrator David Matsuda has announced that he is stepping down. He has served as Administrator since 2010.  Beginning at the end of May, interim Deputy Administrator Chip Jaenichen will become the Acting Administrator.

The Department of Transportation announced that it will delay a rule for electronic logging requirements for trucks. The “Electronic Logging Devices and Hours of Service Supporting Documents” rule derived from MAP-21, has been delayed until November 18.

CBO released a new projection for the Highway Trust Fund. After FY2014, when the Moving Ahead for Progress in the 21^st Century Act (MAP-21) expires, the highway account will only have an estimated $4 billion and the transit account will only have an estimated $2 billion. CBO adds that, “Under CBO’s baseline projections, the highway and transit accounts of the Highway Trust Fund will have insufficient revenues to meet all obligations starting in fiscal year 2015. Under current law, the Highway Trust Fund cannot incur negative balances and has no authority to borrow additional funds.”

Yesterday, United Airlines flew a Boeing 787 Dreamliner for the first time in more than four months. The Dreamliner was grounded in January due to a fire caused by its lithium-ion battery. Thus far, Boeing, the FAA and the NTSB have not found a root cause of the fire.  However, Boeing has modified the battery system, the FAA has approved the modifications, the Dreamliner has flown several successful domestic test flights, and the planes have already resumed commercial service overseas.

IN THE STATES

In 39 states, legislators have submitted 85 bills to curb the use of unmanned aerial vehicles, or drones, to protect privacy rights. 

California: The Los Angeles City Council has approved the Southern California International Gateway and its environmental analysis.  The rail yard proposal, however, is mired in controversy, and is expected to be the subject of lawsuits by environmental and social justice groups. The $500 million rail yard proposal would be capable of handling up to 2.8 million 20-foot shipping containers a year by 2035 and 8,200 trucks a day.

Illinois: An audit of the Illinois Department of Transportation has found that in the past two years, less than half of the money spent from the state road fund went directly to road construction costs. The majority of funds expended by the road fund went to Illinois DOT salaries and bond debt. 

Maryland: On May 16, Governor Martin O’Malley has signed the Transportation Infrastructure Investment Act of 2013.  The $4 billion, six-year transportation legislation phases in the higher wholesale gasoline taxes over several years, with the first increase of 1 percent occurring in July and eventually reaching 3 percent in July 2016.  Additionally, it indexes the 23.5¢ per gallon tax on gasoline and 24¢ per gallon on diesel to inflation, allowing automatic increases each year. The increased taxes are expected to generate more than $800 million per year. The law also relies on a federal action to allow states to collect out-of-state sales tax on Internet retailers. If Congress does not pass legislation empowering states to levy this tax by 2015, then Maryland’s sales tax on gasoline will automatically increase an additional 2 percent.

Governor O’Malley has announced $1.2 billion of “first round” in new highway and transit projects to fund.

Virginia: On May 13, Governor Bob McDonnell signed the $6 billion transportation bill into law.  The legislation eliminates the 17.5¢ per gallon retail gasoline tax  and imposes in its stead a 3.5 percent wholesale gasoline tax and a 6 percent tax on diesel. The law also raises titling fees and increases the sales taxes from 5 percent to 5.3 percent. Similar to the Maryland transportation law, it assumes revenues from online sales tax with automatic tax increases if it does not receive that authority from Congress. 

On May 15, the Commonwealth Transportation Board released its working draft of the “Fiscal Years 2014-2019 Six-Year Improvement Program,” which increases transportation funding by $4 billion to $15.4 billion over the next six fiscal years beginning July 1.

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Last week the Senate agreed to vote on Marilyn Tavenner’s nomination to lead the Centers for Medicare and Medicaid Services (CMS); the Department of Health and Human Services (HHS) announced an initiative that will give consumers information on what hospitals charge and posted an initial set of data on CMS’ website; two major Medicare authorizing committees launched significant sustainable growth rate (SGR) reform initiatives; HHS opened the door to a bifurcated exchange approach by allowing Utah to operate its small business exchange itself with the federal government operating the individual exchange; Kentucky Gov. Steve Beshear and West Virginia Gov. Earl Ray Tomblin announced that their states would expand Medicaid; and the Florida legislature closed its session without passing a bill to expand Medicaid.

ON THE HILL

On May 10, the bipartisan leadership of the Senate Finance Committee announced a hearing on May 14 to address ways to reform the SGR, including witness testimony from the Medicare Payment Advisory Commission’s (MedPAC’s) Executive Director Mark Miller, health care consultant and former Government Accountability Office (GAO) analyst Bruce Steinwald, and the Brookings Institution’s Kavita Patel.  It also solicited feedback in an open letter to stakeholders, which asks for specific solutions to improving the Medicare Physician Fee Schedule.  Submissions are due by May 31 to the dedicated mailbox at sgrcomments@finance.senate.gov.

After repeated rejections from Congress for additional funds to set up the Affordable Care Act (ACA), HHS Secretary Sebelius has been reaching out over the past few months to ask health industry executives, community organizations and church groups to make donations to groups like Enroll America that are working to enroll those without insurance and increase awareness of the law.  On May 11, the ranking Republican on the Senate Committee on Health, Education, Labor and Pensions, Sen. Alexander (R-Tenn.), said that Sec. Sebelius’s “fundraising and coordinating with private entities to implement the new health care law may be illegal.”

On May 8, the House Ways and Means Subcommittee on Health discussed ideas for reforming Medicare’s SGR with a group of influential medical practitioners and experts.  Subcommittee Chairman Kevin Brady (R-Texas) said the system "fails to take into account the quality of the care provided or how efficiently that care was furnished."  The committee’s ranking member, Rep. Jim McDermott (D-Wash.) said "we need a policy that rewards quality, not just quantity.  We need a policy that incentivizes team-based, coordinated care, with a strong primary care component."

On May 7, Sen. Tom Harkin (D-Iowa) said he would allow Marilyn Tavenner’s nomination to head CMS to go forward.  He had previously put a hold on Marilyn Tavenner’s nomination because he was upset about cuts the administration had made to the ACA’s prevention and public health fund.  The Senate agreed to vote on Tavenner after an hour of debate, although a specific date for the vote has not been set.

Health care also has taken a place in the immigration debate in which Senators have been engaged.  Part of the debate focuses on the economic impact of allowing undocumented illegal immigrants to become legal immigrants – many lawmakers have expressed concern over the cost of providing Medicare, Medicaid or subsidies for the new health marketplaces to a large group of newly legalized immigrants.  Sen. Orrin Hatch (R-Utah) filed an amendment that would bar the group from receiving ACA subsidies for five years after becoming legal.  Sen. Jeff Flake (R-Ariz.) filed an amendment that would require HHS to ensure those with registered provisional immigration status are not receiving means-tested public benefits and would revoke the registered provisional immigrant status of anyone in that status convicted of fraudulently claiming or receiving federal means-tested benefits.  Other lawmakers are concerned that if this group is denied these subsidies, some of them may get health care in emergency rooms, which could be more costly. 

In response to instances of counterfeit drugs and stolen – and then spoiled – drugs being sold in pharmacies, Congress is working on “track and trace” legislation to help ensure the authenticity and safety of prescription drugs.  Committees in the House and Senate have released draft versions of bills that would require manufacturers to place bar codes on packages of drugs they ship.  The bar codes would be scanned by wholesalers and other middlemen on their way to the pharmacy, at which point the pharmacy would track the drug by its barcode to ensure its authenticity and safety.

On May 7, Rep. Bill Cassidy (R-La.) filed legislation to attempt to create more financial and efficiency accountability for Medicaid funding.  The first version of Rep. Cassidy’s Medical Accountability and Care Act died in Congress last year.

House Majority Leader Eric Cantor (R-Va.) said that the House will vote again to repeal the Affordable Care Act.  The House has already voted more than 30 times to repeal the law, but freshmen congressmen have not yet had an opportunity to vote on the issue.

Conservative House Republicans are exploring options for delaying the Affordable Care Act as part of the debt ceiling fight.  Members of the Republican Study Committee met with the Congressional Budget Office (CBO) to inquire how much savings could be generated from delaying exchange and Medicaid expansion.

IN THE WHITE HOUSE

On May 10 in a Mother's Day-themed event at the White House, President Obama targeted women and young people to promote the benefits of the Affordable Care Act for women – free cancer screenings and contraceptives, among the major perks.  President Obama urged mothers to encourage their adult children to sign up for the health insurance exchanges that open this fall.

On May 9, the Obama administration pledged $150 million for community health centers to provide in-person enrollment assistance to uninsured patients.

AT THE AGENCIES

On May 8, as part of the agency’s efforts to make health care more affordable and accountable, HHS Secretary Sebelius announced a three-part initiative that will, for the first time, give consumers information on what hospitals charge.  New data was released and posted on the CMS website for the 100 most common Medicare inpatient stays, that shows significant variation across the country and within communities in what hospitals charge for common inpatient services.

HHS also announced that it has made about $87 million available to states to enhance their rate review programs and further health care pricing transparency.  The Robert Wood Johnson Foundation, a nonprofit focused on public health issues, is planning a data visualization challenge that would further the dissemination of the data to a larger audience.

IN THE STATES

Notwithstanding the Missouri Governor’s support of Medicaid expansion, the Missouri legislature did not include expansion measures in its 2014 budget.  Neither the state House or Senate included expansion in their blueprints.  They have opted instead to create committees to study the issue for the remainder of the year and report on the impact of expansion in early 2014, which delays any decision on the matter to after the January 1 start date.

On May 9, the Idaho health insurance exchange board met.  The board is working to determine how it can set up a state exchange even with very little done so far.  It has been discussing possibly partnering with the federal government in some ways, while still remaining a “state-based exchange and remaining in control.”

On May 9, Kentucky Governor Steve Beshear announced that his state will expand the Medicaid program to adults earning up to 133 percent of the federal poverty level, covering an additional 300,000 people. 

On May 9, West Virginia Governor Earl Ray Tomblin announced that West Virginia would expand its Medicaid program, making him the 26^th governor to back the expansion.  Governor Tomblin’s office expects the expansion to cover more than 91,000 people in the state.

After months of discussions with state leaders in Utah, HHS agreed on May 10 to let the state run its own small business health exchange but for the federal government to run the individual exchange, as the state requested, potentially opening the door to a bifurcated exchange approach for other states as well.

California has delayed its plan to launch a program to test new ways to coordinate care for dual eligbiles.

IN THE COURTS

On May 7, Dr. Steven Hotze of Houston sued the United States over the Affordable Care Act.  Dr. Hotze argues that the law violates the U.S. Constitution’s origination and takings clause, which were not part of the arguments before the Supreme Court in June.  He also argues that the ACA violates the constitutional requirement that revenue bills originate in the House.

IN THIRD PARTIES

The Urban Institute is out with a new proposal to curb deficit spending.  The report says that capping the tax exclusion for employer-sponsored health coverage could save hundreds of millions of dollars annually.  The proposal is controversial, with some arguing that this would change the health insurance market.

An article from May’s issue of Health Affairs by David Cutler and Nikhil Sahni argued that if the slowed rate of health care spending growth persists, public-sector health spending will be as much as $770 billion less than predicted.

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

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Last week the Centers for Medicare & Medicaid Services (CMS) issued new proposed regulations on FY 2014 payment updates and regulatory policy changes for inpatient and long term care hospitals, skilled nursing facilitates, hospices and inpatient rehabilitation facilities; the Internal Revenue Service (IRS) released a proposed rule on the minimum value of coverage employers must provide to their employees; the Center for Consumer Information and Insurance Oversight (CCIIO) issued guidance explaining the role agents and brokers will play in health insurance marketplaces; Hill leadership, while technically out of session, was busy debating how federal employees will interact personally with insurance marketplaces; and the Department of Health and Human Services (HHS) shortened the application for health coverage in response to concerns that initial enrollment forms were too long.

ON THE HILL

A provision of the Affordable Care Act (ACA) requires lawmakers and their staff to participate in the health-insurance marketplaces. At the end of last week, questions were raised about whether, under the ACA, congressional employees will be able to continue having their health insurance premiums subsidized by the government, or whether they will have to pay 100 percent of their premiums in 2014. Congressional leaders are discussing possible exemptions for Capitol Hill staffers but are sensitive to the potential for political backlash from a decision to exempt them.

On May 1, House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) and Senate Finance Committee Ranking Member Orrin Hatch (R-Utah) released Making Medicaid Work, a blueprint to modernize the Medicaid program. 

IN THE WHITE HOUSE

Speaking at a news conference at the White House on April 30, President Obama said the Affordable Care Act is already benefitting most Americans, even if they do not know it. Major provisions of the Affordable Care Act, however, do not take effect until 2014.

AT THE AGENCIES

CMS announced that the application for health coverage has been simplified and significantly shortened. The application for individuals without health insurance has been reduced from 21 to three pages, and the application for families was reduced by two-thirds. Also, CMS announced that for the first time consumers will be able to fill out one simple application to see their entire range of health insurance options, including plans in the Health Insurance Marketplace, Medicaid, the Children’s Health Insurance Program (CHIP) and tax credits that will help pay for premiums.

This week, CMS, as is usual, issued proposed rules for FY 2014 for inpatient and long term care hospitals, skilled nursing facilitates, hospices and in-patient rehabilitation facilities.  In general, the rules propose modest positive updates and appear to be in line with initial expectations, notwithstanding some novel policy proposals. As always, the rules are proposed and will not be finalized until later this summer. Cozen O’Connor Public Strategies has evaluated the inpatient and long term care hospital rule, and a summary is available here. We will be writing similar summaries of the other rules in the days ahead. Please be advised that there is ample opportunity to comment on these proposals before they go into effect on October 1.

On April 30, the IRS released a proposed rule on the health insurance premium tax credit enacted by the Affordable Care Act. Under the Affordable Care Act, some employees will be eligible for premium tax credits if the coverage provided by the employer does not provide “minimum value.” The rule spells out how to determine the value of coverage an employer must provide in order not to trigger the employer mandate penalty by proposing inputs that will be used to determine whether minimum value has been met.

The Center for Consumer Information and Insurance Oversight (CCIIO) issued a document explaining the role agents and brokers will play in the health insurance marketplaces. The guidance suggests that agents and brokers, including web brokers, will be a major source of marketplace assistance for individual consumers using the marketplaces.

On April 30, the Food and Drug Administration (FDA) eased requirements for purchase of Plan B emergency contraception. Those who are 15 years and older will not need a prescription to get this emergency contraception, which lowers the current age restriction by two years. 

IN THE STATES

House Bill 818 passed through the Pennsylvania House by a vote of 144-53.  The bill is designed to prevent health plans on Pennsylvania’s insurance exchange, when the law kicks in, from including abortion services. The bill reads, “No qualified health plan offered in this Commonwealth through the health insurance exchange shall include coverage for the performance of any abortion.” The Pennsylvania Senate will consider the bill soon.

On April 24, a Louisiana house health panel voted along party lines to defeat a measure that would expand the state’s Medicaid program. A parallel discussion took place in the state Senate Health and Welfare Committee. The senators moved to delay a vote on the bill because they would like to have a representative from the Department of Health and Hospitals answer questions first.

Legislation that would let optometrists, pharmacists and nurse practitioners perform medical tasks currently reserved for doctors passed through the California Senate Business, Professions and Economic Development Committee on April 29.

The dominant insurer in Maryland, CareFirst BlueCross BlueShield, says proposed premiums for new policies for individuals are going to rise by 25 percent on average next year.

IN THE COURTS

On May 2, a group of small business owners and self-employed individuals from six states filed a lawsuit against the federal government arguing that the IRS did not have the authority to impose an employer coverage requirement or the associated penalties in those states with a federally facilitated exchange. The lawsuit was filed in D.C. District Court.

IN THIRD PARTIES

A new study from the Brookings Institution, Bending the Curve, outlines reforms designed to reduce health care spending by improving care and promoting value-based payments.

Forty-two percent of those surveyed in a new Kaiser Family Foundation poll did not know that the Affordable Care Act continues to be the law. Some responded that it had been repealed by Congress; others said it was overturned by the Supreme Court.

A new study from The New England Journal of Medicine, The Oregon Experiment – Effects of Medicaid on Clinical Outcomes, received a lot of press attention this week. The study compares thousands of low-income people in Oregon receiving Medicaid with an identical population that did not. The study shows that those with Medicaid coverage spent more on health care, but were not, however, healthier. A 2008 Medicaid expansion in Oregon based on lottery drawings from a waiting list provided a unique opportunity for this randomized-controlled trial.

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

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President Obama has nominated Anthony Foxx, the Mayor of Charlotte to replace Ray LaHood as Secretary of Transportation.  Mayor Foxx oversaw several large transportation projects during his tenure as mayor, including the construction of a new runway at Charlotte Douglas International Airport, an expansion of the city’s streetcar system and the creation of the Charlotte Regional Intermodal Facility. 

On the Hill

Both the House and the Senate passed S. 853, the Reducing Flight Delays Act of 2013, a bill that directs the FAA to move $253 million from the Airport Improvement Program account to pay for air traffic controller salaries.  The FAA reported hundreds of slowdowns and delayed flights last week due to the furloughs. Under budget sequestration, 15,000 air traffic controllers were furloughed, but this reallocation of funds will allow the furloughs to end at least until October 1. While the bill does not specifically require the funding be used to end the furloughs, the money is expected to be used for at least that purpose.  Overall, the FAA budget will be required to cut the same amount under sequestration, but those cuts have merely been reapportioned. In an infrequent act of speedy legislating, the bill was introduced and passed by unanimous consent in the Senate on April 25, and was passed in the House on a 361-41 vote on April 26.  (The President would have already signed the bill, but the Senate had to pass the bill again due to a typo.)

The bill does not address specifically, however, the future of the funding for the 149 air traffic control towers that the FAA has identified will lose federal funding June 15.  After alleviating the furloughs, the remainder of the $253 million reallocated by the bill, about $21 million, would be enough to continue to fund the towers, but the FAA has not made its intentions clear. 

The House Committee on Transportation and Infrastructure’s Panel on 21st Century Freight held its first hearing on April 24. The Panel on 21st Century Freight, created by Transportation and Infrastructure Chairman Bill Shuster (R-PA), will hold several hearings over the next six months, create a national intermodal freight plan, and recommend legislation to the full committee. Shuster has named six House members to the panel: Rep. John Duncan, Jr. (R-Tenn.), who leads the panel, Rep. Gary Miller (R-Calif.), Rep. Rick Crawford (R-Ark.), Rep. Richard Hanna (R-N.Y.), Rep. Daniel Webster (R-Fla.) and Rep. Markwayne Mullin (R-Okla.). Transportation and Infrastructure Ranking Member Nick Rahall II (D-W.V.) named Jerold Nadler (D-N.Y.) as the lead Democrat for the panel, and appointed Rep. Corrine Brown (D-Fla.), Rep. Daniel Lipinski (D-Ill.), Rep. Albio Sires (D-N.J.), and Rep. Janice Hahn (D-Calif.) as well. In the hearing, Rep. Duncan stressed that the panel will focus on the “multi-modal nature of freight movement,” and seek to relieve the bottlenecks in moving goods across ocean vessels, highways, railroads, air carriers, inland waterways, ports and pipelines.

Rep. Darrell Issa (R-Calif.) and Rep. Zoe Lofgren (D-Calif.) introduced H.R. 1663, the Promoting Automotive Repair, Trade and Sales (PARTS) Act of 2013. The PARTS Act would reduce the exclusivity period that automobile companies currently have on replacement parts for their models from 14 years to 2 ½ years. The bill would allow parts manufacturers other than the original equipment manufacturer to build replacement parts in an effort to increase competition and innovation and decrease price.

A cloture vote has been scheduled for S. 601, the Water Resources Development Act (WRDA) of 2013, on May 6. The U.S. Chamber of Commerce and 169 signees have written a letter of support of the WRDA reauthorization bill. 

Rep. Shuster and Rep. Issa, Chairman of the House Oversight Committee, have requested the Department of Transportation and the FAA provide specificity in their implementation of budget sequestration. Sen. John Rockefeller (D-W.V.), Chairman of the Committee on Commerce, Science, and Transportation, and Sen. John Thune (R-S.D.), Ranking Member of the Committee on Commerce, Science, and Transportation, also requested more specific information on the implementation of budget cuts to the FAA.

At the Agencies

The FAA has formally approved the lithium-ion battery system upgrades to the Boeing 787 Dreamliner.  The upgrades are estimated to cost about $500,000 per plane and take about five days for installation. Ten of the 50 Dreamliners in current operation are presently having the improvements installed. Internationally, however, the Boeing 787 has officially returned to commercial flight, as a Dreamliner departed from Ethiopia this weekend.

The Department of Transportation has released its Notice of Funding Ability for National Infrastructure Investments, although the Department of Transportation is continuing to refer to them as TIGER Discretionary Grants. The continuing resolution passed at the end of March appropriates $473 million in TIGER grants for FY 2013. TIGER grant applications are due June 3.

In the States

New York: On April 24, The Port Authority of New York and New Jersey approved contracts totaling $3 billion of work on the Bayonne Bridge, Goethals Bridge and Outerbridge Crossing.  The Bayonne Bridge needs to be raised to accommodate ships from the expanded Panama Canal. The Goethals Bridge will be entirely reconstructed. Both the Bayonne Bridge and the Goethals Bridge will have pedestrian walkways added. Construction for all three projects is expected to begin by the end of 2013.

Louisiana: Mitch Landrieu, Mayor of New Orleans, announced new $650 million terminal will be created at Louis Armstrong New Orleans National Airport. The terminal is expected to begin construction in early 2014 and open in May 2018.

Virginia & Maryland: Under the transportation plans passed this year under both Maryland Governor Martin O’Malley and Virginia Governor Bob McDonnell, state gasoline taxes for each states are linked to federal action on Internet sales taxes. Both transportation bills that passed this year assume a certain amount of revenue that can be collected in sales tax from out-of-state, online retailers, and if Congress doesn’t pass a bill that permits states to collect Internet sales taxes by the end of 2015, then gasoline taxes are automatically increased. Currently, the Senate is considering S. 743, the Marketplace Fairness Act of 2013. On April 25, the Senate voted to end debate on the bill 63-30, which sets up a final (simple majority) vote on May 6. President Obama supports the bill, but it may face opposition from Republicans in the House if they consider it a tax increase.

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Marilyn Tavenner received bipartisan support from members of the Senate Committee on Finance in her confirmation hearing to lead the Centers for Medicare and Medicaid Services (CMS) though a full Senate vote is being held up, the president released his FY 2014 budget proposal with health care reform and specified reimbursement reductions to providers and manufacturers totaling $400 billion over 10 years sprinkled throughout it, and Department of Health and Human Services (HHS) Secretary Sebelius received a warm welcome from the Senate Committee on Health, Education, Labor & Pensions but faced tough questions from members of the House Committee on Ways and Means and Senate Finance Committee Chair Max Baucus, who announced his retirement this week but called the secretary’s health reform implementation efforts a “train wreck.”

IN THE WHITE HOUSE
On April 10, the president released his FY 2014 budget proposal. As is always the case, the president’s budget is a non-binding proposal meant to serve as a guide for Congress to the president’s priorities. The budget would give HHS about $1.5 million for setting up marketplaces and helping consumers navigate them. It also would reduce growth in Medicare spending by $371 billion over the next decade. Changes to Medicare include requiring higher cost sharing for new Medicare beneficiaries, making wealthier seniors pay more of their Part B and D premiums, closing the doughnut hole by 2015 instead of 2020 as in the Affordable Care Act, and cutting payments to hospitals and other providers for bad debt and graduate medical education over the next 10 years. The budget also suggests delaying the planned reduction to hospitals in disproportionate share payments to offset the charity care they provide. The proposal would eliminate the Center for Disease Control and Prevention’s Preventive Health and Health Services Block Grant Program, and expand and simplify the tax credits provided to small businesses for their non-elective contributions to employee health insurance. The budget requests $305 million for the IRS to pay for IT to implement the health law – in total, the plan calls for about $440 million and nearly 2,000 more workers to implement the law.

AT THE AGENCIES
On April 9, the Senate Finance Committee held a confirmation hearing for President Obama’s nominee to lead CMS, Marilyn Tavenner. Tavenner has been the CMS acting administrator on an interim basis for over a year.  It has been about six years since the Finance Committee last held a confirmation hearing for a CMS administrator.  Tavenner is expected to be confirmed.  Sen. Orrin Hatch, the ranking Republican on the Senate Finance Committee, said he supports Tavenner’s nomination.  House Majority Leader Eric Cantor introduced Tavenner and expressed strong support in his introduction.  Tavenner said she would run the agency as a business.  On April 23, the Senate Finance Committee voted to approve Tavenner’s nomination. Then on April 24, Sen. Harkin delayed Tavenner’s full vote in response to CMS’s use of the public health and prevention money for ACA implementation. We do not expect this to be a permanent problem for Tavenner and expect her to be confirmed in the near future.

On April 8, CMS issued a pair of proposed rules that would extend the safe harbor exception for donated electronic health records systems from December 31, 2013 to December 31, 2016, when the Medicare meaningful use incentive program also ends.

ON THE HILL
On April 24, bipartisan members of the Senate Committee on Finance released an analysis outlining a comprehensive overview of the policy and legislative recommendations received from 146 stakeholders in the health care community on ways to improve federal efforts to combat waste, fraud, and abuse in the Medicare and Medicaid programs.

On April 12, Sec. Sebelius testified at a hearing before the House Ways and Means Committee on the president’s budget.  She told the committee that the federally run insurance exchange would be up and running by October 1.  Sec. Sebelius explained that the exchange data hub was “basically built and paid for” but also that implementation funding was still a challenge. Though many expect House Republicans will be unwilling to provide additional funding for reform implementation, members of the committee did not explicitly say so at the hearing.

On April 17, Secretary Sebelius testified before the Senate Committee on Finance. Chairman Max Baucus questioned the law’s implementation and said he “see[s] a huge train wreck coming down.” Sen. Baucus was a key architect of the Affordable Care Act. Then on April 23, Sen. Baucus announced that he would not seek reelection in 2014.

House Republicans were pushing H.R. 1549, The Helping Sick Americans Now Act, which would divert money from the ACA's Prevention and Public Health Fund to fund the Pre-Existing Condition Insurance Plan through the remainder of the year. In February, HHS had announced it was suspending enrollment because its $5 billion appropriations were depleted. The House canceled a vote on the bill on April 24, when it became clear there were not enough votes.

On April 24, CMS Center for Consumer Information and Insurance Oversight (CCIIO) Director Gary Cohen testified before the House Energy and Commerce oversight subcommittee. House Republicans expressed deep concern to Cohen that the health insurance exchanges would not be ready in time for open enrollment, and Cohen assured them that HHS was on schedule.

IN THE STATES
Five states were awarded $275.6 million from the Obama administration to continue building health insurance exchanges.  Hawaii received $128.1 million, Illinois received 115.8 million, Arkansas received $16.5 million, New Hampshire received $5.4 million and Rhode Island received $9.8 million.

On April 18, the Ohio House of Representatives passed its budget in House Bill 59 without Governor Kasich's proposed Medicaid expansion. The House is calling for a separate debate on this issue and the budget includes an amendment that will make it possible to revisit the issue.

On April 16, the Arkansas House voted 77-23 to approve an appropriation bill that plans on Medicaid expansion in the state, and on April 17 the Arkansas Senate approved a "private option" Medicaid expansion as well, 28-7.  Unlike traditional Medicaid or the expanded Medicaid originally envisioned by the ACA's drafters, the Medicaid expansion proposed in Arkansas would use federal Medicaid dollars to buy private coverage in insurance exchanges.  On April 23, Arkansas Gov. Mike Beebe signed the plan into law.  The Obama administration has agreed to the plan in principle but has not yet given final approval.  Arkansas officials will travel to Washington soon to present the plan.

On April 16, North Dakota Governor Jack Dalrymple(R) signed legislation to expand Medicaid in the state. The expansion is expected to grow the program from covering about 65,000 a month to 85,000 a month.

On April 16, the Iowa Senate Ways and Means Committee advanced a bill that would extend a state tax break to small businesses that cover their employee's health care costs.

IN THIRD PARTIES
A new study by the Kaiser Family Foundation predicts that by 2019, annual health care cost growth will be over 7 percent, compared to the 3.9 percent between 2009 and 2011.  The study attributes most of this disparity to the poor economy, but suggested that structural changes in the health care system may be playing a role as well.

A new study from Families USA says that almost 26 million individuals will be eligible for tax credits through the ACA to help them purchase health insurance in marketplaces.

On Friday (4/19), Alan Simpson and Erskine Bowles, who lead President Obama's 2010 National Commission on Fiscal Responsibility and Reform, released a new deficit reduction proposal.  The plan aims to cut the deficit by a total of $5.2 trillion over 10 years.   The proposal is similar to the original Simpson-Bowles plan but more modest.  It would cut deficits by $2.5 trillion.

The Bipartisan Policy Center issued a report on health care cost containment with recommendations for the next phase of health reform.  The plan suggests over 50 recommendations, which would cut the federal deficit by about $560 billion over the next 10 years.

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Last week, President Obama released his FY2014 budget, outlining several proposals to fund new infrastructure programs.  The budget proposes $40 billion for “Fix it First” projects to repair existing infrastructure, as well as $10 billion for new infrastructure spending.  The proposal also includes a call for the creation of a National Infrastructure Bank, a policy he alluded to in his State of the Union address this year.  The National Infrastructure Bank would utilize both loans and loan guarantees and would operate as “an independent, wholly-owned Government entity outside of political influence.”  The budget additionally proposes an America Fast Forward (AFF) Bonds program to attract private capital for infrastructure investment, such as public pension funds or foreign investor funds.  The budget includes $40 billion over five years to fund development of passenger rail programs, particularly high-speed rail, and $1 billion for the implementation of the Next Generation Air Transportation System (NextGen).  Absent from the budget proposal, however, were methods to fund the aforementioned infrastructure programs.

The International Longshoremen’s Association (ILA) has approved a new six-year contract that would cover about 15,000 dockworkers on the Atlantic and Gulf coasts.  The negotiations between the  ILA and the U.S. Maritime Alliance (USMX) have been ongoing for over a year and have nearly resulted twice in strikes, first in December 2012, then again in February 2013.  The contract includes a $1 hourly wage increase in 2014, 2016 and 2017, a new payment advancement scale, protection of ILA members displaced by new technology, container royalties split between the ILA and USMX exceeding $225 million, and employer contributions of $1 per hour to local pensions and benefits. 

ON THE HILL
Members of Congress wrote Secretary of Transportation Ray LaHood and the Federal Aviation Administration (FAA) last week expressing their opposition to federal funding cuts to 149 air traffic control towers on June 15.  Most notable of the signatories of the bipartisan letter were Sen. Jay Rockefeller (D-W.V.), Chairman of the Senate Commerce Committee, Sen. John Thune (R-S.D.), Ranking Member of the Senate Commerce Committee, Rep. Bill Shuster (R-Pa.), Chairman of the House Transportation and Infrastructure Committee, and Rep. Nick Rahall (D-W.V.), Ranking Member of the House Transportation and Infrastructure Committee.

Several bills have been introduced to continue funding some or all of the towers.  In the House, Rep. Tom Cotton (R-Ark.) introduced H.R. 1432, the Air Traffic Control Tower Funding Restoration Act, which would prevent the cuts and provide the $50 million in funding through cutting the FAA’s research and facilities funding.  In the Senate, Sens. Richard Blumenthal (D-Conn.) and Jerry Moran (R-Kan.) introduced S. 687 to prohibit the closing of air traffic control towers.  The bipartisan S. 687 currently has 29 cosponsors. 

The Senate voted 87-11 to confirm Sally Jewell to head the Department of Interior.  Prior to her confirmation, Jewell was the CEO of REI.  The confirmation comes after Sen. Lisa Murkowski (R-Alaska) and the Department of Interior negotiated a deal to revisit the Department of Interior’s decision to block construction of a road that would provide health care access to Aleutian villagers through the Izembek National Wildlife Refuge.  Sen. Murkowski had been considering placing a hold on the nomination prior to this agreement.

The Congressional Budget Office has scored S.601, the Water Resources Development Act (WRDA) of 2013.  Whereas the WRDA of 2007 was scored at $23.2 billion over 10 years, S.601 has been scored as costing $12.5 billion over the next 10 years (while requiring $135 million in offsets).  The WRDA reauthorization bill lacks earmarks, which contributed to the higher WRDA of 2007 score.  To avoid earmarking, S.601 grants authority to the U.S. Army Corps of Engineers to determine which projects will receive authorized funds.

Rep. Rosa DeLauro (D-Conn.) released a statement announcing her intention to reintroduce her bill, the National Infrastructure Development Bank Act, this Congress.  In the 112th Congress, H.R. 402 had 78 co-sponsors, all of whom were Democrats. 

AT THE AGENCIES
The FAA has postponed its air traffic control tower funding cuts for two months.  The FAA has announced that it will stop funding all of the 149 air traffic control towers on its list on June 15, achieving about $600 million in budget cuts to satisfy budget sequestration.  Originally, the FAA intended to cut funding at three staggered dates: 24 towers would have lost funding April 7, another 46 towers would have lost funding April 21, and the remaining 79 towers would have lost funding on May 5.  The delays, however, are still prompting criticism from several lawmakers and industry groups.  The American Association of Airport Executives and several individual airports have filed suit against the FAA in an effort to prevent some of the funding cuts.  The loss of funding does not necessarily mean that all of these towers will close; some state governments are considering funding some towers in lieu of federal funding.

Amtrak ridership has increased by one percent in the first half of FY2013.  Amtrak has seen ridership increases in 26 of its 45 routes.  In FY2012, Amtrak recorded a record ridership high of 31.2 million passengers.  March also set a record for the most ridership in Amtrak’s history.  2.8 million riders used Amtrak in March, a 1.9 percent increase from March 2012.

Boeing completed its sole test flight for the FAA’s re-rectification process of the 787 Dreamliner.  The flight was reportedly “uneventful” and was to demonstrate that the newly redesigned lithium ion battery system is safe and not prone to the battery fire issues that grounded the plane in January.  The FAA has not indicated what the review process timeline will be moving forward.  Regardless, British Airways has committed to purchasing 18 new Dreamliners.

On March 29, the Department of Transportation released a total of $1.4 billion in Superstorm Sandy aid to the Metropolitan Transportation Authority, PATH, New Jersey Transit, and the New York City Department of Transportation.  By statute, $2 billion had to be allocated to reimburse transit agencies by the April 1 deadline.  Prior to these transfers, $554 billion had been allocated to transit agencies in New York, New Jersey, Pennsylvania and Connecticut in early March. 

Customs and Border Protection has delayed its implementation of furloughs and overtime cuts in response to increased funding over sequestration levels in the continuing resolution.

BEFORE THE COURTS
The Supreme Court denied certiorari to Spirit Airlines v. U.S. Department of Transportation, an airline challenge to a 2012 Department of Transportation rule requiring airlines to display the total price of a ticket most prominently including in the largest type size.  The plaintiffs claimed that rule is a violation of speech rights as it prevents airlines from suitably demonstrating the impact of taxes and fees on the final price of a flight, as well as unfair because other industries are not required to demonstrate prices and taxes in such a manner.

The merger of American Airlines and US Airways has cleared federal bankruptcy court.  The merger still requires approval from the Department of Justice and US Airways shareholders.  The merger will give shareholders of the AMR Corporation 3.5 percent  of the new airline.

IN THE STATES
After the failed Port of Virginia privatization, Fitch Ratings believes that future “port privatizations will be similarly challenging.”

California: Los Angeles has completed a 30-year, $400 million software synchronization of all of its 4,500 traffic signals.  The effort to boost commuter and vehicle efficiency will reportedly raise the average automobile speed to 17.3 miles per hour from 15 miles per hour and significantly reduce average driving times. 

Maryland:  The Maryland Senate has joined the House of Delegates in passing the transportation bill, on a vote of 27-20.  The bill would phase in the higher gasoline taxes over several years, with the first increase of 4¢ occurring in July.  The bill indexes the 23.5¢ per gallon tax on gasoline to inflation, allowing automatic increases each year.  The bill also relies on a federal action to allow states to collect out-of-state sales tax on Internet retailers, as does an early passed Virginia transportation bill.  If Congress does not pass legislation empowering states to levy this tax by 2015, then Maryland’s sales tax on gasoline will automatically increase an additional 2 percent.

Massachusetts: State lawmakers are considering various tax increases to fund transportation.  The $500 million package would raise the gasoline tax by 3¢, increase taxes on tobacco products, including an additional $1 tax per pack of cigarettes, and modify the tax code with respect to computer software design.  The increased revenue is projected to create more than $300 million to invest in infrastructure by 2018.  Governor Deval Patrick has an alternative package that would increase the income tax to 6.25 percent and lower the sales tax to 4.5 percent to fund $1.9 billion in  education and  transportation projects.

Michigan: Governor Rick Snyder signed SB 233, granting $21 million to dredge 58 harbors.  He also signed SB 252, which provides low-interest loans to dredge private marinas.

New Hampshire: The New Hampshire House of Representatives has given its final approval of a 12¢ gasoline tax increase on a 206-158 vote.  The bill originally passed in the House on March 6 and touted a 15¢ tax.  As the bill involves state revenue, it had to return to the House Ways and Means Committee again, and be voted on a second time to pass. The bill advances to the Republican-controlled Senate, where it faces little chance of advancing to the Governor.

New York:  The New York Metropolitan Transportation Authority is constructing a two-mile long steel seawall to prevent future flooding.  The $38 million project will stretch along the A subway line to the Rockaway peninsula, and be seven feet taller than the rails. 

Virginia: Governor Bob McDonnell’s proposed changes to the General Assembly-passed transportation bill have been approved by both houses of the General Assembly.  Among Gov. McDonnell’s changes is a reduction to the proposed hybrid vehicle annual fee, reducing the proposed fee from $100 to $64.  In the original General Assembly-passed package, the motor vehicle sales tax was increased from 3 percent to 4.4 percent, but Gov. McDonnell’s submitted changes proposed an increase from 3 percent to 4.15 percent.  The plan is expected to raise almost $6 billion over five years.

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While Congress was in recess, the Centers for Medicare and Medicaid Services (CMS) surprised many when it changed course on Medicare Advantage payment rates – switching from a 2.3 percent reduction to a 3.3 percent increase, the Department of Health and Human Services (HHS) announced a one-year delay for the small business health options program exchange to offer multiple health plans, and HHS released a final rule detailing the expanded Medicaid program and confirming that the federal government would cover 100 percent of the expenses for newly eligible Medicaid beneficiaries.

AT THE AGENCIES

On Monday (4/1), CMS surprised many when it announced that it would change the 2.3 percent cut to Medicare Advantage rates to a 3.3 percent increase.  Prior to the news, health insurers were predicting painful changes for Medicare Advantage customers.  The initial rates included in the proposed regulation assumed that there would be significant cuts in physician payments, and in turn lower Medicare costs, because of the Sustainable Growth Rate.  The switch follows a report from the Congressional Research Service, which said CMS could assume that Congress would avoid major cuts to Medicare physician reimbursements at the end of the year, and letters from Senate Finance Committee Chairman Max Baucus, Ranking Member Orrin Hatch and 98 House members to CMS expressing concern about the proposed rates.

On Wednesday (4/3), CMS released a proposed rule that outlines standards for navigators in federally facilitated and state partnership markets.  Navigators will help educate consumers on available health coverage options and will assist them in shopping for health insurance.

On Tuesday (4/2), CMS published an update to the clinical quality measures for hospitals participating in the meaningful use program for electronic health records (EHRs).  Prior to the update, hospitals were required to use EHR systems that met the clinical quality measure specifications of the December 2012 interim final rule.  Now, however, CMS is encouraging the use of updated clinical quality measures.

HHS announced a one-year delay to a requirement of the small business health options program (SHOP) exchange this week.  Though small businesses were supposed to be able to choose from multiple health plans through insurance exchanges beginning in 2014, HHS granted an extra year for the requirement to offer multiple plans on SHOP exchanges.

On Friday (3/29),  HHS released a final rule describing the methodology states will use for claiming a higher match rate for newly eligible Medicaid beneficiaries.  The regulation implements the ACA provision that authorizes states to expand Medicaid to adults under 65 with incomes up to 135 percent of the federal poverty level.  The federal government will cover the full cost of newly eligible beneficiaries for the next three years, and afterward the federal contribution will gradually be phased down to 90 percent by 2020.

The National Association of Insurance Commissioners had its annual spring meeting on Friday (4/5).  At the meeting, a draft paper titled "Rate Increase Mitigation Strategies" was presented.  The paper addresses the "rate shock" that may be caused by the ACA.

ON THE HILL

On Thursday (4/4), Sen. Chuck Grassley (R-Iowa) sent a letter pressing CMS for information about how a Wall Street analyst was able to learn about the Medicare Advantage rates in advance of CMS’s official announcement.

On Friday (4/5), Reps. Joe Pitts (R-Pa.) and Michael Burgess (R-Texas) of the House Ways and Means Subcommittee on Health released a press release offering suggestions for making health reform more affordable.  Suggestions offered in the release include creating a premium increase safety valve, allowing state coverage compacts, giving Americans coverage options like those of members of Congress, ensuring consumers who like their insurance can keep it, prioritizing coverage for Americans with pre-existing conditions over wasteful spending, and replacing price controls with market-based solutions and incentives.

IN THE STATES

Vermont posted its partnership plan proposals this week, listing the prices residents can expect for health insurance coverage  in 2014.  The Vermont Department of Financial Regulation posted a summary sheet that compares what Blue Cross Blue Shield Vermont and MVP Health Care – two carriers that have filed proposed rates with the department – might charge for coverage for singles, couples, single parents with children, and couples with children.

An amendment to a bill that lays out health care exchanges passed the Virginia House and Senate.  The amendment bars health insurance plans sold through a federal exchange from covering most abortions.

Pennsylvania Gov. Tom Corbett met with Sec. Sebelius on Tuesday (4/2) to discuss Medicaid expansion.  Neither HHS nor Gov. Corbett publicly reported any developments after the meeting.  Gov. Corbett said the meeting was “meaningful,” that he asked the secretary for  answers to key questions and that he is still considering the options for Pennsylvania.

On Friday (4/5), Center for Consumer Information & Insurance Oversight (CCIIO) Director Gary Cohen sent Massachusetts a letter granting it permission to phase in certain rules Massachusetts business leaders had argued would have led to rate shock in 2014.  Massachusetts will be permitted to phase out certain rating standards such as age, smoking status and wellness.

IN THE COURTS

On Thursday (4/4), the Department of Justice filed a brief in the 4^th Circuit Court of Appeals arguing that the Anti-Injunction Act prevents the court from hearing the case of Liberty University, which continues to challenge the ACA’s employer mandate and argues that the reform law provided federal funding for abortions.

Federal Judge Edward Korman ruled on Friday (4/5) that the most common morning after pill be made available over the counter for all ages, rather than requiring a prescription for girls 16 and younger.  The Food and Drug Administration has recommended this type of unrestricted access for years, however both President Obama and Sec. Sebelius have supported restricting over the counter access to morning after pills for those younger than 17.

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This Friday, President Obama will visit the Port of Miami. On July 19, 2012, President Obama put the Port of Miami on his “We Can’t Wait” list of expedited infrastructure projects to instruct the Army Corps of Engineers to deepen the federal navigation channel at the port from 42 feet to 50 feet.

The American Society of Civil Engineers released its 2013 Report Card for America’s Infrastructure, awarding a D+.  In 2012, the ASCE gave America’s Infrastructure a flat D.  This year, the ASCE added ports as a new category, which received a grade of C.

ON THE HILL

Yesterday, President Obama signed the continuing resolution (CR) that Congress passed last week, funding the government for the remaining six months of FY2013.  The final version mostly funds the Moving Ahead in Progress for the 21st Century Act (MAP-21).  Whereas the original CR passed by the House included cuts to transit, roads and transportation safety at MAP-21 levels, the CR fully funds those programs.  The Projects of National and Regional Significance Program, which was created by MAP-21 and authorized $500 million for the program, was eliminated in the continuing resolution. Federal aid for highways and transit formula grants are fully funded at MAP-21 levels under the CR.  

This past weekend, the Senate passed S.Con.Res 8, the Senate FY2014 budget bill, on a vote of 50-49.  The budget proposal includes $50 billion to repair the nation’s infrastructure, through fixing roads bridges and airports, updating transit systems, and making room for pedestrians and bicyclists.  The proposal also includes $10 billion for an infrastructure bank and $10 billion to repair dams and dredge ports.

Of the 500+ amendments proposed to the Senate budget, several were infrastructure-related.  Sen. Al Franken (D-Minn.)’s amendment to bring broadband infrastructure investments to rural areas was agreed to by unanimous consent.  Sen. Pat Toomey (R-Pa.)’s amendment to increase funding for the inland waterways system was also agreed to by unanimous consent.  Sen. Rand Paul (R-Ky.) proposed an amendment to fund $8 billion to repair deficient bridges and $8 billion to pay down the federal deficit, offset by $15 billion in cuts to foreign aid and $1 billion in cuts to the Department of Energy loan guarantee program.  The amendment failed by a vote of 26-72. 

Many of the infrastructure-related amendments did not receive a vote, including the following.  Sen. Paul introduced an amendment to privatize the Transportation Security Administration (TSA).  Several amendments were introduced to reverse the TSA’s ruling that some small knives would be permitted on flights.  Sen. Jim Inhofe (R-Okla.) introduced an amendment to modify the methodology of the Department of Transportation’s compliance, Safety, Accountability Program.  Sen. Inhofe also introduced an amendment to create a point of order against legislation that would impose a user fee with respect to general aviation.  Sen. David Vitter (R-La.) proposed an amendment aimed at improving the solvency of the Highway Trust Fund by imposing fees on federal agencies that fail to meet specified deadlines relating to surface transportation projects under the National Environmental Policy Act of 1969.  Sen. Vitter also introduced an amendment to improve the solvency of the Highway Trust Fund through net increase federal revenues from onshore and offshore domestic energy leasing on federal land.

Sen. Amy Klobuchar (D-Minn.), Chairwoman of the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, and Sen. Vitter have introduced S. 638, the Railroad Antitrust Enforcement Act, to end the antitrust status of freight rail.  Shippers have lauded the bill, and the effects of ending railroad antitrust exemptions may save consumers an average of about $100 yearly.  The Association of American Railroads has castigated the bill, saying it unnecessarily complicates the law and undermines private investments made to America’s freight rail.

On March 20, the Senate Environment and Public Works Committee unanimously approved S. 601, the Water Resources Development Act of 2013 in a 15 minute markup.  The bill includes provisions to require new taxes collected for the Harbor Maintenance Trust Fund be exclusively spent on dredging and other port maintenance projects.  The bill, co-sponsored by Chairwoman Barbara Boxer (D-Calif.) and Ranking Member David Vitter (R-La.), would also streamline environmental reviews through requiring the Army Corps of Engineers to coordinate with other involved agencies and to simultaneous perform the environmental reviews.  Agencies that miss deadlines in the environmental permitting process will be penalized $10,000 to $20,000 per week, capped at 5 percent of the office’s yearly funding.  The bill also authorizes a two-year study on inland waterways revenue collection and more efficient ways to collect it.  The last Water Resources Development Act passed in 2007 over President Bush’s veto.

On March 13, Rep. Maxine Water (D-Calif.) introduced H.R. 1124, the TIGER Grants for Job Creation Act.  The bill would, upon enactment, provide an additional $1 billion to the Department of Transportation’s TIGER grant program, and exempt that money from budget sequestration.

Rep. Ed Whitfield (R-Ky.) and Rep. Daniel Lipinski (D-Ill.) introduced H.R. 1149, the Waterways are Vital for the Economy, Energy, Efficiency, and Environment Act of 2013 (WAVE 4).  If enacted, WAVE 4 will modernize the lock and dam infrastructure on the inland waterways system.  The bill would reform the U.S. Army Corps of Engineers’ internal project delivery process, prioritize essential construction and major rehabilitation projects, and revise current beneficiaries’ cost-sharing for these projects.  To fund improvements, the bill would impose a 30-45 percent increase in the existing user fee.

On March 14, a bipartisan coalition of Illinois legislators introduced the Water Infrastructure Now Public Private Partnership Act. Sen. Dick Durbin (D) and Sen. Mark Kirk (R) introduced S. 566, and Rep. Cheri Bustos (D) and Rep. Rodney Davis (R) introduced its companion bill, H.R. 1153.  The bill would create a pilot program to explore alternatives to traditional financing, planning, design, and construction models for the Army Corps of Engineers and encourage public-private partnerships.  If enacted, the bill would authorize the pilot program for five years to identify up to 15 previously authorized navigation, flood damage reduction, and hurricane and storm damage reduction projects for participation. 

AT THE AGENCIES

The Federal Aviation Administration (FAA) has reduced the number of air traffic control towers it will close from 179 to 149.  The FAA released a statement that the closures are necessary to pare the $600 million from its budget under sequestration.  Administrator Michael Huerta has reiterated that all sequestration-related budget cuts, including these tower closings, will be and have been made without compromising safety.  The FAA has cut its travel budget by 30 percent and canceled conference attendance for the rest of the calendar year.

Sen. Lisa Murkowski (R-Alaska) announced that she and the Department of the Interior have arrived at agreement, and Interior will take a “second look” at its decision to prevent the construction of a road through the Izembek National Wildlife Refuge in Alaska.  The Department of the Interior originally blocked the road because of an environmental impact study by the Fish and Wildlife Service, which they will revisit.  The road would provide those in the Aluetian village of King Cove with access to an all-weather airport in Cold Bay.  The deal comes in light of Sen. Murkowksi considering to hold Sally Jewel’s nomination to Secretary of Interior to force action on this issue.

The Environmental Protection Agency has stated that model year 2012 for cars and trucks has set the record for the highest real-world average fuel economy at about 23.8 miles per gallon.  The previous real world high was model year 2010, which was 1.2 miles per gallon lower.

On March 25, the beleaguered Boeing 787 Dreamliner embarked on the first of two scheduled test flights for its new battery.  The changes improve battery ventilation and insulation.  The FAA announced earlier this month that the proposed lithium battery redesign for the Dreamliner had been approved and would undergo extensive testing to ensure that the design is safe for aviation.  The FAA grounded the Dreamliner in mid-January following a battery fire.  Boeing has stated that it expects commercial flights of its 787 fleet to resume in weeks, not months.

IN THE STATES

On March 20, House Majority Leader Eric Cantor delivered a speech to the National Association of State Treasurers that he will support maintaining the tax exemption of interest paid by municipal bonds.  For the past two years, President Obama has suggested limiting the exemption to increase federal tax revenues. 

Maryland: The Maryland House of Delegates approved a bill to raise gasoline taxes to bolster the rapidly depleting state transportation fund.  The bill would phase in the higher gasoline taxes over several years, with the first increase of 4¢ occurring in July.  For the average motorist, the total cost of increased gasoline taxes would begin at $19 per annum at its first increase, and rise to $100 per annum once the maximum tax increase is enacted in mid-2016.  The measure passed the House of Delegates by a vote of 76-63.  All of the 76 delegates in favor were Democrats, and the other 22 Democrats voted in the negative. 

The bill indexes the 23.5¢ per gallon tax on gasoline to inflation, allowing automatic increases each year.  The bill also relies on a federal action to allow states to collect out-of-state sales tax on Internet retailers, as does an early passed Virginia transportation bill.  If Congress does not pass legislation empowering states to levy this tax by 2015, then Maryland’s sales tax on gasoline will automatically increase an additional 2 percent.

Pennsylvania: Governor Tom Corbett and Amtrak have struck a deal to continue daily passenger service between Pittsburgh and Harrisburg.  The “Pennsylvanian” will also continue to run from Harrisburg to Philadelphia and New York.  Pennsylvania’s share for maintaining the Pennsylvanian route was going to rise to $6.5 million in October, but the deal lowers that expected share to $3.8 million annually. 

Wisconsin: Governor Scott Walker’s budget proposal would allow the state to borrow $994.2 million over two years to bolster the state transportation fund.  Wisconsin is anticipating a decrease of $21 million over the next two years in transportation aid from the federal government.  Included in the $994.2 million bond for transportation is $404 million for highways, $302 million for the Zoo Interchange, $200 million for the Hoan Bridge, and $60 million for rail.

Gov. Walker’s plan also includes about $445 million in spending from other sources.  His plan would take $94.4 million from the state’s main account, made up of income and sales taxes.  His plan would also move the cost of transit programs out of the transportation fund and into the general fund, saving the transportation fund $106.4 million in this budget, and more in years to come.  The transportation plan would use $44.5 million for roads from an account that draws on a 2¢ per gallon gasoline surcharge to clean leaking subterranean fuel tanks.  The Governor and the Republicans who control the Legislature have expressed staunch opposition to increasing the state’s 32.9¢ gasoline tax, which the Governor’s transportation plan does not alter.

Virginia: Governor Bob McDonnell has submitted his proposed changes to the transportation funding package passed by the General Assembly.  The regional funding proposals are the most contentious, and Gov. McDonnell has proposed an alteration to the formula that satisfies constitutional concerns and justifies a regional funding district to allow for districts other than Northern Virginia and Hampton Roads to qualify in the future.  Among Gov. McDonnell’s changes is a reduction to the proposed hybrid vehicle annual fee, reducing the proposed fee from $100 to $64.  In the General Assembly passed package, the motor vehicle sales tax was increased from 3 percent to 4.4 percent, but Gov. McDonnell’s submitted changes proposed an increase from 3 percent to 4.15 percent. 

Gov. McDonnell met with his state’s Congressional delegation to discuss federal legislation to permit states to collect state sales taxes on out-of-state Internet retailers.  Governor McDonnell’s bipartisan transportation plan (as well as the above Maryland transportation proposal) relies on federal government allowing states to collect this tax by the end of 2015, or else an automatic wholesale gasoline tax increase will be triggered at the onset of 2016.

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Last week, as the Affordable Care Act turned three, the drumbeat of concern over Medicare Advantage cuts grew louder when Senate Finance Committee Chairman Max Baucus and Ranking Member Orrin Hatch – as well as 98 house members – wrote to the Centers for Medicare and Medicaid Services (CMS) expressing concern about rates for Medicare Advantage plans, MedPAC released its March report to Congress, the House and Senate passed a continuing resolution to fund the government through September 2013 at current law levels including sequestration, and the House and Senate each passed a 2014 budget.

ON THE HILL

Rep. Paul Ryan's (R-Wis.) budget passed the House of Representatives on Thursday (3/21).  No Democrats voted for the plan.  The bill would balance the budget in 10 years by cutting domestic spending and reforming Medicare.  The budget would reform Medicare starting in 2024 by giving seniors a choice between traditional Medicare coverage or a private plan with similar benefits.  The House budget would also convert Medicaid into a block grant program such that states would receive a lump sum for their programs instead of the open-ended federal medical assistance percentages they now receive.  Though the budget does not eliminate the entire Affordable Care Act, it does assume that Congress would eliminate the parts of the Affordable Care Act that subsidize insurance coverage for the uninsured.

On Saturday (3/23) just before 5:00 a.m., the Senate passed its first budget in four years, with no Republicans voting for it and four Democrats voting against it.  The four Democrats, all of whom are up for re-election in 2014, were Mark Pryor (Ark.), Kay Hagan (N.C.), Mark Begich (Alaska) and Max Baucus (Mont.).  The Senate budget would boost infrastructure spending by $100 billion to bolster the economy and raise taxes to bring $975 billion over 10 years into the government.  The budget trims spending modestly and includes an expedited track for passing tax increases.  The Senate budget includes health care cuts as well – accelerating payment reforms that tie provider reimbursement to patient outcomes, reducing waste and fraud, and encouraging greater provider engagement.

The drumbeat of concern over Medicare Advantage cuts grew louder on (3/15) when Senate Finance Committee Chairman Max Baucus and Ranking Member Orrin Hatch sent a letter to CMS Acting Administrator Tavenner raising concerns about the proposed Medicare Advantage cuts and 98 bipartisan House members sent a separate letter to Tavenner, also requesting changes to the Medicare Advantage rates.  These rates are expected to be finalized by April 1, 2013.

The Director of CMS’s Center for Medicare and Medicaid Innovation (CMMI), Dr. Richard Gilfillan, testified before the Senate Finance Committee on Wednesday (3/20).  At the hearing, Dr. Gilfillan said the results of the Pioneer Accountable Care Organization demonstration will be available this summer.  Dr. Gilfillan also said that CMMI was currently analyzing data from the multi-payer advanced primary care practice and federally qualified health center advanced primary care practice demonstrations.

Last week, the House and Senate approved a continuing resolution to prevent a government shutdown and keep agencies funded through the end of the fiscal year and sent it to the White House to be signed into law.

AT THE AGENCIES

Health and Human Services (HHS) Sec. Sebelius announced that the third anniversary of the Affordable Care Act saw more than 6.3 million Medicare beneficiaries save over 6.1 billion on prescription drugs, and 71 million Americans in private health insurance plans receive coverage for at least one free preventive health care service.

On Monday (3/18), the Departments of Health and Human Services, Labor and Treasury issued a proposed rule under the Affordable Care Act that prohibits health plans from imposing waiting periods over 90 days on enrollees before coverage begins.

On Friday (3/15), the Medicare Payment Advisory Commission (MedPAC) released its March report to Congress.  In the past, the commission’s recommendations have formed the basis for payment changes later in the year.

IN THE STATES

The Colorado state exchange board approved a 1.4 percent fee on all health policies sold through the state’s health exchange.  The revenue would be used to fund the exchange after federal backing runs out.  The board expects the exchange to cost between $22 and $24 million per year to run.

On Saturday (3/23), the Maryland House of Delegates gave initial approval to a measure that would expand Medicaid eligibility to 133 percent of the federal poverty line and create a funding mechanism for the state's health marketplace.  The funds will come from an existing state-regulated 2 percent tax on insurance plans.

On Thursday (3/21), the Michigan State Senate Health Policy Committee approved a bill that would allow health care providers and institutions to refuse to provide service on moral, religious or conscientious grounds.  This bill already passed the state Senate in December.

IN THE COURTS

Tom Monaghan and his company, Domino's Farm Corp., sued the federal government in December 2012, arguing that complying with the Affordable Care Act’s mandate requiring employee insurance plans to provide coverage for contraception violated his legal rights.  On March 15, U.S. District Judge Lawrence P. Zatkoff found that the company and Monaghan could be irreparably harmed if the mandate was enforced while the lawsuit is pending and issued a preliminary injunction.

IN THIRD PARTIES

This month's tracking poll from the Kaiser Family Foundation shows that the public is more confused about the Affordable Care Act than ever, in particular about items that are or are not part of reform.

The Health Care Incentive Improvement Institute issued a report card evaluating states on the requirements state laws put on hospitals and providers for transparency in health care costs.  The report gave 29 states failing marks and seven a D.  Two states, Massachusetts and New Hampshire, received an A.

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Last week, the Department of Health and Human Services (HHS) conditionally approved state partnership marketplaces in Iowa, Michigan, New Hampshire and West Virginia; Accountable Care Organizations wrote to the Centers for Medicare & Medicaid Services (CMS) arguing that the quality targets set by the Center for Medicare & Medicaid Innovation (CMMI) were arbitrary; and legislation implementing Medicaid expansion in Florida struggled to get through the state legislature.

ON THE HILL

On Wednesday (3/6), the Republican controlled House of Representatives passed a continuing resolution that would fund the government through the end of the fiscal year.  The measure allows the Food and Drug Administration (FDA) to fully collect medical device and generic drug user fees.  Senator Ted Cruz (R-Texas) is planning to offer an amendment to the legislation that would delay funding of the ACA.

Senators Alexander and Corker are pushing S.11, the Fiscal Sustainability Act, which would save an estimated $689 billion in health savings over 10 years and reform Medicaid and means-test Medicare.

AT THE AGENCIES

In response to CMMI’s quality metrics for ACOs, which are the targets pioneer Accountable Care Organizations (ACOs) have to meet in order to receive bonus payments in 2013, many of the ACOs wrote to CMS arguing that at least 19 of the targets were arbitrary or unreasonable due to a lack of data to support them.  The Pioneer ACOs received payments in 2012 for reporting on the 33 metrics. In 2013 though, the ACOs will be paid for performance, not just reporting.

IN THE STATES

HHS conditionally approved state partnership marketplaces in Iowa, Michigan, New Hampshire and West Virginia.  The partnership marketplaces (formerly exchanges) will allow these states to control various marketplace components, while the federal government runs others.  Seven states have now been approved for partnership marketplaces.

On Thursday (3/7), the Minnesota Senate approved a bill implementing the state health insurance marketplace. A companion bill passed in the House on Monday (3/4).  Unlike the  House bill, which would fund the exchanges’ operating costs with a tax on exchange premiums up to 3.5 percent, the Senate bill would fund it by diverting money from an existing 75-cent state fee on a pack of cigarettes.

On Monday (3/4), the Florida House of Representatives signaled it does not plan to go along with Gov. Rick Scott's turnaround on Medicaid.  On Monday, the House Select Committee on the Patient Protection and Affordable Care Act expressed substantial doubts that the federal promises for Medicaid funding assistance could be relied on long term.

On Tuesday (3/5), hundreds of protesters marched in Austin to protest Texas Governor Rick Perry's decision not to support Medicaid expansion in his state.

IN THIRD PARTIES

In health care industry heavy Massachusetts, the Retail Association of Massachusetts and the South Shore Chamber of Commerce are urging the White House to reconsider its proposed rule on rate review, which prevents health plans from denying coverage or setting rates based on certain factors.  The Massachusetts groups argue that holding small businesses to the same rating standards as large businesses is discriminatory.  Specifically, the group’s request that nothing in the rule should be construed to preclude a state from allowing health insurance carriers to offer additional discounts and incentives if approved by the state insurance regulator.

The Urban Institute argues in a new paper that the government could save close to $90 billion over 10 years if it allowed 65 and 66-year olds to buy into Medicare if they choose to, but asking middle and high income earners to share more of the cost.

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Sequestration began on March 1, and federal agencies are still in the process of sending out furlough notifications and determining specific program cuts.  The continuing resolution authorizing current federal spending will expire March 27, and without legislation, a government shutdown would occur on March 31.  The House of Representatives passed their version of a new continuing resolution providing for funding through the end of the fiscal year, and the Senate is expected to take up its version this week.   

At a meeting of the President’s Export Council, President Obama revealed that the White House budget proposal will include investments in waterway maintenance, emphasizing the importance of strengthening the national port and waterway infrastructure, especially in light of last year’s major drought in the Mississippi River.

ON THE HILL

The House of Representatives passed a continuing resolution (CR), H.R. 933, on a vote of 267 – 151, with 50 Democrats voting in the affirmative.  The bill reduces transportation funding levels from the 2012 surface transportation reauthorization, Moving Ahead for Progress in the 21st Century Act (MAP-21), through September 30, 2013.  The bill cuts roughly $700 million from transportation programs – $555 million of cuts to highway funding, $48.5 million of cuts to highway safety funding, and $117 million of cuts for transit funding.  The CR extends FY 2012 funding levels, which cuts the increase authorized by MAP-21.  Sen. Barbara Boxer (D-Calif.), Chairwoman of the Senate Committee on Environment and Public Works, Sen. Jay Rockefeller (D-W.V.), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, and Sen. Tim Johnson (D-S.D.), Chairman of the Senate Committee on Commerce, Science, and Transportation, wrote Speaker John Boehner (R-Ohio) expressing their dismay that MAP-21 spending had been cut, considering it was “fully paid for” through the federal gasoline tax, fee increases and the closing of tax loopholes.

The Senate version of the continuing resolution does fund the level of spending authorized for highways and rail under MAP-21, but does not include a comprehensive transportation budget addressing the other components of MAP-21.  Senate Democrats want to avoid political fights that may disrupt passing the CR, such as the inclusion of California high-speed rail.  Both sides are expected to agree on the Senate version early next week to avoid a government shutdown.

Rep. Paul Ryan (R-Wis.), Chairman of the House Budget Committee, unveiled his budget plan yesterday.  The FY 2014 budget blueprint describes highways and transit programs as having “become distorted, leading to imprudent, irresponsible and often downright wasteful spending,” and that “however worthy some highway projects might be, their capacity as job creators has been vastly oversold.”  The document suggests high-speed rail and other heavily subsidized programs should only be pursed if they can be self-supporting.

Sen. Bob Casey (D-Pa.) has introduced S. 407, the Reinvesting in Vital Economic Rivers and Waterways Act of 2013.  If passed, the RIVER Act would increase the Inland Waterways User fee from 20¢ per gallon to 29¢ per gallon beginning in 2014.  Industry seems supportive of the bill despite increased user fees, as the American Waterways Operators and the Waterways Council have endorsed the bill.  The bill also includes project management process reforms and directs the Secretary of the Army and Inland Waterways Users Board to develop a capital investment program for inland waterways projects over the next 20 years. 

Rep. Nick Rahall (D-W.V.) has introduced H.R. 949, the Invest in American Jobs Act of 2013.  The bill strengthens existing “Buy American” provisions for investments in aviation, rail, highways and public transit to require that all of the steel, iron and manufactured goods used are produced in the United States.  The bill would extend the “Buy American” provisions to additional federal infrastructure and transportation loans, loan guarantees and grants, including Clean Water State Revolving Fund grants and Economic Development Administration grants.  The bill would also allow for waivers but requires the federal agency justify any proposed waiver through adequate public notice.

Sen. Jay Rockefeller (D-W.V.) and Sen. Frank Lautenberg (D-N.J.) have introduced the American Infrastructure Investment Fund Act of 2013, S. 387.  Upon enactment, the bill would create a national infrastructure fund within the Department of Transportation, funded at $5 billion a year over FY 2014-2015.  While the bill does not explicitly refer to the fund as a bank, the fund is essentially the national infrastructure bank that President Obama called for as part of his national infrastructure plan in the January State of the Union address.  The fund can utilize loans or loan guarantees and can be used to finance rail, port, pipeline, airport, highway, bridge and public transportation projects, amongst others.  The bill also authorizes a $600 million National Infrastructure Investment Grant program within the Department of Transportation funded over FY 2014-2015. 

Rep. Bill Shuster, Chairman of the House Committee on Transportation and Infrastructure, and Sen. John Thune, Ranking Member of the Senate Committee on Commerce, Science, and Transportation, continue to press Secretary of Transportation Ray LaHood in a letter requesting  more information on budget cuts due to sequestration.  Shuster and Thune have been vocal in their insistence that LaHood and FAA Administrator Michael Huerta’s insistence on massive furloughing is not necessary and are requesting details as to how budget cut decisions have been made.  Thune and Shuster similarly recommend cutting items such as consultants and the travel budget in lieu of furloughing employees or shutting down Air Traffic Control towers.

AT THE AGENCIES

The Office of Management and Budget (OMB) has released its final numbers for budget cuts due to sequestration.  The Department of Transportation’s budget will be cut by $1.943 billion, including $637 million in cuts to the FAA, $396 million in cuts to the TSA, and $77 million in cuts to Amtrak. 

On March 11, the FAA released a list of 173 air traffic control towers it intends to close because of budget sequestration.  The FAA will not begin furloughing its employees or closing towers until April 7.  The FAA will release a final list of closures on March 18. 

The National Transportation Safety Board (NTSB) is continuing its probe into the lithium-ion battery fire on the Boeing 787 Dreamliner.  The NTSB is currently looking into its manufacturing process, how batteries are charged, and how charges are monitored.  The cause of the short circuit that caused the fire has not been discovered.

The Brookings Institution released a report on Amtrak ridership titled “A New Alignment: Strengthening America’s Commitment to Passenger Rail.” Eighty percent of its ridership occurs on 26 routes of short corridors of 400 miles or less, and short runs are responsible for nearly all of its 55 percent ridership gain since 1997.  The report also showed that 15 of Amtrak’s least-traveled routes, all over 750 miles, lost a total of $597.3 million in 2012.  The report also showed that the Acela and Northeast Regional routes have a positive operating cost of $205.4 million, including subsidy.

On March 6, the Department of Transportation released the first $390 million in aid for Hurricane Sandy affected areas.  By statute, $2 billion of the $60 billion Disaster Relief Appropriations Act must be released no later than March 30.  The aid package is subject to sequestration and will be reduced by $646 million – $545 million from transit relief and $101 million from highway relief.

IN THE STATES

Maryland: Governor Martin O’Malley introduced his transportation plan last week.  The proposal is expected to increase revenues by $3.4 billion over the next five years. The plan introduces a new wholesale tax on gasoline indexed to inflation and economic growth. Governor O’Malley is also advocating for cutting the existing 23.5¢ per gallon gasoline tax to 18.5¢ per gallon and supplementing lost revenue through the new 4 percent wholesale gasoline tax, resulting in motorists paying an estimated additional 2¢ per gallon at the pump.  Governor O’Malley’s proposal also echoes Virginia Governor Bob McDonnell’s proposal to assume federal legislative action allowing states to tax Internet transactions by 2015.  In O’Malley’s plan, if Congress fails to pass such a provision, the Maryland state wholesale gasoline tax increases from 4 percent to 6 percent.

New Hampshire: On March 6, the New Hampshire House of Representatives voted on a bill to increase the state gasoline tax by 15¢, an 83 percent increase, over the next four years by a vote of 207-163, with 15 Republicans and 192 Democrats voting in the affirmative and 10 Democrats and 153 Republicans voting in the negative.  As the bill involves state revenue, it must return to House Ways and Means Committee again, and be voted on a second time to pass.  In the Senate, Republicans hold 13 of the 24 seats.  Republicans attempted to defeat the bill through a series of procedural motions, first to suspend the rules, which passed, then to table the bill without debate, which failed, then to amend the bill to ban the state from funding state troopers and other non-transportation expenses from the highway fund, which also failed.

New York: Of the $390 million released by the Department of Transportation from the Disaster Relief Appropriations Act of 2013, the New York Metropolitan Transit Authority received $193 million for repair and restoration of the East River tunnels, the South Ferry/Whitehall station, the Rockaway line, rail yards, maintenance shops and heavy rail cars.  The Port Authority Trans-Hudson Corp. received $54 million for the World Trade Center Hub Project and $141 million to repair commuter rail service between New York and New Jersey.

Pennsylvania: Under the Disaster Relief Appropriations Act of 2013, the Southeastern Pennsylvania Transportation Authority (SEPTA) received a grant of $1.19 million from the Department of Transportation.

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Yesterday, the Senate Committee on Commerce, Science, and Technology and the Senate Committee on Homeland Security and Government Affairs held a hearing titled, “The Cybersecurity Partnership Between the Private Sector and Our Government: Protection Our National And Economic Security,” in which the recent Executive Order on voluntary cybersecurity standards was discussed extensively.

• The Executive Order directs agencies to look into incentives that can be used under existing law to encourage businesses to opt into the voluntary cybersecurity standards. Secretary of Homeland Security Janet Napolitano revealed that amongst the incentives that DHS is considering are a federal procurement preference and granting some sort of governmental seal of approval. Napolitano contends that the market in and of itself has not provided sufficient incentive for all businesses to raise their cybersecurity standards.

• Senator Jay Rockefeller (D-WV), Chairman of the Commerce Committee, and Secretary Napolitano agreed that H.R. 624, the Cyber Intelligence Sharing Protection Act (CISPA), is “wholly insufficient.” Rockefeller particularly stressed that cybersecurity is not an issue that Congress can afford to revisit every year in a piecemeal fashion, and a more comprehensive bill must be pursued. Napolitano agreed, citing perceived insufficiencies in CISPA, such as the lack of privacy concerns and authorizing the NSA to establish standards and share information instead of a civilian agency.

• Senator Mark Warner (D-VA) voiced concern about unintended consequences that could arise from voluntary standards. Particularly, he was concerned that the standards could create a free rider problem, stagnant standards, or entrenched standards. Complying with stagnant standards, he worried, would be both dangerous and potentially wasteful. He was also concerned that entrenched standards could create a costly, complex barrier to entry for new businesses in certain industries.

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As Washington and the rest of the country brace for cuts from the sequester to kick in on March 1, Florida Gov. Rick Scott surprised many and confirmed others' predictions by announcing his state will expand its Medical program, and the Department of Health and Human Services (HHS) issued long-awaited final rules on essential health benefits, as well as pre-existing conditions and premium rate bands.

AT THE AGENCIES
On Friday (2/22), HHS released final rules implementing the provisions of the Affordable Care Act (ACA) that require insurers to cover those with pre-existing conditions without charging higher prices. 

Friday’s final rules also crystalize regulations on how insurers may set their premiums.  Under the ACA, only certain, very limited criteria may be used to set premiums.  With respect to age, the law says plans can only charge older patients three times more than younger ones, even though older patients are notoriously much more expensive to treat than younger ones.  Though many interest groups fought this provision when it was included in the proposed rule, it nonetheless remains in the final rule.  America’s Health Insurance Plans (AHIP) says this outcome will cause insurance for young people to spike “overnight.”  The rules do ensure young adults will have access to a catastrophic coverage plan, which will offer lower premiums and less generous coverage for those who do not seek much health care outside of an emergency situation.

On Wednesday (2/20), HHS issued a long-awaited final rule on essential health benefits (EHB).  The final rule outlines the standards for essential health benefits that insurers must cover in and out of health insurance marketplaces beginning in 2014.  Insurers must cover 10 broad care categories, which include emergency services, maternity care, mental health and substance abuse services, and preventive and wellness services.  As in the proposed rule, individual and small group plans for 2014 and 2015 must cover at least one drug in every therapeutic category and class or the same number of prescription drugs in each category and class as the state's EHB benchmark plan, whichever is greater.  Many states require at least two drugs per class.

The final regulation does not differ much from the proposed regulation.  One change uncovered by the American Cancer Society Cancer Action Network concerns colonoscopies.  Under both the proposed and final regulations, colonoscopies are deemed a preventive service that insurers have to cover without copayment.  What was previously unsettled, however, was whether if a doctor discovered a polyp and removed it during the procedure, whether this too would be included.  The final regulation says insurance companies cannot charge patients for the removal of a polyp during a recommended colonoscopy.

The Medicaid and CHIP Payment and Access Commission (MACPAC) named Anne L. Schwartz, PH.D., as its new executive director.  Schwartz has been the acting executive director for the past four months.

On Thursday (2/21), the Center for Medicare and Medicaid Innovation announced that it is awarding $300 million to 25 states through the State Innovation Models Initiative, which supports the development and testing of state-based models for multipayer payment and health care delivery system transformation to improve health system performance.  Six states will receive awards for Model Testing, three for Model Pre-Testing, and 16 for Model Design.  Of the $300 million, more than $250 million will go to Arkansas, Maine, Massachusetts, Minnesota, Oregon and Vermont.

IN THE STATES
Friday (2/15) was officially the last day for states to report to the federal government that they wanted to participate in running health insurance marketplaces in their states in partnership with the federal government.  The federal government will be running more than half  – 26 – of the state’s health insurance marketplaces.

Florida Gov. Rick Scott, a Republican and leading critic of the Affordable Care Act, announced on Wednesday (2/20) that his state would expand  Medicaid coverage.  A day after Gov. Scott’s announcement, Sec. Sebelius said that states are opting to expand Medicaid because the offer is “simply too good to pass up.”

On Tuesday (2/19), Oklahoma State Representative Mike Ritze (R) introduced legislation that would declare the Affordable Care Act unconstitutional and void in the state.  Ritze's motivation is the law’s mandate that requires employers to provide birth control coverage in health insurance plans.  The legislation was approved 7-3 by the House Public Health Committee.

ON THE HILL
Still no deal on the Hill to prevent the sequester, set to begin March 1.  Medicaid is protected from the cuts, but Medicare spending will be cut by 2 percent through reductions in payments to hospitals, physicians and other care providers.  Additionally, according to the Congressional Budget Office (CBO), other health-related programs like medical research, mental health treatment and approvals for new drugs are subject to 5 percent or more in cuts.

IN THIRD PARTIES
On Thursday (2/21), 17 major medical specialty groups recommended that doctors reduce their use of 90 widely used unnecessary tests and treatments.  The list includes recommendations not to induce labor or perform a Cesarean section before a woman’s 39th week of pregnancy unless it is medically necessary, not to automatically use CT scans to examine children’s minor head injuries, and to avoid routine preoperative testing for low-risk surgeries without a clinical indication.

On Thursday (2/21), Time Magazine ran the longest article by one writer the magazine has ever published, "Bitter Pill: Why Medical Bills are Killing Us."  The cover story provides in-depth discussion of the country’s high medical costs and the major problems hospitals, insurance companies and the pharmaceutical industry are facing.

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Following President Obama’s State of the Union call for a national infrastructure policy, the White House released this fact sheet, providing some details of the plan thus far.  The fact sheet outlines calls for cutting red tape, encouraging public-private partnerships, creating a national infrastructure bank, expanding the Transportation Infrastructure Finance and Innovation Act (TIFIA) loan guarantee program, and investing $50 billion in national transportation infrastructure, with 80 percent focused on existing repairs.  The only source of funding mentioned is a new America Fast Forward bonds program to attract private capital.  A more detailed outline of the plan is expected to be released in March as part of the President’s budget proposal.

ON THE HILL

Representative Bill Shuster (R-Pa.), Chairman of the House Transportation and Infrastructure Committee, has criticized the President’s plan for increasing investment in national infrastructure for being a “short-term” solution.  The President’s plan has not addressed the 18.34¢ per gallon federal gasoline tax that has been underfunding infrastructure and transportation spending for the past several years.  The most recent surface transportation bill, Moving Ahead for Progress in the 21st Century Act (MAP-21), authorizes spending of more than $50 billion per year, whereas the revenue from the gasoline tax provides only about $35 billion per year.  Representative Shuster considers the one-time infusion of infrastructure spending insufficient to solve long-term federal transportation funding issues.

Tomorrow, Wednesday, February 27, the House Committee on Transportation and Infrastructure Subcommittee on Aviation will hold a hearing titled “Implementation of the FAA Reauthorization and Reform Act: One Year Later.”  The hearing will focus on the implementation of passenger service improvements, Unmanned Aircraft Systems, the Next Generation Air Transportation System (NextGen), and general safety.  FAA Administrator Michael Huerta will testify, and his written testimony, once available, will be accessible here.

Senator Bob Casey (D-Pa.) is expected to introduce legislation focused on improving repair and modernization of the inland waterways system through greater federal investment, cost-efficient reform and prioritizing navigation projects.  According to an announcement from Senator Casey, the Reinvesting in Vital Economic Rivers and Waterways Act of 2013 (RIVER Act) would also increase the inland waterways fuel user fee from 20¢ per gallon to 26¢ per gallon.

American Airlines and US Airways have formally announced their merger plans. Senator Amy Klobuchar (D-Minn.), Chairwoman of the Senate Judiciary Committee’s Antitrust Subcommittee, has announced her intention to hold a hearing to consider the economic impact of the airline merger.

The Senate Committee on Commerce, Science, & Transportation finalized subcommittee leadership positions and memberships.  The Subcommittee on Aviation Operations, Safety, and Security will be chaired by Senator Maria Cantwell (D-Wash.) and Senator Kelly Ayotte (R-N.H.) will serve as the Ranking Member. The Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security will be chaired by Senator Frank Lautenberg (D-N.J.) and Senator Roy Blunt (R-Mo.) will serve as the Ranking Member.  The Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard will be chaired by Senator Mark Begich (D-Alaska) and Senator Marco Rubio (R-Fla.) will serve as Ranking Member.

AT THE AGENCIES

Secretary of Transportation Ray LaHood has some of the expected effects sequestration will have on the Department of Transportation, but has been stressing that cuts will not affect safety whatsoever, which remains the top priority of the department.  Unless legislative action is taken, the sequester will cut about $1 billion across-the-board in transportation funding, including about $600 million from the FAA.  FAA Administrator Michael Huerta is considering a furlough strategy for the majority of the 47,000 FAA employees, eliminating midnight shifts in more than 60 air traffic control towers, and/or closing 100 air traffic control towers to satisfy the necessary budgetary cuts the FAA would need to make under the sequester.  These changes could result in delays of up to 90 minutes for commercial flights, as well as longer security lines.  Senator John Thune (R-S.D.), Representative Bill Shuster (R-Pa.), and Representative Frank LoBiondo (R-N.J.) insist that the FAA could consider numerous other options, including cutting some of the $500 million the FAA spends on consultants, before resorting to furloughs.

The FAA is currently reviewing Boeing’s proposals for the 787 Dreamliner to return to the skies.  If the FAA accepts Boeing’s proposal, the Dreamliners would not be authorized to return to business as usual without completing an FAA recertification process that could last several months, if not longer. 

Secretary LaHood has announced the formation of the National Freight Advisory Committee.  The National Freight Advisory Committee will aid the Department of Transportation in its implementation of the National Freight Strategic Plan as mandated by MAP-21.  The National Freight Advisory Committee will also support the implementation of the Department of Transportation’s Freight Policy Council.  The Committee will comprise at least 25 voting members outside of the Department of Transportation and will meet at least three times per year.

IN THE STATES

New Hampshire: The House Public Works and Highways Committee has unanimously voted to recommend raising the state gasoline tax by 15¢ per gallon over the next four years.  The 15¢ tax increase would be spread over six years for diesel fuel to ease the increased costs to trucking companies.  The panel endorsed the 15¢ plan over an alternate plan to  increase vehicle registration fees by $15 and impose a 12¢ per gallon gasoline tax increase.  A bill in the New Hampshire Senate would use tax revenues from casinos to fund infrastructure improvements.

Virginia: The General Assembly passed Governor Bob McDonnell’s comprehensive transportation revenue bill, HB2313, this weekend.  The bill now awaits Governor McDonnell’s signature or potential amendments.  Once signed, the bill would slash the state gasoline tax, impose a new wholesale gasoline tax, a new diesel gasoline sales tax and a higher state sales tax.  To compensate for the reduced gasoline tax, the bill also includes $100 annual fees on electric, hybrid and other alternative fuels vehicles.  The collection of the projected $880 million of revenue for transportation projects is contingent on Virginia passing additional legislation, as well as Congress passing a bill that would allow states to collect state sales tax on online purchases.  While the bipartisan bill carried many of Governor McDonnell’s original proposals, his effort to eliminate the gasoline tax outright failed to gain enough traction to be included in the final bill.

Wyoming: On February 15, Governor Matt Mead signed a 10¢ per gallon gasoline tax hike into law.  The tax increase, which will raise about $70 million in its first year, will take effect on July 1, 2013.  The revenue raised by the tax will be divided by the Wyoming Department of Transportation and local governments, which will be allocated two-thirds and one-third respectively.

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Last week another marketplace deadline came and went, Illinois became the 21st state approved to operate a health insurance marketplace, and U.S. senators pressed the HHS official responsible for the bulk of exchange implementation for information.

AT THE AGENCIES

On Friday (2/15), the Obama administration said the state-based high-risk pools from the ACA will close to new applicants in the next few days or weeks as funding is beginning to run low.  The 100,000 or so people who are already enrolled in these pools will not, however, be affected.

On Friday (2/15), CMS issued its annual projection of Medicare Advantage and Part D premiums and rates for calendar year 2014.  CMS said that for the first time since the Part D program began, the standard Part D deductible will go down from $325 in 2013 to $310 in 2014, and cost- sharing amounts will also be lower. Comments are due on March 1.

CMS also issued a proposed rule that would implement medical loss ratio requirements for the Medicare Advantage Program and Medicare Prescription Drug Benefit Program under the ACA.

On Friday (2/8), the Obama administration released details on some of the nonmilitary cuts that will take effect due to sequestration from the Budget Control Act of 2011.  Among other things, the cuts would result in the loss of 12,000 research positions funded by National Institutes of Health grants and the end of treatment for 373,000 individuals with mental illness.

IN THE STATES

Technically, the deadline to apply for a state-federal partnership exchange/marketplace was Friday 2/15.  HHS has shown, however, that it is willing to be flexible on deadlines in return for state participation in implementing health reform.

Long-awaited decisions on three state exchanges came on Friday (2/15).  Govs. Chris Christie of New Jersey, Rick Scott of Florida, and Bill Haslam of Tennessee said they would not embrace partnership models for their exchanges. Because the states also are not choosing to run their own exchanges, they will default to federally run exchanges.

On Wednesday (2/13), New Hampshire Governor Maggie Hassan officially applied for a partnership exchange in a letter to HHS Sec. Sebelius.

On Wednesday (2/13), Wisconsin Gov. Scott Walker announced he will not propose expanding Medicaid in his state, and instead proposed tightening income eligibility for Medicaid, lifting a cap on a program that covers childless adults, and forcing more people to buy insurance through a government-run marketplace in order to cover the state’s low-income uninsured population.  The plan outlined by Walker would cover non-disabled adults up to 100 percent of the federal poverty level, down from its current 200 percent federal poverty level limit for state assistance, and allow those above 100 percent to purchase coverage through the exchanges.

On Wednesday (2/13), Illinois became the 21st state (including the District of Columbia) to be approved to operate a health insurance exchange, with enrollment to begin in October 2013.  Illinois’ exchange will be a partnership marketplace.

On Wednesday (2/13), the Georgia House passed House Bill 198 that would require health insurance navigators to be licensed in order to help uninsured Georgians and businesses use the health insurance exchange.

North Carolina Gov. Pat McCrory said on Tuesday (2/12) that the Medicaid program in his state is too troubled to expand, and he does not want to play a part in implementation of an insurance exchange in his state.  On Wednesday (2/13), the state House gave tentative approval to legislation blocking the expansion of Medicaid and the development of a health insurance exchange.

ON THE HILL

On Thursday (2/14), Gary Cohen, the director of the Center for Consumer Information and Insurance Oversight at the Centers for Medicare and Medicaid Services, testified before the Senate Finance Committee.  Cohen said HHS is making great progress and will be ready for people across the country to obtain high-quality affordable health care coverage beginning on October 1.  Sen. Orin Hatch (R-Utah) argued that the health insurance exchanges required by the ACA are going to increase health care costs.  Sen. Bill Nelson (D-Fla.) pushed Cohen for information about why funding for co-ops under the ACA was eliminated in the tax compromise.  Sen. Maria Cantwell (D-Wash.) questioned Cohen on the delay to implementation of the Basic Health Program, which would have enabled states to offer government insurance to people who did not qualify for Medicaid but who would still have had a difficult time affording premiums and cost sharing in the exchange.  Sen. Ron Wyden (D-Ore.) expressed disappointment that the administration had not extended the law’s definition of “affordable” coverage to family plans.

In an effort to shelter health care programs, Food and Drug Administration (FDA) funding, and several other items from the sequester, set to kick in on March 1, Senate Democrats crafted a proposal, the American Family Economic Protection Act, which includes a combination of revenue increases and equally split cuts to defense and non-defense discretionary spending.  Republicans criticized the proposal, especially for the increases in taxes it requires.

On Friday (2/15), Reps. Charles Boustany (R-La.) and Jim Matheson (D-Utah) reintroduced a bill to repeal the health insurance tax in the Affordable Care Act.  The Congressional Budget Office (CBO) valued the tax at $100 billion over 10 years.  Boustany also sponsored the bill in the last Congress and gathered 226 cosponsors.  The bill, however, never came up for a vote.

IN THIRD PARTIES

About 50 leading conservative voices signed on to a memo calling for Congress to defund the Affordable Care Act in the next continuing resolution.

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In the past week, the Congressional Budget Office (CBO) released an updated federal budget to account for new regulations from the Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS), President Obama formally renominated Marilyn Tavenner to lead the Centers for Medicare and Medicaid Services (CMS), the Obama administration proposed eliminating outdated and burdensome Medicare requirements, and Mississippi became the first state to have its exchange plans rejected.

AT THE AGENCIES

The CBO released an updated federal budget to account for the new regulations from HHS and IRS (granting exemptions from individual mandate requirements and saying affordability requirements to employees of employer-provided health plans are for self-only plans, not family plans).  The updated budget projects an increased number of uninsured and decreased projected federal revenue from the penalty for failing to have insurance.

Also included in the CBO updated 10-year budget was a change in the cost of fixing the sustainable growth rate problem, from $245 billion to $138 billion.  The change comes just as a bill was introduced on Wednesday (2/6) by Rep. Allyson Schwartz (D-Pa.) and a bill from Ways and Means Health subcommittee chair Rep. Kevin Brady (R-Texas). Schwartz's bill would require physicians to adopt a replacement for fee-for-service, which CMS would then test and approve over a five-year period. Congressman Brady's alternative, expected soon, according to a Ways and Means Committee memo would continue wide-scale modified fee-for-service system and offer incentive payments for physicians that undertake efficiency improvements.

On Thursday (2/8), President Obama formally renominated Marilyn Tavenner to lead the Centers for Medicare and Medicaid Services.  The Senate still has to vote to confirm her.  Tavenner has been the acting administrator of CMS since November 2011, when she was nominated for the first time.  If Tavenner is confirmed by the Senate, she would be the first confirmed CMS Administrator in more than seven years.

The Essential Health Benefits, Actuarial Value, and Accreditation Final Rule and the Notice of Benefit and Payment Parameters Final Rule are now under review at the Office of Management and Budget (OMB).

On Monday (2/4), HHS and CMS issued a proposed rule that would modify or eliminate Medicare regulations deemed to be outdated or overly burdensome, particularly in ways that enable hospital workers and technicians to perform “tasks they are trained to do, without requiring the supervision or approval of a physician or other practitioner.”  A list of suggestions is included in the proposed regulation.  The reforms are expected to save hospitals and health care providers up to $3.4 billion over five years. Public comments are due April 8.

The Obama administration delayed the roll out of the Basic Health Program by one year.  The Basic Health Program aimed to benefit low to moderate-income people who did not qualify for the expanded Medicaid program.  The program would have enabled states to offer government insurance to people who did not qualify for Medicaid, but who would have a difficult time affording premiums and cost sharing (even with government subsidies) in the exchange.  On Wednesday (2/6), HHS said it was behind schedule and would not be able to get this program up and running by 2014.

IN THE STATES

Indiana Gov. Mike Pence said the only way he would approve Medicaid expansion for his state is if the state could use its "Healthy Indiana" plan to cover new members.  States have the ability to choose whether to expand their Medicaid programs under the Affordable Care Act due to the Supreme Court’s decision making the expansion optional.

On Tuesday (2/5), Pennsylvania Gov. Tom Corbett said in a letter to HHS Sec. Sebelius that he cannot recommend expanding Medicaid because of the increase in taxpayer dollars it would require.

On Monday (2/4) Ohio Gov. John Kasich, a Republicans who has criticized the Affordable Care Act, announced he will expand Medicaid in his state.

On Thursday (2/7), Michigan Gov. Rick Snyder proposed a $51 billion state budget for FY 2014, which includes a proposal to expand Medicaid.

On Friday (2/8), Mississippi became the first state to have its health insurance exchange plan rejected.  In a letter to the state, HHS cited a lack of support from Mississippi’s governor and no formal commitment to coordinate with other state agencies as the reasons for its rejection.  The state’s insurance commissioner was planning a state-based exchange for the state, however, Gov. Phil Bryant did not support it.

ON THE HILL

A group of 180 House Members, Republicans and Democrats, reintroduced a bill to end the Affordable Care Act's 2.3 percent tax on medical devices.  This provision of the ACA is projected to raise $30 billion over 10 years; however, opponents say it will hinder innovation in the medical device industry and stifle job growth.

A bipartisan group of Senators, led by Senate Finance Committee Ranking Member Orin Hatch (R-Utah) and Sen. Amy Klobuchar (D-Minn.) introduced a bill to repeal the medical device tax.

Representative Ron Kind (D-Wis.), a member of the House Committee on Ways and Means, was selected to lead the House Rural Health Care Coalition, a bipartisan group of lawmakers that will focus on improving access to health care in rural communities.

Rep. Gingrey (R-Ga.) introduced a bill to Change the Permissible Age Variation in Health Insurance Premium Rates.

IN THIRD PARTIES

In response to the Obama administration's attempt to find a compromise over the contraception requirement of the Affordable Care Act, Cardinal Timothy Dolan, president of the U.S. Conference of Catholic Bishops, said the recent proposed rules are insufficient because they only offer "second-class status" to church-affiliated organizations and institutions, unlike the full exception granted to houses of worship.

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President Obama called for increased infrastructure and transportation spending in last night’s State of the Union address, stressing the need to fix failing infrastructure first and utilizing public-private partnerships where appropriate. As details emerge of his national infrastructure plan and its funding, we will keep you updated.

On February 2, the International Longshoremen’s Association and the U.S. Maritime Alliance reached a six-year, tentative deal, averting the potential for a strike across 16 East and Gulf Coast ports.  The deal is still subject to ratification by both sides, and details have not been released.  The previous contract extension was scheduled to expire February 6. Both sides had been operating on two subsequent short-term extensions since September 2012.

ON THE HILL

Today, February 13, the House Committee on Transportation and Infrastructure will hold a hearing titled “The Federal Role in America’s Infrastructure.”  Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce, former Pennsylvania Governor Ed Rendell, co-chair of Building America’s Future, and Terry O’Sullivan, the general president of the Laborers’ International Union of North America are slated to testify.  Witness testimony, as it becomes available, will be posted here.

Last week, the Senate Committee on Environment and Public Works held an Oversight Hearing on the Implementation of Army Corps of Engineers Water Resources.  Assistant Secretary of the Army for Civil Works Jo-Ellen Darcy testified that the Army Corps of Engineers will pursue alternative financing mechanisms to bolster funding to improve the nation’s water resources infrastructure.  Darcy floated public-private partnerships and founding an infrastructure bank as examples of what alternative financing mechanisms the Army Corps of Engineers may pursue.  She testified that sequestration would cut funding for the corps by as much as 8.2 percent across-the-board in all programs, including dredging and flood protection.  During the hearing, Senators Frank Lautenberg (D-N.J.) and Tom Carper (D-Del.) lobbied for additional disaster relief funding for areas affected by Hurricane Sandy to be added to the upcoming Water Resources Development Act reauthorization.

On January 31, the Senate Committee on the Environment and Public Works held a hearing titled “The Harbor Maintenance Trust Fund and the Need to Invest in the Nation’s Ports.”  Chairwoman Barbara Boxer (D-Calif.) and Ranking Member David Vitter (R-La.) both voiced their support that the Harbor Maintenance Trust Fund (HMTF), which is at a surplus of about $8 billion, be drawn on to repair aging port infrastructure and provide needed funds for dredging and expansion.  Both indicated they intend to introduce and pursue legislation similar to H.R. 335, the Realize America’s Maritime Promise (RAMP) Act, a bipartisan bill in the House that would direct all user fees and current interest on the balance of the HMTF to be directed for appropriations. Any appropriations from the HMTF, however, would need to be offset.

Representatives Ted Poe (R-Texas) and Janice Hall (D-Calif.), the co-chairs of the Congressional PORTS Caucus, have requested the House Transportation and Infrastructure Committee hold a hearing on the HMTF as soon as possible.

Senator Amy Klobuchar (D-Minn.) will chair the Subcommittee on Antitrust, Competition Policy and Consumer Rights in the Senate Judiciary Committee.  The proposed merger between US Airways and American Airlines to form what would be the nation’s largest airline would fall under this subcommittee’s jurisdiction.  The merger will undergo an antitrust review by the Department of Justice.

Senator Lisa Murkowski (R-Alaska) is considering placing a procedural hold on the nomination of Sally Jewell to Secretary of the Interior.  Murkowski is considering the hold in light of the unwillingness of the Department of Interior to approve the construction of a road in Alaska. Proponents of the road consider its construction crucial to health care access for a remote village, but critics consider its construction and use to be harmful to the environment as it would travel through the Izembek National Wildlife refuge.

AT THE AGENCIES

Secretary of Transportation Ray LaHood has reiterated he will step down in the coming months.  President Obama has not indicated whom he intends to name as his successor.  Steven Chu has officially resigned from his post as Secretary of Energy, and President Obama has not nominated a successor.

Boeing has now completed two test flights of the 787 Dreamliner without any battery incidents. The Federal Aviation Administration (FAA), which grounded the flight last month, approved the test flights last week but has not released a time frame for the return of the 787 to commercial flight status.  In light of the incident, the National Transportation Safety Board is questioning the adequacy of the FAA’s policy of self-certification which allowed Boeing to certify the safety of its own lithium-ion batteries, and the FAA is reviewing the policy as well.

Last week, the Federal Transit Authority (FTA) released $2 billion in emergency relief funds from the Disaster Relief Appropriations Act of 2013 for transit systems damaged by Hurricane Sandy.  By statute, the FTA must issue interim regulations before the remaining $8.9 billion can be released.

IN THE STATES

Illinois: The Chicago Infrastructure Trust has named retired Lt. Col. Stephen S. Beitler, a venture capitalist, to serve as its first CEO.  His first goal will be to form a strategic approach and study best practices in other regions with greater experience in private-public partnerships.  The Chicago Infrastructure Trust was formed to entice private investment in the city’s public projects.  The Infrastructure Trust, one of Mayor Rahm Emanuel’s signature initiatives, is a 501(c)3 chaired by James Bell, a former Boeing official.  The Infrastructure Trust’s first project will be updating the Board of Education’s buildings to make them more energy efficient, which is estimated to cost about $50 million and will involve a multiple bid process.

Michigan: Governor Rick Snyder’s transportation plan includes raising state taxes on gasoline and diesel fuel to 33¢ per gallon in an effort to raise $1.2 billion to ameliorate the conditions of Michigan’s highways.  Under this increase, the current 19¢ per gallon gasoline tax, static since 1997, would rise by almost 75 percent and the current 15¢ diesel tax, dating back to 1984, would rise by 120 percent.  The increase in the gas taxes would raise an additional $728 million in tax revenue, and Snyder is pursuing higher registration fees as well.

Pennsylvania: Governor Tom Corbett has elaborated on his state transportation plans.  Under the governor’s plan, the flat tax paid by consumers would be lowered, and the tax gas stations pay on fuel would be increased.  The plan would increase the taxes paid on gasoline about 5¢ per gallon over the next five years to fund a $1.8 billion increase in transportation funding.  Corbett has maintained his plan is not a tax increase, as his proposal phases down then removes the cap to the wholesale gasoline tax after the first $1.25 per gallon of gasoline.  Critics, however, contend that not only is it indeed a tax, but the burden will ultimately be shifted to the consumer.

Virginia: Governor Bob McDonnell continues to pursue his transportation funding plan to eliminate the gasoline tax, increase the sales tax, and supplement that with other fees and taxes, such as a yearly electric vehicle fee.  McDonnell’s plan would raise $3.1 billion over five years.  If the state highway construction fund does not receive any additional revenue, it will be depleted by 2017.  The state gasoline tax has remained static at 17.5¢ per gallon since 1987, about 37¢ per gallon in today’s dollars.

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(1) Much is being made in the media about the "rift" between the White House and the Departments of State and Defense and the CIA regarding arming Syrian rebels. There no doubt were strongly held views on both sides of this matter, but this difference of opinion isn't some dramatic breakdown in the Obama Administration's foreign policy apparatus; rather, it's the result of the typical Executive Branch decision making process. 

(2) The National Security Council, which is part of the Executive Office of the President, drives decision making on major "interagency" issues like this (and many smaller issues that don't rise to the level of public awareness and that don't necessarily implicate "security"). The NSC acts with the President's imprimatur, and their jurisdiction is incredibly broad. This does not change from one administration to the next. The NSC undoubtedly coordinated and drove this issue, presented all sides of the argument to the President, and the President made a decision.

(3) What's often characterized as a "rift" for sensationalist media purposes usually represents a legitimate difference of opinion on policy. Disagreement is healthy in any decision making process inside any organization as long as it doesn't turn personal, and the government is no exception. The American people unfortunately never see the long and passionate debates inside the corridors of power in Washington. The public is never well served by a policy choice that's made without a dissenting voice. Whatever your view on Syria and contrary to what the media suggests, this "rift" is government working as it should, rather than a sign of dysfunction.

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 Several agency actions on the Affordable Care Act out of HHS and Treasury last week include proposed regulations detailing exemptions from the shared responsibility tax, such as an exemption for those who would qualify for expanded Medicaid but live in states that choose not to expand the program; a final rule that addresses the meaning of affordability with respect to employer-provided coverage; and a proposed rule to guide nonprofit religious organizations that wish to object to contraception on religious grounds. 

AT THE AGENCIES

On Wednesday (1/30), the Departments of Health and Human Services and Treasury issued proposed rules that define who is exempt from the ACA’s shared responsibility (individual mandate) tax, how eligibility for an exemption will be determined, and how the amount of the tax will be calculated and collected.  While the general rule remains that if an individual fails to have minimum essential coverage, he or she must pay the shared responsibility tax, the proposed rules lay out nine exceptions: 1) religious groups that are opposed to the acceptance of public or private insurance benefits; 2) members of health care sharing ministries in existence since 1999; 3) incarcerated individuals confined after a final disposition of charges; 4) aliens not lawfully present in the United States; 5) members of federally recognized Indian tribes; 6) individuals without access to affordable minimum essential coverage (where the cost to the individual of coverage through an employer or the exchange exceeds 8 percent of the individual’s household income); 7) individuals whose household income is below the tax filing limit for the taxable year in which the exemption is claimed; 8) individuals who lack minimum essential coverage for one three-month period in a given year; and 9) specific enumerated hardship exemptions.

The new regulations published Wednesday (1/30) also include an answer to the question of who is eligible for premium tax credits when an employee has an offer of employment-based coverage that is "affordable" for the individual, but not for his family.  Under the ACA, an employee who is offered adequate and affordable (which under the ACA means the employee does not have to pay more than 9.5 percent modified adjusted gross household income) insurance coverage is not eligible for a premium tax credit.  This final regulation is the second final regulation on the premium tax credit issue; however, the first final regulation did not address what would happen if an employed individual could afford individual coverage for 9.5 percent or less of household income, but family coverage tipped the percentage over that number.  Under the new final rule, an employer must offer coverage for an employee and his or her children; however, the employer will not be penalized if family coverage is unaffordable so long as self-only coverage is affordable.

The new regulations also say that the IRS will not penalize low-income residents who fail to get health insurance if they live in states that decline to raise Medicaid eligibility under the Affordable Care Act.

On Friday (2/1), HHS announced a proposed rule to guide nonprofit religious organizations that wish to object to contraception on religious grounds.  According to an agency press release, the proposed rule provides an opportunity for these organizations to receive an accommodation to provide their enrollees separate contraceptive coverage with no co-pays, at no cost to the religious organization.

CMS also released a final rule on Friday (2/1) on the ACA's Sunshine Act.  The rule requires drug, device and biologic manufacturers to report to CMS payments and gifts they make to physicians and teaching hospitals each year.

CMS announced it will expand competitive bidding for durable medical equipment and supplies within Medicare, which has a projected savings of $25.7 billion for the Part B Trust Fund and $17.1 billion for beneficiaries between 2013 and 2022.  The next round of this competitive bidding program will expand the program from nine non-metropolitan areas to 91 areas, which include major cities.

On Thursday (1/31), CMS announced a new initiative with the goal of improving care and reducing costs for Medicare.  The agency selected 500 organizations to participate in the Bundled Payments for Care Improvement Initiative.  CMS will use the initiative to test how bundling payments for episodes of care results in more coordinated care for beneficiaries and lower costs for Medicare.

On Friday (2/1), Cindy Mann, the Center for Medicaid and CHIP Services Director, sent a letter to state Medicaid directors providing guidance on section 4106 of the ACA.  The provision establishes a one-percentage point increase in the federal medical assistance percentage (FMAP) as of January 1, 2013.  The increase, Mann says in the letter, will be applied to expenditures for adult vaccines and clinical preventive services to states that cover, without cost sharing, a full list of specified preventive services and adult vaccines.

Gary Cohen, one of the directors of the HHS office leading the bulk of the implementation effort, said on Thursday (1/31) that the federal marketplace (exchange) would be ready in eight months, when open enrollment begins for 2014.

According to The Hill, on Thursday (1/31), White House senior economic adviser Gene Sperling said the White House is not willing to make cuts to Medicaid but would consider cuts to Medicare.

IN THIRD PARTIES

The Healthcare Information and Management Systems Society's (HIMSS) EHR Association submitted comments to HHS advocating for a delay in the Meaningful Use Stage 3 incentive program for electronic health record systems until three years after a participating provider reaches Stage 2.  HHS has already pushed the start of Stage 2 back by a year.

The Essential Health Benefits Coalition, which is made up of business groups, health plans and health care providers, is urging HHS to follow private-sector approaches as it develops a final rule on the essential health benefits that individual and small-group plans must cover.

The U.S. Small Business Administration launched a new blog and website to educate small business owners about the ACA, breaking the law's key provisions down by how they affect different sized businesses.

ON THE HILL

Sens. Tom Coburn (R-Okla.) and Claire McCaskill (D-Mo.) announced a bill on Wednesday (1/30) that would repeal a provision of the ACA many states say allows Massachusetts hospitals to receive extra Medicare dollars at the expense of other states’ hospitals. Twenty states along with the National Rural Health Association recently called for repeal of this provision.

IN THE STATES

On Thursday (1/24) in his State of the State address, California Gov. Jerry Brown called for the state Legislature to convene a special session to review the state's compliance with the federal Affordable Care Act.

The California Hospital Association announced that nearly 400 California hospitals joined the Centers for Medicare and Medicaid Services' Partnership for Patients initiative, making California the nation's leader in the number of hospitals that have volunteered to participate in the initiative.

IN THE COURTS

The 4th Circuit Court of Appeals set a February 27 deadline for Lynchburg University’s brief in Liberty University's case and scheduled oral arguments for May.  In November, the Supreme Court ordered the appeals court to consider Liberty’s claim that the Affordable care Act violates the school’s religious freedoms.  Liberty is challenging the individual mandate and the provision requiring employers to offer health insurance to their workers.

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The current International Longshoremen’s Association (ILA) and U.S. Maritime Alliance (USMX) contract extension expires at the end of February 6.  Carrier-paid container royalties remain the central issue in the negotiation.  Dockworker contracts were originally set to expire September 30, 2012, but have been renegotiated and extended on a short-term basis first until December 29, 2012, and now until February 6 as the two parties are struggling to come to a long-term agreement.  If the ILA and USMX fail to reach an agreement before the expiration deadline, the ILA could strike or the USMX could shut down its East and Gulf Coast ports.  Either decision would have an immediate, negative effect on the United States that would reverberate to most sectors of the economy.  The Obama administration has declined to comment on whether or not it would intervene given a port strike, instead urging the parties to resolve their negotiations as quickly as possible.  In 2002, facing a port strike, President George W. Bush ended a 10-day, 29-port lockout on the West Coast through the invocation of the Taft-Hartley Act.  President Barack Obama did not invoke Taft-Hartley in December during an eight-day strike at the Ports of Los Angeles and Long Beach. 

ON THE HILL

Yesterday the Senate passed a $50.5 billion disaster relief bill targeting relief to victims of Hurricane Sandy by a vote of 62-36.  The bill includes $5.4 billion for the Army Corps of Engineers, $10.9 billion for transit, $16 billion for the Department of Housing and Urban Development community development programs, and $11.5 billion for the Federal Emergency Management Agency (FEMA) Disaster Relief Fund. 

Before the vote, the Senate considered an amendment proposed by Sen. Mike Lee (R-Utah) that would have offset the bill with discretionary cuts, ensuring the bill would not add to the federal deficit.  Because funds in the bill are designated emergency spending, cost offsets were not required.  His amendment would have cut fiscal year 2013 discretionary appropriations by 0.49 percent and reduced discretionary spending caps for fiscal years 2014-2021.  The amendment failed on an essentially inverse vote to the bill, 35-62.

The $50.5 billion relief bill and the previously passed $9.7 billion law authorizing additional borrowing authority for the National Flood Insurance Program is roughly equivalent to the failed $60.4 billion relief package passed by the Senate in the 112th Congress.

The Sandy disaster relief funding, however, will be subject to the cuts of the sequester. The across-the-board cuts of budget sequestration, or the sequester, were delayed by the fiscal cliff deal and will go into effect on March 1, barring legislative action.  Even though more than 80 percent of the appropriations of the bill have been classified as emergency spending, the entirety of the relief bill’s appropriations are subject to a $2.5 billion cut through the sequester.  Much of the funding for transit programs, the Army Corps of Engineers, and Community Development Block Grants are not expected to be fully obligated by March 1 and may be especially hit hard.

Senators Claire McCaskill (D-Mo.) and Pat Toomey (R-Pa.) have reiterated their joint opposition to federal earmarks and will again seek a permanent ban on earmarks in the 113th Congress.  In the 112th Congress, McCaskill and Toomey’s bill, the Earmark Elimination Act of 2011, was never voted on.  McCaskill has stated she will pursue passage of the measure through the amendment process instead of as standalone legislation.  The practice of earmarking has been banned on a temporary basis since the 112th Congress.  Prior to the ban, earmarks were frequently used to fund infrastructure and transportation projects in members’ constituent districts or states, and critics of the earmark ban decry that loss of a funding source for local infrastructure projects.

The House Committee on Transportation and Infrastructure has officially announced its oversight plan, which details the focus areas of each subcommittee.  The committee has additionally announced all of its subcommittee chairs: Frank LoBiondo (R-N.J.) will chair the Subcommittee on Aviation,. Duncan Hunter (R-Calif.) will chair the Subcommittee on Coast Guard and Maritime Transportation, Lou Barletta (R-Pa.) will chair the Subcommittee on Economic Development, Public Buildings and Emergency Management, Tom Petri (R-Wis.) will chair the Subcommittee on Highways and Transit, Jeff Denham (R-Calif.) will chair the Subcommittee on Railroads, Pipelines and Hazardous Materials, and Bob Gibbs (R-Ohio) will chair the Subcommittee on Water Resources and Environment.

Notable amongst these is Rep. Denham, who has been an outspoken opponent of California’s high speed rail.  In the 112th Congress, Denham introduced an amendment that would have barred any federal funding for California’s high-speed rail.  The current rail authorization is set to expire this year, and Denham’s subcommittee will be in the middle of the debate and crafting policy for the reauthorization.

AT THE AGENCIES

Following its investigation of the battery fire on a Boeing 787 Dreamliner, the FAA issued an emergency directive and has officially grounded the Dreamliner.  Conflicting statements from members of Congress have not demonstrably indicated whether or not they will hold congressional hearings looking into the matter while the investigation is ongoing.  No timeline has emerged as to how or when the Dreamliner will be approved for commercial flights again.  The National Transportation Safety Board is continuing its investigation, but as it lacks regulatory authority, the FAA retains the sole authority to permit the Dreamliner to return to flight.

IN THE STATES

California:  On January 16, the Port of Los Angeles began its $137.7 million construction of the West Basin Railyard, a new intermodal storage rail yard that will connect with the national freight network, linking the Port of Los Angeles and the Alameda Corridor.  The rail yard will receive $16 million through a federal Transportation Investment Generating Economic Recovery (TIGER) grant and $51.2 million through a state Proposition 1B Trade Corridors Improvement Fund (TCIF) grant.  Breaking ground begins the Phase I of the two-phase project.  Phase I will construct the new rail yard, support tracks for terminals, and double-track connections to the Alameda Corridor and national rail network.  Phase II is projected to being in 2013, and will include final rail connections and catalyze truck and commuter traffic.

Illinois: The FAA has accepted a preliminary application and approved continued consideration by Chicago for the privatization of Midway International Airport.  Mayor Rahm Emmanuel has stated he is in the process of reviewing potential bidders for leasing Midway for as many as 40 years.

Maryland: Senate President Mike Miller is proposing an additional 3 percent sales tax on gasoline to combat the state’s transportation funding shortfall, which Miller estimates would generate more than $300 million per year for the governor’s roughly $700 million plan to replenish the Transportation Trust Fund.  The current Maryland gasoline tax is 23.5¢ per gallon.  In addition to the 3 percent increase, Miller’s plan includes provisions to allow local government officials to raise their jurisdiction’s gas tax by as much as 5¢ to fund their local transportation projects.  Miller is also considering introducing plans to lease the Intercounty Connector (ICC), the struggling $2.6 billion toll road, to a private operator as another method to increase revenue for transportation projects, particularly rail.  Miller cited the $3.8 billion lease of an Indiana toll road to international investors for 75 years as his inspiration to consider leasing the 18.8 mile ICC.  Moody’s chief economist, Mark Zandi, however, has warned the state against raising the gas tax, and instead waiting for the state economy to fully recover before implementing a higher gas tax.

Michigan: Governor Rick Snyder has announced  he will pursue $1.2 billion in a combination of higher gasoline taxes and vehicle registration fees to rebuild and sustain state infrastructure.  According to administration officials, the $1.2 billion target represents an additional $120 to be raised for each Michigan vehicle.  State legislators have floated having a referendum on May 7, asking voters to decide if the $1.2 billion will be raised via the governor’s gas tax and registration fee plan, or through an alternate increase in the state’s sales tax from 6 percent to 8 percent. 

New York: Last week, the New York State Thruway Authority approved issuing $500 million in short-term bonds to fund the $3.9 billion, three-mile Tappan Zee Bridge construction.  Despite the lack of a comprehensive financial plan for the project, the Thruway Authority has stressed that proper revenue will be raised through a combination of tolls and long-expected federal TIFIA financing.  The exact nature and amount of the TIFIA loan, however, has not been announced.  DOT is currently reviewing 27 TIFIA applications.

Pennsylvania: Governor Tom Corbett has announced he will pursue “uncapping” the wholesale gasoline tax, which is currently capped at $1.25 per gallon.  His administration estimates that uncapping the gas tax could raise $2 billion annually for the state, and go a long way towards ameliorating the commonwealth’s transportation funding problems. 

Virginia: Governor Bob McDonnell’s plan to eliminate the state gas tax and replace it with an increase in the state sales tax and a number of other measures, detailed in our last Infrastructure Alert.  State legislators have proposed at least eight alternative plans, and which, if any, of those will emerge to be a leading opponent against McDonnell’s plan has yet to be seen.  McDonnell’s plan has received a varied array support and criticism.  The anti-tax-increase group, Americans for Tax Reform, has declared the plan a tax increase and antithetical to the group’s pledge that the governor has taken, although he disagrees.

INFRASTRUCTURE ALERT EXTRA

As Congress and the states weigh their options in funding the vital infrastructure investments that both sides of the aisle agree are crucial to the United States, think tanks, interest groups, and various publications have turned their focus to funding the national infrastructure, particularly surface transportation.

Congressional Budget Office: Status of the Highway Trust Fund Under MAP-21 [Slideshow]

Tax Foundation: Gasoline Taxes and Tolls Pay for Only a Third of State and Local Road Spending

Building America’s Future: Transportation Infrastructure Report 2012

American Society of Civil Engineers: Failure to Act: The Impact of Current Infrastructure Investment on America’s Economic Future

Bloomberg Op-Ed: Want Better Roads? Kill the Gas Tax

The Transport Politic: The Federal Role in Surface Transportation Funding

USA Today: Time to Tweak Gas Taxes? States Weigh Options

Streetsblog: Confronted with Congested Pricing, People Clamor for Transit, Gas Tax

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In the past week, the health insurance exchanges were rebranded as “health insurance marketplaces;” HHS extended the deadline for states to opt into administering their own marketplaces and announced $1.5 billion in new grants to states for building them; and CMS released a proposed rule that details eligibility standards for marketplaces, Medicaid and CHIP.

AT THE AGENCIES

On Monday (1/14), Sec. Sebelius announced that the deadline for states to opt into administering marketplaces (exchanges) under the Affordable Care Act would be waived or extended. The administration said it is trying to encourage states to share the responsibilities of running the marketplaces, supervising health plans and assisting consumers.

CMS released a proposed rule on Monday (1/14) that provides further detail on state marketplaces, Medicaid and the Children's Health Insurance Programs (CHIP). Sec. Sebelius said the rule is intended to “give states more flexibility to implement the law in a way that works for them.” The rule details options for coordinating Medicaid, CHIP and marketplace communications regarding eligibility to consumers.

On Thursday (1/17), HHS announced $1.5 billion in new grants to states building insurance exchange marketplaces under the Affordable Care Act. The states that received funding are California, Delaware, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, New York, North Carolina, Oregon and Vermont.

CMS announced that physicians who were excluded from the meaningful use program because of the way they process Medicare claims (assigning reimbursement and billing to critical access hospitals) are now eligible to participate in the electronic health record meaningful use program.

On Thursday (1/17), the HIPAA omnibus rule was posted on the Federal Register public inspection desk. The package substantially modifies HIPAA privacy, security and enforcement rules and increases penalties for noncompliance. The final rule will be effective in March 2013.

On Wednesday (1/16), HHS kicked off an effort to raise awareness of the individual mandate with a website relaunch and a switch in the name of health insurance exchanges to health insurance marketplaces.

IN THIRD PARTIES

A coalition of 21 hospital associations sent a letter to the White House asking it to help fight a provision of the Affordable Care Act. The provision at issue allows hospitals in Massachusetts to dramatically boost their Medicare payments at the expense of other states. In their letter, the hospital associations argue that “scarce Medicare funding should reward value and efficiency in healthcare, not be diverted based on manipulation of obscure payment formulas.”

On Tuesday (1/15), the new nonprofit coalition, Enroll America, launched and announced its campaign to ensure that those who are eligible sign up for new insurance under the Affordable Care Act. Enroll America is an outgrowth of various Affordable Care Act support groups, especially Families USA.

IN THE COURTS

On Tuesday (1/15), HHS and other named agencies appealed the preliminary injunction that was granted by U.S. District Judge Reggie Walton, to Tyndale House Publishers, a Christian publishing company, in November. Tyndale does not want to provide its employees with contraceptives as required by the Affordable Care Act.

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 The $50.7 billion Hurricane Sandy relief package is currently being debated in the House.  Monday night, the Rules Committee approved 13 amendments for floor consideration.  After neglecting to schedule a vote on an aid package that had been approved by the Senate in the last Congress, the House rushed to pass a $9.7 billion bill to bolster the federal flood insurance fund and is now hashing out the rest of the package.

The $5.25 billion expansion of the Panama Canal is now officially half-complete.  The U.S. Army Corps of Engineers has estimated that American ports are spending between $6 billion and $8 billion annually in local, private and federal funding in preparation for increased maritime activity and deeper draft vessels as a result of the expanded Panama Canal, and foreign ports are rushing to do the same. 

ON THE HILL

President Obama signed into law the $9.7 billion bill replenishing the National Flood Insurance Program (NFIP).  After the House dragged its feet on voting on any Sandy relief measure in the 112th Congress, the House separated the $9.7 billion flood insurance portion of it as a separate bill for quick passage.  The law will increase the NFIP’s borrowing authority from $20.75 billion to $30.425 billion and will allow the NFIP to meet obligations to policyholders affected by Sandy.

While over 90 amendments were proposed to the Hurricane Sandy relief bill, HR 152, the House Rules Committee approved 13 for floor consideration. HR 152 is a base bill that only provides $17 billion of the $50 billion package. The remaining $33.7 billion originates from a Rep. Rodney Frelinghuysen (R-N.J.) companion amendment for long-term projects.  One of the remaining thirteen amendments under consideration would offset the $17 billion bill with 1.63 percent across-the-board cuts to domestic and defense spending.  Other amendments seek to restrict or clarify how the money is spent, to ensure that it is spent on either disaster-affected areas or projects.

AT THE AGENCIES

The U.S. Army Corps of Engineers has announced that contractors have completed the first phase of emergency work to remove rocks that have held up barge traffic in the drought-stricken Mississippi River. The Army Corps of Engineers has been battling the drought in the Mississippi River for more than a month.  Relieving the Mississippi River by diverting water from the Missouri River, is, however, off-limits to the corps under a 1940s-era flood control law.  Apart from continued rock removal, the corps has few options in its arsenal left.  Further water loss to the Mississippi will jeopardize the viability of the waterway for cargo ships and interrupt supply chains.

Secretary of Homeland Security Janet Napolitano will continue to serve as secretary through the second term of the Obama administration  Under Napolitano, Customs and Border Protection and the Border Patrol have grown substantially.  Secretary of Transportation Ray LaHood has announced he will turn over the helm of the Department of Transportation but has set no timeline for his departure.

The GAO has released a report that advocates for fees on motorists based on miles-traveled to achieve more efficient and equitable system of funding the Highway Trust Fund.  Passenger vehicle drivers would pay between $108 and $248 yearly in mileage-based fees, whereas the average total of federal gas tax revenue per driver is about $96.  The GAO has estimated such a system would cost more to administer than collecting gas taxes.

The FAA is investigating an incident last week in which a Boeing 787 Dreamliner was leaking fuel.  The FAA’s investigation will involve a comprehensive review of the Dreamliner, including its critical systems, design, manufacture and assembly.

The National Highway Traffic Safety Administration (NHTSA) has proposed rules mandating electric vehicles produce a minimal level of sound so pedestrians and cyclists can hear the vehicles when they are travelling 18 miles per hour or less.  The Pedestrian Safety Enhancement Act of 2010 requires the NHTSA to implement sound rules on electric vehicles for increased awareness and safety of pedestrians and cyclists.

IN THE STATES

Virginia: Gov. Bob McDonnell unveiled his plan to alter the state’s financing of transportation and infrastructure projects, and has proposed eliminating the state’s gas tax and replacing it with increasing the state’s sales tax from 5 percent to 5.8 percent.  McDonnell’s plan would not eliminate the 17.5 percent state tax on diesel fuel.  The plan would also impose a $100 yearly fee on alternative fuel cars, and put $1 billion from Internet sales tax revenue that would originate from a proposed bill in Congress towards transportation financing as well.  McDonnell estimates his plan would raise about $3.1 billion over five years.  Virginia’s current transportation system is projected to run out of money in 2017.

Maryland: Gov. Martin O’Malley announced the Maryland General Assembly may consider funding state transportation through indexing the gas tax to inflation or increasing the state sales tax in an effort to fund needed transportation infrastructure.  The Maryland state gas tax has remained 23.5 cents per gallon since 1992.  Raising the state sales tax from 6 percent to 7 percent or indexing the gas tax to inflation is estimated to increase tax revenues about $700 million per year.

Pennsylvania: The Pennsylvania Turnpike Commission’s increased toll rates by 10 percent on cash customers and 2 percent for E-ZPass customers on January 6. The increase in tolls is estimated to increase toll revenue by $25 million in 2013.

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The Obama administration gave eight more states conditional approval to operate health insurance exchanges, bringing the total number of fully or partially approved exchanges to 20; HHS approved 106 new accountable care organizations; and Congress reached a deal on the fiscal cliff that includes a “doc fix,” cuts the Community Living Assistance Services and Supports Program (CLASS), and slashes funds for the Consumer Operated and Oriented Plan program (CO-OP).

IN THE STATES

On Monday (1/7), Florida Gov. Rick Scott met with HHS Sec. Sebelius to discuss whether Florida will assist with the implementation of the state exchange and expand its Medicaid program in accordance with the Affordable Care Act. Gov. Scott is concerned about expanding the state’s Medicaid program, which already consumes close to 30 percent of the state’s budget, because he knows the expansion would be difficult or impossible to reverse and fears that the state portion of spending will grow over time. Scott said, "Growing government is never free." Prior to Scott’s meeting with Sec. Sebelius, however, Scott projected health reform could cost state taxpayers $26 billion, and after the meeting his administration released new cost estimates of $3 billion.

On Friday (1/4), Montana Governor-elect Steve Bullock unveiled state budget changes. Bullock intends to keep the proposed expansion of Medicaid under the ACA intact.

In response to Utah’s request from mid-December that the federal government allow Utah to run its own exchange by utilizing its already-existing exchange, the Obama administration gave conditional approval but said it would have to go beyond the services already offered.

On Thursday (1/3), Gov. John Hickenlooper announced a plan that would expand Medicaid in Colorado in accordance with the Affordable Care Act. The governor said that expansion would cost Colorado about $128 million over 10 years, however, his administration has identified more than $280 million in cuts and savings to the Medicare program to cover the change.

New Mexico Gov. Susan Martinez, who is a Republican, said the state will act in accordance with the Affordable Care Act and expand its Medicaid program.

According to the state budget California Gov. Jerry Brown released Thursday (1/10), it would cost California $350 million to participate in Medicaid expansion under the Affordable Care Act. These projected costs result largely from “the woodwork effect,” the increase in program participation from those individuals who were already eligible.

Former CMS Administrator Don Berwick said Tuesday (1/8) he is considering running for governor of Massachusetts in 2014.

ON THE HILL

On Tuesday (1/1), the House of Representatives approved the Senate’s last-minute fiscal cliff package. The deal includes a one-year doc fix, which prevents the 27 percent cut to physician Medicare payments. Such “doc-fixes” have been made every year since 2003. Physicians are happy the cuts will not go into effect this year but are disappointed the fix did not go beyond the usual one-year patch. Hospitals are less happy – the doc fix was paid for, in part, by cutting $15 billion in Medicare and Medicaid payments to hospitals over the next 10 years.

Additionally, the CLASS Act, which was intended to provide long-term care insurance, was eliminated. The executive branch had already said it would not proceed in implementing the CLASS Act because it was financially unsustainable.

Another loser in the fiscal cliff deal was the Affordable Care Act’s Consumer Operated and Oriented Plans (CO-OPs). Though the federal government has already awarded more than $2 billion in CO-OP loans, no state-level CO-OP is fully funded or operational yet.

On Thursday (1/10), President Obama signed the Strengthening Medicare and Repaying Taxpayers (SMART) Act into law, which changes the way Medicare collects money from those whose negligence caused a patient to incur medical bills.

AT THE AGENCIES

HHS issued a split decision on Governor Paul LePage's request for the state of Maine to eliminate health insurance for about 37,000 Medicaid recipients to account for the $20 million budget gap the state faces. The Obama administration partially approved Maine's request and allowed it to eliminate coverage for 12,592 working parents with earnings between 133 and 200 percent of the federal poverty level.

On Thursday (1/3), HHS gave eight more states conditional approval to operate the health care exchanges they laid out in blueprints to the federal government. The approved exchanges include the state-based exchanges of California, Hawaii, Idaho, Nevada, New Mexico, Vermont and Utah, and the partnership exchange of Arkansas. This brings the total number of states approved to fully or partially operate their exchanges to 20, 18 state-based and two partnership exchanges.

HHS approved 106 new accountable care organizations under the Affordable Care Act. According to an HHS press release, the new ACOs will benefit 4 million Medicare beneficiaries.

On Thursday (1/10), HHS issued a new report showing that Medicare’s costs are rising at an historically low rate while seniors receive more benefits.

On Wednesday (1/9), a White House official said that Kathleen Sebelius will remain the Secretary of HHS.

 

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On January 1, President Obama signed the American Taxpayer Relief Act of 2012 into law to prevent the country from going over the proverbial “fiscal cliff.” 

What are the main effects on healthcare of the fiscal cliff deal?

The fiscal cliff deal prevents the scheduled 26.5% cut in reimbursement rates due to the Sustainable Growth Rate formula to doctors who see Medicare patients, repeals the Community Living Assistance Services and Support (CLASS) Act, and cuts about $2.3 billion by rescinding all unobligated Consumer Operated and Oriented (CO-OP) funds under section 1332(g) of the Affordable Care Act. 

How significant are these changes?

Doc-Fix: To primary care physicians and Medicare patients, the doc fix is very significant.  Without it, doctors would be paid 26.5% less on services provided to Medicare beneficiaries.  This decrease could have led to a reluctance or ultimately a refusal of doctors to see Medicare patients.  That being said, almost no one really thought the cut would go into effect.  Every year since 2003, Congress has passed a short-term doc-fix to stabilize provider payments.  The fix is significant but unsurprising.

CLASS Act: Under the Affordable Care Act, the CLASS Act was to be a voluntary, government-run, long-term care insurance program.  It was intended to be self-sustaining; however, it quickly became clear to everyone, including HHS Sec. Sebelius, that the voluntary nature of the Act would cause adverse selection, which would ultimately prevent the program from being self-sustaining.  In October 2011, the Obama administration had already decided to stop implementing the program but did not formally repeal it.  It is significant that the CLASS Act is not being implemented, but this is not news either.

CO-OP Program: CO-OPs were included in the Affordable Care Act to provide an alternative to the health coverage provided by for-profit insurers in the form of loans.  HHS has already distributed $1.9 billion in loans to 24 nonprofits in 24 states.  The Taxpayer Relief Act does not cut this already distributed loan money or administrative funds for the Department to work with the 24 launched plans.  It does, however, cut the $1.9 billion remaining for this program.

How is the Doc-Fix financed?

The American Taxpayer Relief Act reduces hospital payments in two ways: over the next ten years, it cuts $10.5 billion from projected Medicare hospital payments for inpatient care and reduces Medicaid disproportionate share (DSH) payments to hospitals by $4.2 billion.  Additional sources of funding come from rebasing bundled payments for end-stage renal disease, implementing competitive bidding for diabetic test strips purchased in retail pharmacies, and reducing risk-adjusted payments to Medicare Advantage plans.

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The 112th Congress adjourned before voting on any Hurricane Sandy relief bill. Although the Senate passed a $60.4 billion relief bill, the House did not hold a vote on it nor the Republican-backed alternative $27 billion bill.  After the 113th Congress has convened, the speaker has announced that the House will vote Friday, January 4, on a $9.7 billion bill to increase the borrowing authority of the National Flood Insurance Program and will follow up with a January 15 vote on a separate bill containing $50 billion in relief.

The International Longshoremen’s Association and the U.S. Maritime Alliance have agreed to a new collective bargaining agreement in principle to avoid strikes in 14 ports along the East and Gulf coasts.  The deal allows for a 30-day extension of negotiations in finalizing the collective bargaining agreement.  The principal disagreement, a royalty fee the Maritime Alliance has paid dockworkers since the 1960s to offset wage decreases, has been settled in the agreement but not disclosed.

On the Hill

The Senate passed its Sandy relief bill on December 28 by a vote of 62-32, with all Senate Democrats voting in the affirmative.  The bill would provide an additional $11.5 billion for the Federal Emergency Management Agency’s Disaster Relief Fund, $10.8 billion for the Federal Transit Administration, and a $9.7 billion increase in borrowing authority for the National Flood Insurance Program.  Prior to the vote, the Senate rejected several amendments that would limit spending from Senator Tom Coburn (R-Okla.) and Senator McCain (R-Ariz.).  Prior to the vote, McCain also withdrew his proposed amendment that would restrict the $336 million to Amtrak for Sandy-related damage.  Senator Rand Paul’s (R-Ky.) amendment declaring the bill regular spending instead of emergency spending, and therefore requiring equal offsetting cuts, was also rejected.

Congress passed its deal to prevent the immediate effects of the fiscal cliff, with several provisions affecting infrastructure and transportation policy.  Notably, the deal extends the railroad maintenance tax credit equal to 50 percent of gross expenditures for maintaining railroad tracks that are owned or leased by Class II or Class III railroads through 2013.  Over the next 10 years, the extension of this railroad tax credit will cost $331 million.  The deal also restores the commuter tax break for 2012 (retroactively) and 2013, bringing the transit tax break in parity with the parking provision.  Commuters can now use $240 monthly for pretax transit expenses.  The commuter transit provision is estimated to cost $220 million over 10 years.

Three major infrastructure authorizations will require reauthorization in the 113th Congress: the Moving Ahead for Progress in the 21^st Century Act (MAP-21), the Passenger Rail Investment and Improvement Act of 2008 (Amtrak reauthorization), and the Water Resources Development Act of 2007 (WRDA).  MAP-21 will expire at the end of 2014 and members will need to consider new surface transportation legislation prior to the end of the 113th Congress.  Of the greatest importance, the Highway Trust Fund is dwindling due to decreased revenue for gas taxes and, short of major reform, Congress will need to make changes to the federal excise tax on gasoline to meet this funding need.  The Amtrak reauthorization will likely feature a debate on the success of Amtrak and the possibility of privatization, as former chairman of the Transportation and Infrastructure Committee John Mica (R-Fla.) pressed for during his tenure.

Michael Huerta has been confirmed to a five-year term as the administrator of the Federal Aviation Administration (FAA).  Huerta has been serving as acting administrator since he was nominated in late 2011, but a hold on the nomination delayed his confirmation until January 1, 2013.

The remaining vacancies of the House Transportation and Infrastructure Committee have been filled by 10 Republicans and 10 Democrats. Reps. Steve Daines (R-Mont.), Roger Williams (R-Texas), Markwayne Mullin (R-Okla.), Scott Perry (R-Pa.), Rodney Davis (R-Ill.), Thomas Massie (R-Ky.), Mark Meadows (R-N.C.), Trey Radel (R-Fla.), Tom Rice (R-S.C.), and Daniel Webster (R-Fla.) will join the Committee from the Republican Party. From the Democrat Party, Reps. André Carson (D-Ind.), John Garamendi (D-Calif.), Rick Nolan (D-Minn.), Dina Titus (D-Nev.), Ann Kirkpatrick (D-Ariz.), Sean Patrick Maloney (D-N.Y.), Cheri Bustos (D-Ill.), Lois Frankel (D-Fla.), Elizabeth Esty (D-Conn.), and Janice Hahn (D-Calif.) have joined the 60-member committee as well. Subcommittee chairs have not yet been announced.

At the Agencies

The Army Corps of Engineers has diverted additional water to the Mississippi River as it attempts to stave off a potential shutdown of the crucial shipping waterway due to low water levels.  The corps has estimated the water level is falling faster than expected, and some tugboats may not be able to operate within the next week.  The corps has released water from Carlyle Lake to delay a shutdown, but a commercial river shutdown may occur as soon as January 15.  Several senators and representatives have called on the corps to divert more water to ameliorate the increasingly shallow waters, but the corps has cited a lack of jurisdictional authority in its reluctance to do so.

In the States

Pennsylvania: Governor Tom Corbett is expected to release his administration’s transportation plan early this year.  The highly anticipated plan will use the state’s Transportation Funding Advisory Commission report as a blueprint, and will address highways, bridges, mass transit and rail.  The report revealed that of the 25,000 bridges the Commonwealth of Pennsylvania maintains, about 20 percent are classified as structurally deficient. More than 8,000 miles of state-maintained road has been rated in poor condition.  The report recommends generating $2.5 billion in annual revenue to fund transportation improvements.

New York: According to a report released by Comptroller Thomas DiNapoli, state and local governments face an $89 billion shortfall for infrastructure funding over the next 20 years.  The report cites the recession, high construction and energy costs, and lowered property tax collections as contributing factors.  The report recommends spending of $250 billion on water, sewer and highway systems at the state, county, city and authority level over the next 20 years, but collectively New York is expected to only raise and spend $161 billion. 

The New York Thruway Authority approved a $3.1 billion design to replace the Tappan Zee Bridge. The project was sped up by Governor Andrew Cuomo, who encouraged the state legislature to pass a law allowing the bridge to be built as its designed.  The Tappan Zee Contractors, a consortium of The American Bridge Company, which built the existing Tappan Zee Bridge in the 1950s, Fluor Enterprise, and others, were awarded the contract over two competing contractors.  The project will also require $500 to $800 million in environmental mitigation, management and financial costs.

Washington: The state of Washington has passed a law that will require electric car owners to pay a $100 yearly fee. The intention of the fee is to supplement revenue lost from electric car owners not paying the state 37.5¢ gasoline tax, the largest source of tax revenue for Washington’s infrastructure spending.  Critics of the fee, however, contend that the fee is barely large enough to cover administrational overhead in collecting the fee, and that the tax is unfair as electric vehicle owners already pay taxes on the electricity used to fuel their vehicles.  The fee will apply to about 1,600 vehicles in the state, and does not apply to hybrid vehicles or those incapable of travelling speeds of over 35 miles per hour. 

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The extended deadline for states to submit plans to run their own insurance exchanges is now behind us. A total of 18 states submitted blueprints to run their own exchanges. The 32 remaining states have until February 15, 2013 to indicate they want to set up a partnership exchange. The states that do not submit partnership applications will have federal exchanges. HHS has now conditionally approved 11 states and the District of Columbia to run their own exchanges. Meanwhile, health care providers wait at the edge of their seats to see if the fiscal cliff talks will include a “doc-fix” to avoid the 26.5 percent cut to Medicare claims starting January 1, 2013.

IN THE STATES

The deadline for states planning to run their own health insurance marketplaces come 2014 was Friday December 14, 2012. A total of 18 states said they will plan their own exchanges. The states that submitted new blueprint applications the week of the extended deadline are California, Hawaii, Idaho, Minnesota, Mississippi, Nevada, New Mexico, Rhode Island, Vermont and Utah. Some states submitted prior to the Friday deadline, and on Friday, the government conditionally approved those of the District of Columbia, Kentucky and New York. Colorado, Connecticut, Massachusetts, Maryland, Oregon and Washington had already been approved. The 32 remaining states have until February 15, 2013 to indicate they want to set up a partnership exchange.

On Friday (12/14), Iowa Governor Branstad announced Iowa would enter into a partnership with the federal government on its health care exchange.

On Wednesday (12/12), Ohio announced it secured federal approval to participate in CMS’ State Demonstrations to Integrate Care for Dual Eligible Individuals. Ohio is the third state to be approved by CMS for the demonstration project, following Massachusetts and Washington.

On Tuesday (12/11), Utah Gov. Gary Herbert sent a letter asking the Obama administration to approve the health insurance exchange already in place in Utah.

ON THE HILL

As part of the fiscal cliff negotiations, the White House has called for a permanent fix to the sustainable growth rate as well as $400 billion in health care cuts. Rep. Phil Gingrey (R-Ga.), who serves as co-chairman of the GOP Doctors Caucus said he believes there will be some physician payment fix in fiscal cliff negotiations, likely a one-year fix.

On Thursday (12/13), House Minority Leader Nancy Pelosi (D-Calif.) held a press conference during which she said raising the Medicare age was not on the table in the fiscal cliff negotiations. She further argued that Medicare and Social Security reform do not belong in the negotiations at all.

On Wednesday (12/19), the American Medical Association sent a letter to Senate Majority Leader Harry Reid urging Congress to act immediately to avert the Medicare payment cut to physicians. A cut of 26.5 percent on Medicare claims is scheduled to go into effect starting January 1.

AT THE AGENCIES

Early in December, 11 governors asked for a meeting with President Obama to negotiate for greater control over their Medicaid programs. The governors were interested in having the flexibility to expand Medicaid more modestly than the Affordable Care Act envisions. A few days later, Acting CMS Administrator Marilyn Tavenner and other CMS officials announced that if states do not expand their Medicaid systems pursuant to ACA requirements, they would not qualify for the full 100 percent funding under ACA either.

The Patient-Centered Outcomes Research Institute announced it is awarding more than $40 million over the next three years to 25 comparative-effectiveness research projects.

A new report by the Government Accountability Office identifies three key examples of the overlap between the CMS Innovation Center and efforts from other CMS offices. To decrease the risk of CMS duplicating payments for services, the GAO recommended CMS Acting Administrator Marilyn Tavenner direct the Innovation Center to review and eliminate areas of duplication expeditiously.

Ten Republican senators wrote the Obama administration urging it to extend the 30-day comment period and allow more review time for three recently proposed regulations: the essential health benefits rule, the health insurance market rules, and the HHS notice of benefit and payment parameters for 2014 rule. The director of the Center for Consumer Information and Insurance Oversight at CMS said he would not consider extending the comment period because interested parties need clarity to be prepared for October.

A temporary (three-year) $63-per-person fee will hit health plans serving about 190 million Americans starting in 2014. The fee, buried in a new regulation, is intended to help pay for individuals with pre-existing conditions. This fee will have to be paid by individual beneficiaries or employers.

 IN THIRD PARTIES

The Kaiser Family Foundation posted a new fact sheet that examines the similarities and differences between the Massachusetts and Washington five-year demonstrations to integrate care and align financing for dual eligible beneficiaries.

Findings from a new study by The Commonwealth Fund show the cost of family health coverage rose substantially faster than income between 2003 and 2011.

IN THE COURTS

On Friday (12/14), the founder of Domino's Pizza filed a lawsuit in federal court suing the federal government over the Affordable Care Act's mandatory contraception coverage. The founder currently offers health insurance to his employees that excludes contraception and abortion coverage.

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As the year’s end approaches, the Hill is a flurry of activity with representatives from various health groups trying to ensure that whatever solution Congress finds to the fiscal cliff problems does not negatively affect them and those they represent.  More proposed rules were published this week – among them, one on reducing incentives for insurers to avoid enrolling unhealthy people and another on establishing a multistate insurance plan program for exchanges.

AT THE AGENCIES

The Centers for Medicare and Medicaid Services (CMS) and the Office of the National Coordination for Health Information Technology (ONC) issued a proposed rule that tweaks the meaningful use criteria health care providers need to meet to qualify for payment under the federal Electronic Health Record (EHR) incentive program.  It adds an alternative meaningful use criterion for the electronic transmission of structured lab results from hospitals to ambulatory care providers who ordered the lab test.  Another change is to the ONC’s 2014 EHR certification criteria – the change calls for an update to the data element catalogue, which is what identifies which data is needed to calculate the clinical quality measures included in the EHR incentive payment program’s meaningful use requirements.

A CMS proposed rule, published on Friday (12/7), details a risk adjustment methodology to reduce incentives for health insurers to avoid enrolling people with pre-existing conditions.

A proposed rule, published on Wednesday (12/5), by the Office of Personnel Management provides guidance on establishing a multistate insurance exchange program.  The proposed rule highlights five main objectives: ensuring a choice of a least two high-quality products to consumers, promoting competition in the health insurance market, offering plans from the same issuer to families or small businesses residing/operating in more than one state, providing effective contractual oversight of the multistate plans, and working cooperatively with states and HHS to ensure a “level-playing field” for qualified health plans and multistate plans.

The Internal Revenue Service released new proposed regulations and a set of frequently asked questions regarding some of the new taxes intended to help pay for the Affordable Care Act.  The regulations address the Net Investment Income Tax, which applies at a rate of 3.8 percent to some net investment income for individuals, estates and trusts that are above certain statutory thresholds.  The IRS also released proposed regulations on the additional Medicare tax, which also applies to individuals and couples that fall above certain thresholds.

ON THE HILL

Negotiations to avert the fiscal cliff continue on the Hill.  Around Washington, people are expecting to see large cuts in spending on Medicare and Medicaid.  Other items flagged as potential negotiating tools are the Medicaid provider tax and graduate medical education.

The House Small Business Committee will be releasing documents with guidance to small businesses to assist them in complying with the law.  This past week, on Thursday (12/6), the committee released a list of provisions that will go into effect in the next two years.

Rep. Phil Roe (R-Tenn) and Rep. Phil Gingrey (R-Ga.) will serve as co-chairs of the House's GOP Doctors Caucus for the 113th Congress.  The Caucus’ stated goal is “to play an effective role in protesting the largest overhaul of our nation’s health system in history.”  Rep. Gingrey is currently a co-chair of the caucus, and Rep. Roe will be replacing current co-chair Rep. Murphy.

IN THE STATES

On Monday (12/3), 11 Republican governors sent a letter to President Obama requesting a meeting to discuss the impact of the Affordable Care Act.  Among the signees of the letter were Florida Gov. Rick Scott, Louisiana Gov. Bobby Jindal, Ohio Gov. John Kasich, Virginia Gov. Bob McDonnell and Arizona Gov. Jan Brewer.

On Thursday (12/6), New Jersey Gov. Chris Christie vetoed state legislation to set up a health care exchange.

In an address to the South Dakota state legislature on Tuesday (12/4), Gov. Dennis Daugaard strongly expressed his opposition to expanding the state’s Medicaid program.

Ohio Gov. John Kasich notified HHS that Ohio would not run a health exchange.  Though high level officials had already suggested this was the route Ohio would take, the state had not yet reported the decision to the federal department.

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

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On November 27, President Obama signed S.1956, the European Union Emissions Trading Scheme Prohibition Act of 2011, into law.  The law allows the Department of Transportation to exempt U.S. airlines from the carbon tax imposed by the EU.  However, the EU has delayed the implementation of the emissions trading proposal that was the impetus of the bill.

On the Hill

On December 5, the House passed a resolution of concurrence with the Senate version of H.R. 2838, the Coast Guard and Maritime Transportation Act of 2012.  If enacted, the two-year bill authorizes $8.6 billion in FY2013 spending and $8.7 billion in FY2014 spending for the Coast Guard.  Additionally, the bill reduces regulatory burdens on the maritime industry and small businesses.  H.R. 2838 would allow $1.5 billion in Coast Guard annual acquisition spending, less than the $1.9 billion recommended by the Governmental Accountability Office.  The bill passed on a voice vote and now awaits consideration by the Senate.

On Friday, the White House submitted its $60.4 billion Hurricane Sandy disaster relief funding request to Congress.  The request includes $6.2 billion in recovery funds for transit, $30 million for FAA facilities and equipment, and $32 million for Amtrak repairs.  Under the White House request, Federal Emergency Management Agency (FEMA) would receive an additional $21.5 billion, including $9.7 billion to support the national flood insurance fund, and the Army Corps of Engineers would be eligible for as much as an additional $5.35 billion.  The White House proposal also requests that $55 billion be designated as emergency funds and be exempted from cost offsets.

Rep. Shuster (R-Pa.) will become the chairman of the House Transportation and Infrastructure Committee in the 113^th Congress.  Reps. Chuck Fleischmann (R-Tenn.), James Lankford (R-Okla.), and Randy Hultgren (R-Ill.) have announced they will leave the committee in lieu of other committee appointments.  Rep. Jeff Landry (R-La.), who lost his re-election via a runoff vote on December 10, is also leaving the committee.

Sen. Jim DeMint (R-S.C.) resigned from the Senate last week.  DeMint, only two years into his second term, would have been the most senior Republican in the Commerce Committee and a possible choice for ranking member.  Upon his resignation, John Thune (R-S.D.) became the most senior Republican member of the committee.

At the Agencies

Secretary of Transportation Ray LaHood has announced that he intends to remain secretary at least through fiscal cliff negotiations.  LaHood has previously stated that if he were to remain secretary of Transportation in 2013, he will pursue a national texting-while-driving law.

On December 6, the Department of Transportation (DOT) released an additional $10 million to the state of New Jersey in emergency Hurricane Sandy relief.  DOT has now released a total of $20 million to New Jersey, $30 million to New York, $2 million to Connecticut, $3 million to Rhode Island and $4 million to North Carolina.

The U.S. Army Corps of Engineers has rejected the request of several members of Congress and shippers to increase flow to the Mississippi River by diverting tributaries to ensure adequate water levels for transportation.  In a December 6 letter to legislators, U.S. Army Assistant Secretary for Civil Works Jo-Ellen Darcy denied the request, citing a significant negative impact for the Missouri River if such a diversion were to occur. The Mississippi River is currently at its lowest point in 50 years due to drought, and companies are already reducing cargo shipments on the Mississippi.  The corps is fast-tracking work to remove rock pinnacles between St. Louis and Cairo, Ill., to compensate for low water levels.

Last week, the Department of Energy released its commissioned study on the effects of expanding natural gas exports.  The study, written by NERA Economic Consulting, projects net economic benefits from increasing natural gas exports despite projecting domestic price increases and lower real wage incomes in certain industries.  The Department of Energy was waiting for the release of the report before acting on 15 pending natural gas export applications.

According to the U.S. Energy Information Administration (EIA), domestic crude oil production reached a 15-year high in September.  In September, about 6.5 million barrels per day were produced.

The Environmental Protection Agency has announced that Christopher Grundler will become the director of the Office of Transportation and Air Quality (OTAQ).  Grundler currently leads the National Vehicle and Fuel Emissions Laboratory, and has served as the deputy director of the OTAQ since 1995.  The OTAQ oversees vehicle emissions and participates in setting Corporate Average Fuel Economy (CAFE) standards.

In the States

New York and New Jersey: Sen. Chuck Schumer (D-N.Y.) told a Senate Commerce panel that New York transportation infrastructure suffered $7.5 billion dollars in damage from Hurricane Sandy.  The lion’s share of damage comes from the New York Metro Transportation Authority (MTA).  The MTA, which operates New York City’s subway system, suffered roughly $5 billion in damages.  James Weinstein, executive director of NJ Transit, told the panel that New Jersey’s damages include $100 million to repair or replace rail equipment and another $300 million to fix and replace track, wires, signaling and equipment, as well as money to cover costs of supplemental bus and ferry services and lost revenue.  Additionally, Weinstein believes that his agency needs another $800 million to make improvements to the transit system to withstand storms like Sandy. 

Virginia: Gov. Bob McDonnell said earlier this month that raising Virginia’s gas tax, tying it to inflation or otherwise adjusting it are all potential options for addressing the state’s infrastructure funding problems.  Currently, the state gas tax is a flat 17.5 cents per gallon – almost six cents per gallon less than neighboring Maryland.  In an attempt to build support for the increase, McDonnell reasoned that “every other major tax in Virginia … fluctuate with economic activity because they’re a percentage.” 

Florida: The Tampa-Hillsborough County Expressway Authority (THCEA) has announced that it will sell $455 million as new credit.  Though the THCEA’s name is known in the bond market, in the past it has operated as an agency of the state with Florida's Division of Bond Finance selling bonds on its behalf.  However, in 2009 the Florida state legislature passed a bill that authorizes the THCEA to issue its own bonds.  A portion of the offering will provide new money to finance some capital projects, including a portion of a one-mile project called the Interstate 4 Connector.  Proceeds will also refinance all outstanding Series 2002 and 2005 bonds that were issued by the state on behalf of the Expressway Authority, repay a $49.2 million loan made by the Florida Department of Transportation from the state Infrastructure Bank, and repay a $7.4 million loan from the state Toll Facilities Revolving Trust Fund.  

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What is the AMT?

The Alternative Minimum Tax is a flat income tax with two brackets, 26% for individuals and 28% for married couples, that does not allow certain deductions for dependents, medical expenses, or state or local taxes. Taxpayers are obligated to pay the AMT if it is higher than their regular tax rate. About five million people paid the AMT last year.

What’s the problem?

The AMT is not indexed to inflation, and as such, Congress has passed yearly patches to the AMT to prevent millions of middle income taxpayers from paying the tax. This year, however, Congress has not passed legislation to adjust the AMT to inflation. The inflation patch is expected to cost approximately $100 billion.

How will this affect 2012 tax returns?

According to the Congressional Budget Office, without an inflation patch passed by Congress, more than 26 million households will pay an average of $3,700 more in taxes for 2012. Congress is currently considering passing an AMT inflation patch as part of a deal to avert the so-called fiscal cliff.
 

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HHS is quickly moving to implement the Affordable Care Act.  Rules are out in the past two weeks that charge insurance companies to participate in federal exchanges, prohibit discrimination based on pre-existing conditions, detail essential health benefit requirements, and expand employment-based wellness programs.  In addition, in response to Liberty University’s request, the Supreme Court ordered the 4th Circuit to examine the constitutionality of ACA’s employer requirements.


AT THE AGENCIES

On Friday (11/30), HHS issued new rules that charge insurance companies monthly fees to sell plans through federally run insurance exchanges.  These fees will be pegged to the number of customers each insurer has in the exchange.

On Tuesday (11/20), HHS released three proposed rules implementing the Affordable Care Act.  Comments may be submitted during the 90-day comment period.  One of the rules details ACA’s guaranteed issue and community rating requirements.  The rule would prohibit health insurance companies from discriminating against individuals because of pre-existing or chronic conditions, gender or occupation starting in 2014.  Under the rule, the only factors by which insurers can underwrite are family size, geography and whether or not the individual smokes.  In addition, insurers may not charge seniors more than three times what they charge young people – currently, insurers in 42 states charge seniors five or more times what they charge young adults.

Another of the proposed rules outlines coverage of essential health benefits, which are the minimum package of benefits the Affordable Care Act says must be included in health insurance plans.  The categories of benefits that must be included are inpatient and outpatient care, emergency services, maternity and childhood care, prescription drugs, preventive screenings and lab work, mental health and substance abuse treatment, rehabilitation for physical and cognitive disorders, and dental and vision care for children.  Much of this information was already known.  One surprise, however, is that health insurance plans will have to cover the same number of prescription drugs as the benchmark plan in their states, which means there will be a greater number of prescription drugs covered in each class of drugs.

Finally, HHS also released a proposed rule that implements and expands employment-based wellness programs to promote health and help control health care spending.  Under the regulation, employers may reward employees for annual exams or regular workouts, but they may not punish people who do not engage in these activities.


IN THE STATES

According to a report released Monday (11/26) by the Kaiser Family Foundation, states that expand their Medicaid rolls would see only modest cost increases compared with the expense to the federal government.  Part of the states' concern over costs, however, is that the federal government could increase the percentage of the bill states have to cover in later years in response to fiscal woes.  The report also says that states would face increased Medicaid costs even if they do not expand their Medicaid programs.

On Friday (11/16), Georgia Gov. Nathan Deal said Georgia would not build a state exchange because it has "no interest in spending … tax dollars on an exchange that is state-based in name only."

Wisconsin Gov. Scott Walker, Texas Gov. Rick Perry, Maine Gov. Paul LePage and Arizona Gov. Jan Brewer also each sent letters to HHS Sec. Sebelius saying that their states would not set up state-based insurance exchanges.  This means the federal government will set up the exchanges in these states.  Gov. Perry also said he will not expand Medicaid.

On Friday (11/16), Michigan Gov. Rick Snyder announced he is planning to move forward with a partnership exchange, however, he has not foreclosed the option of a state-based exchange if the federal deadline is again moved or the state House votes for the bill.

Oklahoma Gov. Mary Fallin announced that Oklahoma would not pursue the creation of a state-based exchange or expand its Medicaid program.

On Monday (11/19), Pennsylvania Gov. Tom Corbett said that expanding Medicaid pursuant to the Affordable Care Act would cost the state millions of dollars that it does not have.  The state has not officially made its decision yet, though.  The state is particularly concerned about the “woodwork effect” – even though the federal government will cover the costs associated with newly eligible beneficiaries, many new beneficiaries will also “come out of the woodwork” who were previously eligible.  These individuals would have to be paid for by Pennsylvania since the federal assistance is only for individuals who are newly eligible.  This concern is by no means unique to Pennsylvania.

On Thursday (11/29), Missouri Gov. Jay Nixon said that he plans to expand Medicaid in the state.


IN THE COURTS

On Monday (11/26), the Supreme Court ordered the 4th Circuit Court of Appeals to examine the constitutionality of the Affordable Care Act’s employer requirements and mandatory coverage of contraceptives without a co-pay.  This was in response to Liberty University’s request that the Supreme Court reopen arguments against the employer mandate and contraceptive coverage mandate.

On Monday (11/19), a federal judge ruled against Oklahoma City-based Hobby Lobby in its attempt to block enforcement of contraceptive health insurance provisions of the Affordable care Act.  Hobby Lobby’s attorneys said they plan to appeal the ruling to a federal appeals court in Denver.
 

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What is budget sequestration?

Budget sequestration, commonly referred to as simply “sequestration” or the “sequester,” is the sweeping automatic, mandatory, across-the-board federal spending cuts that will occur on January 2. Sequestration will cut over $100 billion out of the FY2013 budget, half from defense spending and half from nondiscretionary domestic spending. Most mandatory entitlement spending, such as Social Security and Medicaid, will not be affected. Over the next nine years, sequestration will cut $1.2 trillion.

What are the potential effects of the sequester?

The sequester will cut a percentage of the budget of most programs and federal agencies, like NIH and the Department of Education. This may lead to the direct unemployment of thousands of federal employees and contractors, and it will result in a significant impact to the U.S. economy. Along with other, non-related tax changes that will go into effect at the start of the year, the sequester would increase and prolong unemployment and cause a recession, according to the Congressional Budget Office.

What has to happen?

President Obama and a bipartisan majority of Congress have expressed a desire to advert the sequester as part of the fiscal cliff negotiations. The President and Congress are negotiating a legislative deal that in theory will defer the budget cuts that will take effect in 2013. If legislation is not passed before January 2, the cuts will go into effect. After January 2, legislation could roll back some of the cuts, but the effects to unemployment and the economy would be more difficult to ameliorate as time passes.

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What is Medicaid expansion and why does it matter?

The Affordable Care Act greatly expanded the Medicaid program. Under the law, beginning in 2014, anyone 133 percent above the federal poverty line would qualify for Medicaid. This differs from the pre-ACA Medicaid program in that it is only conditioned on income level.  The Medicaid change envisioned by the ACA is so substantial that if all states adopted this new eligibility threshold, 17 million previously uninsured would gain coverage.  In contrast, the traditional Medicaid program required, not only qualifying as low-income, but also, being a child, parent of a child, senior, or being pregnant or disabled. The Affordable Care Act eliminated these additional requirements for Medicaid. However, the Supreme Court ruling limited the effects of the ACA’s Medicaid expansion.

What is the significance of the Supreme Court ruling for Medicaid?

Federal matching funds make up a significant portion of state Medicaid funding – at least 50% in every state. Because states rely on this funding to provide care to Medicaid beneficiaries, the penalty under ACA (pre-Supreme Court decision) that states would lose federal Medicaid funding altogether was severe.  A loss of federal funds was, in reality, not an option for most of the states. By taking away the penalty to states that fail to expand Medicaid rolls, the Supreme Court effectively made the Medicaid expansion requirement optional.  The Supreme Court said conditioning prior Medicaid funding on these expansions was an unconstitutional and impermissible infringement of states’ rights. As a result of the ruling, there is no penalty to states and states can choose whether to expand or not.

What are states thinking?

States have incentive to expand their Medicaid programs because the federal government will cover the full cost of additional beneficiaries for three years.  In 2017, the federal government will pay 95%, in 2018, 94%, in 2019, 93%, and by 2020 and for subsequent years the federal government will pay 90% of the costs of covering these individuals. Some states worry that having to pay even only 10% for all new beneficiaries will be too expensive given tight state budgets. Still other states worry that the federal government will have to further ratchet back the percentage, leaving states with the bill. There is no deadline for the Medicaid decision. Because the federal assistance is most generous in the first few years though, states have an incentive to expand early rather than later. CMS has said that states may expand at first and then change course later, however, it would be very difficult to take away these new entitlements once they have been given.

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• The balance of power in Washington remains intact: control of the White House and Congress remains as it was prior to the election.

• Notwithstanding that balance of power, we are NOT in a status quo political environment.

• There are two reasons why Cozen O'Connor Public Strategies ("CPS") thinks that the hyperpartisan logjam that has dominated Washington in recent memory temporarily will break: (1) for a short period, electoral politics are off the table, and (2) the fiscal cliff is looming and neither party wants to own throwing the country back into recession.

• The fiscal cliff refers to the economic impact of tax changes and government spending cuts, BOTH OF WHICH ARE MANDATED BY LAW, that take effect in 2013.

• The tax changes include expiration of the Bush era tax cuts, the payroll tax cut, and a variety of other temporary stimulative tax measures.

• The spending cuts, known inside the Beltway as "budget sequestration," are long term across the board cuts to government spending. Most mandatory entitlement programs, with the exception of Medicare, are excluded from these automatic spending cuts. Defense spending would absorb a particularly harsh blow.

• Early in 2013, the government also will hit the statutory limit on additional federal borrowing known as the debt ceiling.

• The non-partisan Congressional Budget Office has stated that going over the fiscal cliff will achieve significant deficit reduction, but likely will put the U.S. back into recession and cause unemployment to spike.

• There are two overwhelming policy imperatives in Washington: supporting economic recovery and reducing the budget deficit. There is little disagreement over the need to achieve both of these objectives.

• There are two historical political imperatives in Washington: for the Democrats, protecting entitlements and for the Republicans, holding firm against tax increases.

• In the election, Romney carried the senior vote and there was no broad repudiation of health care reform. CPS believes that this dynamic gives President Obama the latitude to negotiate on entitlement reform. On the other side of the aisle, the electorate did not seize upon the Republican message of economic growth through lower taxes. In the run up to the election, Republicans hinted that if they lose the Presidency they will have to consider revenue increases, so CPS believes that Republicans will now negotiate on taxes.

• CPS believes that in the lame duck session, we will see a period of congressional brinksmanship, but Congress ultimately will pass a limited legislative package to avert the fiscal cliff.

• CPS believes that the Republican leadership is prepared to accept short term revenue (tax) increases provided that there is a long term commitment from Senate leadership and the White House to corporate and individual tax reform. The President already has signaled a willingness to reform the corporate tax code, and there have been bipartisan discussions in the House on doing so for a number of months.

• There is broad bipartisan support for postponing the dramatic and automatic across the board spending cuts scheduled to take effect in January. Key Republican members of Congress and the President have said that they don't want the cuts to stand.

• CPS believes that the President and Senate Majority Leader Reid will agree to put entitlement reform on the table for 2013.

• This legislative package that CPS expects Congress to pass in the lame duck will: (1) defer budget cuts scheduled to take effect in 2013 to later years while making an immediate deficit reduction "downpayment" in 2013; (2) allow some of the temporary tax cuts, including the payroll tax cut, to expire; (3) compromise on extension of some of the Bush era tax cuts; (4) temporarily raise the debt ceiling to enable the government to borrow through mid 2013; and (5) through legislative procedure, bind the new Congress to engage in comprehensive discussions regarding a grand bargain to address taxes, entitlements, and government spending.

• Congress has a narrow window of opportunity to reach a grand bargain before mid-term election politics return front and center towards the end of the second quarter in 2013.

--

Howard Schweitzer

Mark Alderman

Rob Freeman

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The Importance of Evaluating Property and Making a Plan

A natural disaster can leave you and your business mired in financial uncertainty and insecurity. Assessing conditions, values, and assistance need is critical to both short- and long-term recovery. Below are important steps that every home or business should take in wake of a natural disaster.

Assessing Personal Conditions, Home, & Property

• Evaluate your living conditions. If livable, stay with the property/home/apartment and find water and a source of food.
• Find all insurance and any documents which have information regarding the value of the home, its content, and all relevant valuables. This will enable advanced living expenses extended by FEMA to be approved and expedited.
• Contact FEMA via phone, internet, the nearest FEMA Disaster Center, or local, state, or county centers and provide them with as much information as possible.
• Ask for an appraiser from FEMA or the respective insurance carriers to come for a site visit as soon as possible.
• Contact your employer if possible. They may have set up help lines, can provide temporary services, or can extend compensation.
• If all else is not possible, report to the governmental shelters and return to the homes regularly during allowed time frames

Assessing Your Business

• As quickly as possible, recover financial records and establish a leadership command for communications to governmental agencies and the press.
• Divide recovery efforts into employee help, governmental assistance, and private funding for business interests.
• Evaluate loss, both direct and indirect, for recovery assistance.
• Review if you have the business interruption insurance policy
• As soon as possible, set up a separate communications line for employees and government agencies
• Determine cash flow needs. If what is on hand exceeds business, review with internal CFO and COO if necessary.

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What is Medicaid expansion and why does it matter?

The Affordable Care Act greatly expanded the Medicaid program.  Under the law, beginning in 2014, anyone 133 percent above the federal poverty line would qualify for Medicaid.  This differs from the pre-ACA Medicaid program in that it is only conditioned on income level.  The Medicaid change envisioned by ACA is so substantial that if all states adopted this new eligibility threshold, 17 million previously uninsured would gain coverage.  In contrast, the traditional Medicaid program required, not only qualifying as low-income, but also, being a child, parent of a child, senior, or being pregnant or disabled.  The Affordable Care Act eliminated these additional requirements for Medicaid.  However, the Supreme Court ruling limited the effects of ACA’s Medicaid expansion.

What is the significance of the Supreme Court ruling for Medicaid?

Federal matching funds make up a significant portion of state Medicaid funding – at least 50% in every state.  Because states rely on this funding to provide care to Medicaid beneficiaries, the penalty under ACA (pre-Supreme Court decision) that states would lose federal Medicaid funding altogether was severe.  A loss of federal funds was, in reality, not an option for most of the states.  By taking away the penalty to states that fail to expand Medicaid rolls, the Supreme Court effectively made the Medicaid expansion requirement optional.  The Supreme Court said conditioning prior Medicaid funding on these expansions was an unconstitutional and impermissible infringement of states’ rights.  As a result of the ruling, there is no penalty to states and states can choose whether to expand or not.

What are states thinking?

States have incentive to expand their Medicaid programs because the federal government will cover the full cost of additional beneficiaries for three years.  In 2017, the federal government will pay 95%, in 2018, 94%, in 2019, 93%, and by 2020 and for subsequent years the federal government will pay 90% of the costs of covering these individuals.  Some states worry that having to pay even only 10% for all new beneficiaries will be too expensive given tight state budgets.  Still other states worry that the federal government will have to further ratchet back the percentage, leaving states with the bill.  There is no deadline for the Medicaid decision.  Because the federal assistance is most generous in the first few years though, states have an incentive to expand early rather than later.  CMS has said that states may expand at first and then change course later, however, it would be very difficult to take away these new entitlements once they have been given.

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Although these are not the only aspects of student loan policy that will come up in the next legislative session, these issues will drive the discussion regarding student loans.

Student loan debt is being reported as the next big “mortgage crisis” and private student loan lenders will likely be receiving the same congressional attention that private lenders did during the mortgage crisis.  Although allowing students to declare bankruptcy on their student loans would likely cause a wave of bankruptcies, this policy will still be up for debate.  It could very well serve as a bargaining tool for reaching a middle-of-the-road legislative alternative.  A recent Consumer Financial Protection Bureau report on student loans will not necessarily be the impetus for a legislative fix, but it will serve as the foundation for scheduling hearings and framing the debate.

How these two issues are framed will depend on the outcome of the election.  It is hard to draw any true conclusions on what the policy will end up looking like but they will be major discussion points when developing those policies.

The veterans’ issue is a hot one right now for student loans and will continue to be regardless of the outcome of the elections.  As troops are returning, more and more are taking advantage of their educational benefits.  The Consumer Financial Protection Bureau has a specific office set up for identifying consumer fraud  perpetrated against veterans.  Holly Petreaus, General David Petreaus’ wife, leads that office and her focus as of late has been a revaluation of the veteran student loan process and the targeting of veterans for loans from unscrupulous private lenders.
 

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What’s currently being done?

The Cybersecurity Act of 2012, that was defeated in the Senate in August, provides strengthened protection against cyber attacks in the federal government and in private, critical infrastructure systems. The bill would allow the government and private enterprises the ability to share information about threats more easily. In the absence of legislation, the Obama administration has indicated that it is prepared to move forward with an Executive Order that addresses key issues.
 

Is the legislation dead?

Not exactly. While the Cybersecurity Act of 2012, which is a bipartisan bill supported by a majority of Senators, did not survive a procedural vote in August, Senate Majority Leader Harry Reid (D-NV) has stated that the bill will be revisited after the November elections. Secretary of Defense Leon Panetta and General David Alexander, head of U.S. Cyber Command have both urged congressional action on cybersecurity after the election.
 

What’s the difference between the potential Executive Order and legislation?

The Executive Order would set policy under current law in regards to cybersecurity standards on critical infrastructure. The Executive Order cannot provide liability protection. A cybersecurity bill that passed the House in April and the Senate Cybersecurity Act both provided liability protection for private entities that shared information regarding cyber threats with the Administration. Without the incentive of liability protection, an Executive Order cannot be as effective as legislation.
 

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1) What are they?

Health insurance exchanges under the Affordable Care Act are government-run, online marketplaces for private insurance, which will allow individuals and small businesses to compare health insurance options and enroll in a plan easily. They are slated to be up and running by January 1, 2014. A primary goal of the Affordable Care Act is making health insurance available to everyone. The insurance exchange is one of the ways the law plans to achieve this goal.

2) How do health insurance exchanges help ensure that health insurance is available to everyone?

The reason an insurance system works at all is because it attracts, at least in theory,  a mix of all different risk levels into one pool. To an insurer, it’s okay if one beneficiary ends up being extremely unhealthy and expensive to treat so long as someone else ends up being equally healthy and inexpensive to treat on the other end of the spectrum. Achieving this balance requires the group to be random with respect to health. Because a group is likely to be more random and less sensitive to outliers as it gets larger, it is easier for a large company to get access to affordable insurance coverage than it is for a small company or an individual. The large number of individuals in the group suggests to an insurance company that it can bank on the average being the reality. This predictability gives the insurance company more flexibility in determining rates, and in turn, enables big companies to provide their employees with better and/or lower-cost health insurance.

For individuals outside of the large-employer-sponsored health insurance pools and for small businesses, which have smaller risk pools, it is more difficult to negotiate good rates. It is these individuals and small businesses that the health insurance exchanges seek to benefit. The exchange is intended to join these individuals, and separately (in most cases) the small businesses, into risk pools like the risk pools large organizations have, and to provide security against individual risk by increasing the size of the pools.

Together with the Affordable Care Act’s individual mandate, which requires all individuals to have health insurance, the random risk pools these large insurance exchanges create theoretically help relieve adverse selection problems.

3) Where are the states in the implementation process?

Under the Affordable Care Act, states need health insurance exchanges by 2014. A state can set up its health insurance exchange itself, work with the federal government to jointly establish an exchange, or defer to the federal government to establish it. States must decide which of these options to pursue (or let the federal government pursue) by this November 16^th.

For states that want to create a state-based exchange, there is also a January 1, 2013 deadline. On this date, HHS must approve the state-based exchange as on its way to being fully or conditionally operational by January 1, 2014. Most states are well behind schedule to meet these deadlines. Some states that are still studying options might have already chosen to operate a state-run exchange were it not for the tight deadlines. Other states have hired consultants to give them insight as to the time and monetary cost of establishing an exchange and some have then decided to let the federal government take on the responsibility. Some states believe the federal government would have difficulty establishing exchanges for as many states as are opting for federal exchanges, and, standing in opposition to the Affordable Care Act, would like to contribute to making the job too big for the federal government to accomplish. Still others realize that if Governor Romney becomes president and has sufficient congressional support, the exchanges might be repealed or might look different than they look under the Affordable Care Act, and as a result, these states may wait until after the election to make significant time or monetary investments in making a decision. In addition to these complexities, given budget realities in Washington, there are concerns about the availability of funding for exchange implementation whatever states decide.

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In 2012, the words "dysfunctional" and "government" go hand in hand. As a result, the stakes for businesses that are regulated by, receive funding from or otherwise intersect with government at its various levels never have been higher.

While the Fall elections are on everyone's mind, regardless of the outcome, the country again will experience serious political brinksmanship shortly thereafter. Congress will grapple in its lame duck session with the expiring Bush tax cuts, the need to again raise the debt ceiling, looming cuts to the federal budget, expiration of the payroll tax cut, and appropriations for the upcoming government fiscal year – and those are just a few of the issues. Congress will try to address these issues against a backdrop of a still struggling economy, financial regulatory reform, health care reform, and a lingering political hangover from the 2008 financial crisis.

"Governmental risk is intertwined with a variety of other risks facing the enterprise, including, among others, reputational risk and compliance risk."

Uncertainty reigns, and the government is playing a historically disproportionate role in the private sector. So, how does an organization effectively manage its governmental risk, i.e., the potential for government action or inaction to frustrate its business objectives, and turn that risk into a business opportunity?

First, analyze governmental risk as its own distinct risk category. Second, develop a basic understanding of the ways in which government can impact the organization. And third, develop and execute a macro and micro strategy for addressing governmental risk.

Governmental risk is intertwined with a variety of other risks facing the enterprise, including, among others, reputational risk and compliance risk. To effectively address governmental risk, however, an organization should conduct an annual governmental risk assessment and inventory governmental risks across the enterprise. Senior management should prioritize addressing those risks that pose the greatest threat to the organization.

To evaluate the risks that an organization faces at its intersections with government, management needs to have a framework for understanding government. The "three Ps" – policy, politics, and process – guide government decision making and provide a useful reference for a management team thinking about how to mitigate governmental risk.

Government policy is the public goal that the government is attempting to achieve, and it is, at times, hard to comprehend or rationalize, from a private sector perspective. Government policy usually reflects an effort to balance various interests, as opposed to profit and loss that guide private sector activity.

Politics influences government decision making at a number of levels. The public is most accustomed to thinking about this in the context of the two party system, Republicans and Democrats. And while those politics surely matter, more often politics revolves around things such as home state interests, job creation, and the need to show progress on signature initiatives.

Process – the manner in which the government arrives at and executes decisions – is the most misunderstood component of government. For example, if one is attempting to influence legislation, knowledge of the legislative process is as important as enlisting policy support for a bill. Likewise, in the executive branch, it's critical to understand that there are stark differences between the way career civil servants and political appointees look at and address issues.

Depending upon your organizational needs – for example, getting business from the government or keeping the government out of your business – an organization may employ offensive or defensive strategies or both. Simply knowing a member of Congress or other Washington "big wigs" is not a strategy. A strategy needs to account for every moving part in government that impacts your risks. Identify your political assets and liabilities. Who are your friends? Who are your enemies? How does the geography of your organization impact your influence in Washington? Map out the government decision makers impacting your organization and think through those officials' perspectives on key issues and develop a plan to advance your interests.

In executing a strategy there are a few keys. Build relationships early enough in the process of the particular initiative you are trying to advance to be able to have a meaningful dialogue with decision makers. Follow the "no surprises rule" – stay out in front with key officials on all issues, good and bad. Perhaps, most importantly, the most difficult time to mitigate any risk, but particularly governmental risk, given the potential legal and public relations consequences, is when crisis already has struck. So don't wait.

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After failing to pass the Cybersecurity Act of 2012, Congress began its August recess on Friday with members of the House and Senate out of town until the second week of September. At the state level, Georgia voters shot down a one cent state sales tax that would have helped fund infrastructure improvements across the state.

On the Hill

On August 2, the Cybersecurity Act of 2012 failed to survive a cloture vote. The bill would have imposed stricter networking standards on American utilities to prevent fraudulent access or cyber-terrorism. Although the stricter measures on critical infrastructure such as railroads, water treatment facilities, and power plants were loosened from mandatory to voluntary, the bill’s critics cited privacy concerns and new costs to businesses in their opposition. President Obama had penned a rare op-ed stressing the necessity of the bill.

On July 25, Congress passed the Sequestration Transparency Act, which would require the Obama Administration to detail specifically the $1.2 trillion in budget cuts that are scheduled to take place on January 2, 2013. If President Obama signs the bill, the Office of Management and Budget (OMB) would have 30 days to report its future sequester cuts to Congress. While most federal programs will experience mandatory cuts, the Highway Trust Fund may be exempt depending on the OMB’s interpretation of the Budget Control Act of 2011.

Sen. Jim DeMint (R-SC) has blocked the nomination of Michael Huerta to Administrator of the Federal Aviation Administration, and indicated that he may object to approval of any nominations until next year. Huerta has been Acting Administrator of the FAA since last year. Sen. DeMint cited his desire to hold the vote after the election, as the nomination is to a five-year term.

In the seven months leading up to the August recess, Congress has considered a number of bills that impact infrastructure development, but only passed the Moving Ahead for Progress in the 21st Century Act, which reauthorizes surface transportation programs, leaving several infrastructure-related legislative priorities unresolved. While the House has passed H.R. 5972, the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, and H.R. 5325, the Energy and Water Development and Related Agencies Appropriations Act, the Senate has yet to vote on the equivalents. Additionally, neither body has acted on bills to reauthorize Coast Guard activities (H.R. 5887/S. 1665). Further, other infrastructure bills remain stalled, such as  H.R. 6026, the DREDGE Act, which would allow the Army Corps of Engineers to dredge the Mississippi River to accommodate larger vessels traveling from the expanded Panama Canal. It is very unlikely that Congress will complete work on any major infrastructure legislation with the limited time remaining in the legislative year. Action on appropriations is expected to come in a six month continuing resolution, setting overall spending levels at those authorized by the Budget Control Act. As such, additional funding and major authorization questions will remain until the new Congress convenes next year.

At the Agencies

The Transportation Security Administration (TSA) and the American Federation of Government Employees (AFGE) have reached a labor agreement for the representation of TSA’s 43,000 employees. The labor contract, which includes collective bargaining, will require a vote from TSA employees to go into effect. AFGE was elected by TSA employees in June and has been negotiating the terms of the labor agreement since. The terms of the agreement have not been released.

The National Petroleum Council (NPC), the federal advisory committee to the Secretary of Energy, released itsAdvancing Technology for America’s Transportation Future report. The report predicts that internal combustion fueled engines will still reign as the leading vehicular propulsion system in 2030. The NPC believes that vehicles powered by compressed natural gas, not electric batteries, will be the closest competitor to combustion engines, assuming the price of natural gas remains low. However, the report states that the lack of infrastructure supporting compressed natural gas engines would be a considerable barrier to their success.

In the States

New York: Governor Andrew Cuomo is considering a plan that will reallocate $47 million in funds intended for work on roads and bridges within Seneca Nation of Indians (SNI) territory if a resolution is not reached quickly to allow important transportation work to proceed. The project to reconstruct 11.5 miles of Interstate 86 stalled when SNI leaders demanded “exorbitant” new fees for work within the territory and failed to negotiate with New York state.  In an effort to solve this dispute, New York has proposed allowing the SNI to take its fee from the more than $400 million in revenue the Senecas still owe the state relating to its three Western New York casinos. The work scheduled for SNI territory has a combined cost of over $40 million and would create hundreds of construction jobs. 

Georgia:The proposed transportation sales tax that we discussed in our last alert was voted down in nine of twelve multi-county regions. The Transportation Special Purpose Local Option Sales Tax (T-SPLOST) was a one cent state sales tax that would have helped fund infrastructure improvements throughout Georgia. If passed, the tax would have provided $18 billion for road and transit projects in the state, including $6.1 billion going to the metro Atlanta area. Although advocates of the plan had hoped that the largely Democratic Atlanta region would provide a base of support for the tax, over 63 percent of voters voted against the referendum. 

Massachusetts: The Massachusetts Senate has passed a nearly $1.4 billion transportation bond bill to fund infrastructure projects throughout the state. The bill is aimed at maintaining and repairing the Commonwealth’s existing infrastructure and creating jobs throughout the state. 

Virginia: Gov. Bob McDonnell announced that Virginia has entered into a public-private partnership to construct 29 miles of HOV/HOT lanes on I-95. The construction will create 8,000 jobs and approximately $2 billion in economic activity. Two private companies have agreed to finance $854 million of the project’s estimated $925 million price tag in exchange for a 76 year concession period on the stretch of road. Virginia will maintain ownership of the infrastructure.  The construction will begin next month and is slated to be completed in 2014. 

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Over the past week, analysts at the Congressional Budget Office said they expect that the Supreme Court’s decision, which struck down the requirement that states expand their Medicaid programs, will result in 3 million more uninsured and reduce costs by $84 billion; and the House Appropriations Committee released its fiscal 2013 budget for HHS, allocating $68.3 billion to the agency and defunding the Affordable Care Act.

AT THE AGENCIES

On Tuesday (7/17), the House Appropriations Committee released a draft of its fiscal 2013 budget for HHS. The draft includes $68.3 billion for HHS, defunds the Affordable Care Act and ends HHS' Agency for Healthcare Research and Quality as of October 1.

On Thursday (7/26), HHS announced a new plan to crack down on health care fraud. The Department of Health Human Services and The Department of Justice will be partnering with over a dozen health insurers and industry groups to prevent fraudulent health care schemes.

On Thursday (7/19), HHS Secretary Sebelius announced an opportunity to help states design and test improvements to their health care systems. Through the initiative, states will work with a broad coalition of employers, insurers, community leaders, service organizations and health care providers to design or test multi-payer payment and delivery system improvements to health care systems for Medicare, Medicaid and CHIP beneficiaries.

ON THE HILL

On Tuesday (7/24), the Congressional Budget Office (CBO) said that 3 million fewer Americans will gain health insurance through the health reform law because the Supreme Court loosened the law's requirement that states expand Medicaid coverage, and the CBO’s revised budget reflecting the change includes an $84 billion reduction from its March 2012 estimate. The CBO also said that the proposed repeal of the Affordable Care Act would increase the deficit by $109 billion between the years of 2013 and 2022.

IN THE STATES

Virginia Attorney General Ken Cuccinelli is pointing to language in the Affordable Care Act that suggests if a state does not set up a state-based insurance exchange, its citizens will not be able to be fined for not participating. The fines in the law, Cuccinelli argues, apply only to failure to participate in a state-based exchange, but not a federally established one.

Alaska Governor Sean Parnell announced on Tuesday (7/17) that Alaska will not set up an insurance exchange program because it is too expensive.

On Wednesday (7/18), Arkansas Governor Mike Beebe said he is still inclined to move forward with an expansion of Medicaid under the Affordable Care Act, but the matter will be decided by a vote in the Legislature next year.

On Tuesday (7/17), Kentucky Governor Steve Beshear signed an executive order to create the Kentucky Health Benefit Exchange, effective January 1, 2014.

THIS WEEK      

On Thursday (8/2) from 10:00 a.m. to 12:00 p.m. at 1333 H St. NW, the Center for American Progress will host a discussion titled, "Cutting Health Care Costs: Leading Experts to Propose Bold Solutions."

On Friday (8/3) from 12:15 to 2:00 p.m. in the Columbus Club at Union Station, the Alliance for Health Reform will hold a briefing titled, "Medicaid Managed Long-Term Services and Supports: Are More Caution and Oversight Needed?" RSVP by noon on August 2.

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

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Last week the House of Representatives voted to repeal the Affordable Care Act, but several Republican governors expressed willingness to expand their states’ Medicaid programs in accordance with the Act if their states could be granted control over how the dollars would be spent, and Kentucky committed to joining 15 other states and the District of Columbia in establishing a health insurance exchange under the Act.

ON THE HILL

The House of Representatives voted to repeal the Patient Protection and Affordable Care Act. The bill passed 244 – 185, with five Democrats crossing over to support the symbolic repeal legislation. Eyes then turned to the Senate, where Republican Leader Mitch McConnell filed an amendment to force a similar repeal bill in the Senate, but Senate Majority Leader Harry Reid committed to blocking such efforts. As President Obama and others this week noted, this is the 33rd House vote to repeal the health care law.

House Republican Study Committee Chairman Jim Jordan and Congresswoman Michele Bachmann are asking their House colleagues to defund the Affordable Care Act now, not wait until next year and prospective future repeal votes. Jordan and Bachmann’s signature campaign has already put 80 congressmen on record as being willing to defund the law this year.

AT THE AGENCIES

As a result of the Affordable Care Act’s passage, 12.8 million Americans are now receiving a health insurance rebate, which was announced last month. The rebates average $151 per household and were triggered by the Act’s “medical loss ratio” provision, which caps insurance companies’ administrative costs at 20 percent of their premiums.

IN THE STATES

At the National Governors Association meeting over the weekend, five Republican governors expressed a willingness to expand their states’ Medicaid programs under the Affordable Care Act if the federal government would give their states the flexibility to use the funds as they see fit. The governors noted that their states – Virginia, Nebraska, Utah, Tennessee, and Wyoming – would prefer to receive Medicaid funds as block grants and disperse them as they believe best. 

In Indiana, a new private health insurance exchange called JA Exchange launched last week. The exchange will offer private insurance alternatives to state-sponsored programs, but it will also incorporate provisions of the Affordable Care Act so consumers can receive a full menu of options as intended by the Act.

While Texas Governor Rick Perry has said his state will not now proceed with establishing a health insurance exchange, Texas Health and Human Services Commissioner Tom Suehs testified that implementing the Affordable Care Act would cost Texans less than he originally predicted. Suehs originally projected the creation of a federal health insurance overhaul would cost $27 billion over 10 years, but now he expects that figure to be more like $15.6 billion.

Kentucky Governor Steven Beshear formally told Health and Human Services Secretary Kathleen Sebelius on Tuesday that he would sign an executive order to create a health insurance exchange, which would meet the requirements of the Affordable Care Act. Kentucky will be the 16th state, plus the District of Columbia, to either have enacted legislation to create an insurance exchange or to have established one by executive order.

THIS WEEK:

Today (7/18) at 2:00 p.m. in 216 Hart, the U.S. Senate Special Committee on Aging will conduct a hearing titled "Examining Medicare and Medicaid Coordination for Dual-Eligibles.”

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What is LIBOR and why does it matter?

LIBOR, or the London Interbank Offered Rate, is the average interest rate at various maturities at which global banks borrow funds from other banks. LIBOR is calculated by Thompson Reuters in London using interest rate estimates submitted by traders at leading banks. Over $360 trillion of assets globally are indexed to LIBOR.

What is the allegation regarding bank manipulation of LIBOR?

Barclays Bank has been fined $450 million by U.S. and U.K. regulators for intentionally submitting false rates to manipulate LIBOR for its own gain. Barclays submitted deceitful rates to increase profit in their derivatives portfolio and to appear more financially sound. There is an emerging contention that the LIBOR manipulation was tacitly endorsed by government regulators.

What are the potential future implications of the scandal?

Regulators in the US, UK, EU, Japan, Canada, Switzerland, and others are investigating the possibility that LIBOR has been manipulated by other large, multinatioal banks. While some have suggested there will be a wave of ligation against the banks, it’s very difficult to tell if this actually harmed borrowers.  This scandal ensures that more investigations and shaken confidence will persist in an already fragile financial sector.

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The Supreme Court upheld the Patient Protection and Affordable Care Act in a landmark 5-4 decision, which prompted many in business, the administration and states around the country to proceed with the Act’s implementation, while others are preparing for a major political effort to repeal the law.

IN THE COURTS

In a landmark decision, the Supreme Court upheld much of the Patient Protection and Affordable Care Act on Thursday (6/28), including the federal mandate to purchase health insurance, but not the power of the federal government to withhold Medicaid funds from states that choose not to participate in the law’s Medicaid expansions.

AT THE AGENCIES

Medicaid expansions planned under the Affordable Care Act now hang in the balance as state officials decide whether to participate in or opt out of the law’s Medicaid provisions. The Supreme Court effectively said states may implement the new Medicaid expansions included within the law and receive the financial benefits that accompany those expansions, or they may maintain their existing Medicaid programs without having to face a withholding of funds for those programs.

IN THE STATES

Texas is weighing whether to participate in or opt out of the Affordable Care Act’s Medicaid provisions, which, if implemented, would extend coverage to 1.8 million Texans, but also cost the state an estimated $2.6 billion between 2014 and 2019.

Republican governors in numerous states that were party to the case before the Supreme Court vowed to ignore the Court’s ruling at least until after the election.

ON THE HILL

Republican lawmakers on Capitol Hill are already discussing ways to repeal the Affordable Care Act, including the use of unconventional means such as reconciliation, which might allow portions to be repealed with only 51 votes in the Senate. There will likely be a symbolic vote to repeal the Affordable Care Act on July 11, but a larger campaign to repeal the legislation would, at a minimum, require Republicans to win the White House, gain seats in the Senate, maintain control of the House, and then proceed in near perfect unity on repeal efforts, likely including little-known legislative procedural moves.

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

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Last night the members of the Congressional Transportation Conference Committee agreed on a bicameral long term transportation reauthorization bill.  House GOP leaders now have until Saturday at midnight to approve the bill prior to the expiration of the current financing measure. The two year bill, which would provide $8.4 billion in funding each year, is similar in structure to a bipartisan bill passed by the Senate earlier this year.   Industry leaders have been particularly vocal in encouraging the passage of a multi-year bill as another short-term extension would leave many projects around the country in jeopardy.  Additionally, the transportation legislation will include a one-year freeze for government subsidized student loan rates.  Off the hill, the TSA allows an additional airport to hire private screeners and states continue to look for alternative solutions to meet infrastructure needs in a difficult economic climate.

On the Hill

Early this morning the conference committee released a new long term surface transportation bill. The bill (H.R. 4348) represents the first agreement on long-term transportation funding legislation since 2005.  Transportation Committee Chairman John Mica (R-Fla.) said that this “tentative agreement establishes federal highway, transit and highway safety policy and keeps programs at current funding levels through the end of fiscal year 2014. Unlike the last transportation bill, which contained over 6,300 earmarks, this bill doesn’t include any earmarks. This bill also does not increase taxes.” Funding has been extended nine times over an almost four-year period since the expiration of the last federal highway bill.  The agreement came together when Republicans agreed to drop controversial provisions from the legislation, such as approval for the Keystone XL pipeline and the blocking of government regulation of coal ash.  In return, Democrats gave up on $1.4 billion for conservation and agreed to allow states more leeway in how they use money that was once mandated for landscaping, bike improvements and pedestrian walkways.

Capping off a particularly productive week for Congress, Senator Kyl (R-Ariz.) has said legislators agreed to put a one-year freeze on government subsidized student loan rates.  It is believed the transportation and student loan bills may combined and presented and voted on as a package.  If an agreement was not reached, federal Stafford student loans would have doubled on July 1.

Elsewhere, the House is continuing work on the fiscal 2013 Transportation, Housing and Urban Development and Related Agencies appropriations bill.  A vote on the final bill is expected by the end of the week.  It is possible that certain levels in the appropriations bill will change based on the authorization bill being worked out by the conference committee.

According to Greg DiLoreto, the president-elect of the American Society of Civil Engineers (ASCE), U.S. infrastructure projects will probably keep their near-failing grade with the ASCE issues its next report on U.S. public facilities in 2013.  The current grade for our country’s infrastructure from the ASCE is a “D”.

At the Agencies

On June 22, Transportation Secretary LaHood announced that 47 transportation projects in 34 states and D.C. will receive a total of almost $500 million from the U.S. Department of Transportation’s TIGER (Transportation Investment Generating Economic Recovery) 2012 program.  Applications for this most recent round of grants totaled $10.2 billion, far exceeding the $500 million set aside for the program.

On June 21 the Senate Commerce Committee questioned acting Federal Aviation Administration (FAA) Administrator, Michael Huerta, who was nominated to the position by President Obama. The hearing included many questions regarding FAA’s delayed safety rules and overwhelming number of whistleblower complaints. Unlike other high-level U.S. political appointees, who serve only as long as the president who nominated them is in office, the FAA job has a five-year term.

The Transportation Security Administration (TSA) has approved private airport security screeners for Orlando’s Sanford International Airport.  A program allowing for airports to hire private security screeners was included in the $59 billion FAA Authorization bill approved earlier this year.

Earlier this month, U.S. Transportation Secretary Ray LaHood awarded $37.5 million to the King County Department of Transportation to build new bus rapid transit lines as part of greater-Seattle’s new six corridor rapid transit system.  The new funding comes from the Federal Transit Administration’s Bus and Bus Facilities Grant Program.

In the States

Florida: On June 14 Florida Governor Rick Scott held a ceremonial bill signing at the Port of Miami for a package of transportation bills totaling more than $450 million and enabling the bonding of another $450 million.  Florida's 14 seaports handled nearly $149 billion worth of goods in 2011 – 50.4 percent of which came from South and Central American – and it is expected that this number will rise as a result of the widening of the Panama Canal.  $60 million is slated to go directly toward improving the ports while the majority of the funding is to improve Florida’s roadways.

New Jersey: Assembly Democrats are attempting to block Governor Chris Christie’s plan to borrow $260 million for transportation funding.  Although Christie’s original transportation plan called for a reduction in borrowing, due to budget shortfalls – partly caused by a recently instituted tax cut – New Jersey is planning on borrowing even more in 2013 than it did in 2012.  Assembly Democrats believe it is fiscally irresponsible to borrow money to pay for a tax cut the state might not be able to afford.  Even if the bill is ultimately passed, it would put more pressure on the state’s Transportation Trust Fund, which has not been able to cover yearly payments on its existing debt.

New Jersey/Pennsylvania: New Jersey Transit has approved a rapid-transit bus route to connect heavily traveled southern New Jersey roads with downtown Philadelphia.  The $46 million project would let buses travel on highway shoulder lanes and the median for part of the trip.  The route could be in service as soon as 2020.

New York: Governor Andrew Cuomo announced that $4.4 million has been awarded to 10 companies, municipalities, and other entities to enable more than 325 new electric-vehicle (EV) charging stations to be installed across New York State.  New York State's electric-vehicle charging stations are supported by a joint effort by the New York State Energy Research and Development Authority's Electric Vehicle Supply Equipment Demonstration Program and the U.S. Department of Energy. New York's transportation sector has considerable potential for energy efficiency. Transportation makes up about three-fourths of the state's oil consumption, and nearly 40 percent of the state's greenhouse gas emissions.

Last week New York City’s Department of Transportation announced a plan to open bidding for the management of 80,800 parking spots across all five boroughs. While some critics are already drawing parallels to the disastrous sale of Chicago’s parking meters in 2008, New York City intends to retain the power to set rates and enforce penalties.  Further differentiating the plan from the Chicago plan is that NYC’s objective is not to structure an upfront payment.  In Chicago, it is estimated that motorists may pay a Morgan Stanley-led partnership at least $11.6 billion to park at city meters over the next 75 years, 10 times what former Mayor Richard Daley got when he leased the system in 2008.  NYCDOT’s request for qualifications is open through July 31.

Texas: Texas State Highway 130, which is currently under construction and will run between San Antonio and Austin, may become the first U.S. road to post a speed limit of 85-mph.  Texas passed a law last year allowing speed limits of up to 85 mph on newly constructed highways deemed safe enough for such high speeds.  Texas and Utah are the only states that even allow speed limits of 80-mph.

Virginia: Governor Bob McDonnell has recently recommitted to a series of public-private partnership projects, including the Hampton Roads Bridge-Tunnel, Interstate 64 on the Peninsula, Interstate 95, and possibly the Port of Virginia.  McDonnell’s decision to rely so heavily on the private sector stems from frustration with the state’s legislature.  The governor of Virginia has the power to circumvent the legislature pursuant to the Public-Private Transportation Act of 1995, which allows private entities to enter into agreements to construct, improve, maintain and operate transportation facilities. All in all, there are eight projects that are designated with "candidate" status for public-private partnerships and an additional 14 in the "conceptual" phase. Virginia is currently seeking public comment on these P3 projects.

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 1.  Despite initial characterization in the press as a split decision, the Supreme Court's ruling in Arizona v. United States is a significant victory for opponents of the Arizona immigration law.

2.  The Court upheld lower court rulings striking down key provisions of an Arizona law that would have (a) criminalized failure to comply with immigration registration requirements, (b) criminalized illegal immigrants seeking employment, (c) provided authority to state law enforcement officers to make warrantless arrests of certain aliens suspected of being in the U.S. illegally.  

3.  The Court upheld, contrary to lower court decisions, a provision of the Arizona law that allows a state law enforcement officer to consult with federal immigration officials regarding the status of an otherwise lawfully detained individual when the officer suspects such individuals of being in the U.S. unlawfully.  The Court made clear, however, that it expects this authority to be narrowly construed and explicitly reserved the right to reconsider the provision in the future.

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While business and government leaders awaited the Supreme Court’s decision on the Affordable Care Act, major Act implementation developments occurred around the country, including Rhode Island’s decision to proceed with health insurance standards, New Hampshire’s decision to block the implementation of a health insurance exchange, and CMS’s announcement that 14 million Americans have already been served by Affordable Care Act programs it manages, while the cost associated with those programs is likely to rise over the next decade.

AT THE AGENCIES

The Centers for Medicare and Medicaid Services report that 14.3 million seniors have already taken advantage of preventative health care benefits furnished through the Affordable Care Act, which means they have received at least one free preventative benefit over the past year.

Regardless of how the Supreme Court rules on the Affordable Care Act, the annual growth rate for U.S. health care spending will likely remain near historic lows for 2013, and then rise at a modest pace for about the next 10 years, CMS said last week. Between 2011and 2013, health care spending is projected to grow around 4 percent, which is just over the historically low rate of 3.8 percent, but the growth in spending is likely to rise to 7.4 percent as coverage expands under the Affordable Care Act.

CMS also announced that from August 1 through September 19, the center will accept applications related to the Advanced Payment Accountable Care Organization Model, driven by the Affordable Care Act. The advanced payment ACO model enables organizations that voluntarily come together to give coordinated, high quality care to their Medicare patients, to receive an advance on their expected shared savings.

ON THE HILL

The Affordable Care Act received support this week from a subcommittee of the Senate Appropriations Committee, which approved $1.5 billion of increased discretionary spending for HHS programs that will fall under the Affordable Care Act in 2013.

IN THE STATES

Rhode Island’s General Assembly approved legislation to establish health insurance standards consistent with those set forth in the Affordable Care. Gov. Lincoln Chafee requested enactment of the legislation.

Though he previously signaled support for creation of an exchange per the requirements of the Affordable Care Act, New Hampshire Gov. John Lynch signed Republican legislation to block the implementation of a health insurance exchange in New Hampshire.

THIRD PARTIES

The Catholic Health Association retreated from its initial position in support of the Affordable Care Act. The association, which is the largest group of nonprofit health care providers in the United States, said it is “imperative” that the Obama administration expand its exemption for Catholic hospitals, schools, and other ministries of the church. 

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

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While the Supreme Court makes its decision on the Affordable Care Act, lawmakers in Washington, D.C., are driving forward repeal-oriented legislation and simultaneously talking about reinstating elements of the Act should the whole thing be struck down, while HHS, CMS, and the IRS all released new or proposed rules on how to implement elements of the Act, and states like California and Oregon moved closer to full implementation of the Affordable Care Act.

AT THE AGENCIES

The IRS issued guidance on employer implementation of the Affordable Care Act’s new $2,500 cap on employee contributions to flexible health savings accounts, and has requested comments on possible changes to the “use-or-lose” rules for health FSAs. The $2,500 limit will become effective with cafeteria plan years beginning after December 31, 2012 and will be indexed for inflation.

CMS released its 2011 data on the Primary Care Incentive Program which, established by the Affordable Care Act, requires Medicare to pay primary care providers whose primary care billings comprise at least 60 percent of their total Medicare allowed charges, a quarterly bonus of 10 percent from Jan. 2011 – Dec. 2015. The majority of funds (86 percent) went to physicians practicing in urban areas, and roughly 50 percent went to general internists while 38 percent went to family physicians.

ON THE HILL

Awaiting the Supreme Court’s decision on the Affordable Care Act, Senate Republicans now appear to be embracing a contingency plan rumored to be afoot among key House Republicans: Reinstate popular provisions of the Affordable Care Act if the Supreme Court overturns the law. Notable provisions under discussion include the ability of young adults to stay on their parents’ insurance through age 26, a guarantee of coverage for those with pre-existing conditions, and plans to close the Medicare prescription drug coverage gap known as the “doughnut hole.”

The House Ways and Means Committee marked up four bills and related measures on flexible savings accounts and health savings accounts, which easily passed committee with strong support from Democrats and Republicans.

The previously private details of a lengthy negotiation and deal between the Obama administration and the pharmaceutical industry on the Affordable Care Act were made public last week when the House Energy and Commerce Oversight and Investigations Subcommittee released a memo and associated documents as part of its ongoing investigation launched more than a year ago.

IN THE STATES

New Hampshire’s Granite State Network has teamed up with Cigna to launch a collaborative accountable care initiative that is focused on achieving many of the same goals as accountable care organizations.

Oregon’s Health Authority has provisionally certified 11 organizations to be the state’s first coordinated care organizations under an overhaul of the Oregon Health Plan, made possible by the Obama administration’s approval earlier last month of a $1.9 billion grant. The 11 organizations will be responsible for integrating health care for low-income patients on Medicaid, and more organizations are expected to apply for certifications soon and possibly come online this autumn.

California’s state senate approved a bill to make numerous protections of the Affordable Care Act – such as ensuring individuals do not lose or get denied coverage because of pre-existing conditions and requiring every health plan to include guaranteed availability and renewability of coverage – part of California law.

IN THIRD PARTIES

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Ten Things to Watch this Summer

1. Europe -- As Europe's debt crisis grows more troubling, it has the potential to dramatically impact the global economy, which could have ramifications for the President's reelection.

2. Unemployment -- It's cliché to say, but if America's unemployment number ticks below 8% (irrespective of whether the number has come down because people have stopped looking for work), that's a real positive for the President.

3. Iran – As sanctions get tougher the US has a squadron of stealth fighters that have been moved to within striking distance of Iran, and the Iranians recently seem to have become more "flexible" with UN inspectors.

4. Ohio -- Ohio may once again decide the 2012 election, and, surprisingly, the state's unemployment rate of 7.4% is far below the national average.

5. Budget Sequestration -- There is increasing rhetoric in the Congress around scaling back these automatic cuts to defense spending and Medicare, among other programs, but uncertainty will continue to surround these cuts into the lame duck session of Congress.

6. The "Bain" of Romney's Existence -- The President will do everything he can to make Romney look like a vulture capitalist.

7. Tea Party -- This faction of the Republican Party appears to be losing some traction, which ironically will make it easier for the Republicans in Congress to govern.

8. Price of Gas -- After a Spring spike, prices have come down.

9. Pakistan -- Tensions with the U.S. are flaring and the balance of power in South Asia is hanging in the balance.

10. The Stock Market -- If the market dips, that will bode negatively both as a sign of the U.S. recovery and psychologically in terms of the President's re-election prospects.
 

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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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