Congressional Budget Justification

What it means:  Each year the President prepares and submits to Congress a budget, outlining his spending and policy priorities for the coming federal fiscal year.  Accompanying his budget are narrative explanations from each federal agency which present to Congress, specifically the House and Senate Appropriations Committees, the rationale behind the proposed increases or decreases in spending and/or any suggested changes in policy.  These “budget justifications” or “Congressional Justifications” – CJs – also include information about spending for the current federal fiscal year, the prior federal fiscal year, and the upcoming “request” year.  The CJs typically provide updates regarding agency programs, initiatives, projects, and activities and report on the status of requests that Congress has made of the agencies in the previous year’s appropriations measure.

Used in a sentence:  ( http://officeofbudget.od.nih.gov/br.html)

“The NIH Congressional Justification (“CJ”) provides the Senate and House Appropriations Committees detailed estimates and justifications for research and research support activities (infrastructure, administrative, etc.) that NIH would anticipate funding at the President’s Budget Request level.”

Excerpted Example from HHS CJ from FY 2014 Administration on Children, and Families: (https://www.acf.hhs.gov/sites/default/files/olab/fy_2014_cj_final_web_4_25_13.pdf)

“Head Start (+$1.65 billion) – The FY 2014 request for the Head Start program is $9.6 billion, an increase of $1.65 billion from the FY 2012 enacted level. These funds will allow Head Start programs to serve approximately 1,053,000 children by providing new opportunities for working parents to enroll their infants and toddlers in high quality early learning and development programs through the Early Head Start – Child Care Partnership proposal. The Budget supports implementation of new regulations that require low-performing grantees to compete for continued funding. Funding is requested to minimize the disruption of services to Head Start children and families during the transition period to new Head Start provider. The FY 2014 request focuses on improving program quality and ensuring that funds are directed towards the organizations most capable of providing high quality early education that can put children on a path to school success and opportunity.”

An Update from Washington – Debt Ceiling, Taxes, and Health Care – Oh My!

Election year politics already have arrived at the Capitol.  Members of the House and Senate in both parties have their eyes on November 4th and are putting forward agendas and proposals to position themselves favorably in the eyes of the electorate.  Look and listen for a lot of rhetoric—and possibly some action—on jobs and the economy.  With a significant number of Democratic Senate retirements and numerous competitive races, conventional wisdom is that control of the Senate is in play and that Republicans have a solid chance of taking the chamber in the November election.  Pundits agree that the House remains solidly in Republican control and the Democrats will remain in the minority for the next two years.

With the budget deal struck by Senator Patty Murray (D-WA) and Representative Paul Ryan (R-WI) late last fall, much of the Congressional work on the budget and federal appropriations already has been predetermined for the year.  Treasury Secretary Jack Lew recently announced the nation will hit its debt ceiling on February 27th; so before the deadline, the Congress is expected to enact a measure to increase the nation’s borrowing authority without the previous political jockeying and drama.

Senate Finance Committee Chairman Max Baucus (D-MT) was confirmed as U.S. Ambassador to China late last week—causing a Senatorial game of musical chairs with respect to the chairmanship of numerous committees.  The Senate Finance Committee, which has tax policy writing authority, will soon be led by Ron Wyden (D-OR), who has expressed an interest in rewriting the tax code.  Changes he wishes to make include increasing the standard deduction, using the tax code to incentivize businesses to invest overseas earnings in domestic infrastructure, and bringing closer in line the taxation of investment income and ordinary income.

The latest in the implementation of the Affordable Care Act:  on Monday, February 10th the White House announced it again was modifying the requirement for businesses with between 50 and 99 employees—they now have until 2016 to provide health insurance to full-time workers (those working at least 30 hours a week) or pay a penalty.  This requirement already had been delayed a year; such businesses have one more year without being subject to the mandate.  Beginning this year, businesses with more than 100 full-time workers are required to offer coverage to at least 70 percent of their full-time workers or face a penalty; starting next year they must offer health care to 95 percent of their full-time workforce.

Meanwhile, Republicans in the House of Representatives are seeking to change the Affordable Care Act definition of full-time workers from 30 hours a week to 40; earlier this week, the proposal gained some momentum with three Democrats signing on as cosponsors of the measure.  However, with the Democrats still in control of the Senate, at least through this calendar year, it is highly unlikely such a measure would be brought up for a vote in that chamber.  Should the Republicans sweep in November, it is likely that starting in 2015, the President will be sent numerous measures related to repealing or replacing provisions of the Affordable Care Act; if such legislation is attached to other proposals, President Obama will be put in a difficult position of deciding whether or not to enact or veto them.  Only time and the election will tell what the future holds with respect to the long term viability of health care reform.

Budget Deal Passed: Next Steps

As the year winds to a close, the House and Senate have both approved a bipartisan budget deal, which sets allocations for the remainder of Fiscal Year (FY) 2014 and for FY 2015. The President is expected to sign the deal.

The agreement provides $1.012 trillion for FY 2014 and $1.014 trillion in FY 2015.  While it does not completely address sequestration, the budget deal provides some relief from the sequester for discretionary spending; $63 billion for both years.  For more information on the specifics of the deal click here: http://www.budget.senate.gov

So what happens next?

The House is now home for the holidays and the Senate will follow shortly. Appropriations Committee staff will be working overtime to try to draft language for the remainder of FY 2014 that Congress will consider when they return in the New Year. The current Continuing Resolution (CR) expires on January 15th.

There are a number of different scenarios as to how FY 2014 will play out:

  1. An omnibus of all 12 bills
  2. Large package including some bills and CR for others where there is not consensus
  3. A CR with just a date change to carry the federal government to September 30, 2014 (least likely)

A few things to keep in mind:

  1. The current CR expires on January 15th, which does not allow for much time to draft language and get consensus. We could see another short term (possibly just a few days) CR to buy Congress some more time to work on the funding bills.
  2. Even though there has been agreement on FY 2014 and FY 2015 top line numbers and some sequestration relief, the debt ceiling will be another fight early in the New Year.
  3. The budget deal included a three month fix to the SGR (or doc fix), however, discussions around finding a permanent fix to this expensive issue will continue in the early part of the New Year.
  4. While the budget deal did provide some sequestration relief, the issue is certainly not resolved and will continue to plaque Congress going forward.
  5. The sequestration relief that was provided only addresses the discretionary side of spending and in fact extended the sequester for mandatory spending—meaning that Medicare providers will see another 2 percent cut to their reimbursement in 2014.
  6. The President’s budget for FY 2015 is usually delivered to Congress in mid-February but could be delayed until after the FY 2014  spending is resolved.
  7. Elections – wild card. While the general feeling is that most lawmakers want to get FY 2014 resolved, it is hard to tell how primaries and elections will influence the playing field. This will be something to watch.

Budget deal reached

Senate and House negotiators reached an agreement yesterday, December 10, 2013, on top line numbers for Fiscal Year (FY) 2014 and FY 2015 spending and partial replacement of the sequester cuts.

It is being reported that the “bipartisan package includes $63 billion of ‘sequester relief,’ $85 billion of total savings, and $23 billion in net deficit reduction. The agreement would set the discretionary spending level for fiscal year 2014 at $1.012 trillion, and $1.014 trillion in FY 2015.”  Click here to view the Politico article.

A summary, section by section, and legislative text of the budget deal can be found here.

The House is expected to consider the proposal as early as tomorrow, Thursday December 12th.  While there are rumblings in the press that some conservatives and some Democrats are not happy with the deal it is too soon to know if that is the sign of a true compromise or trouble brewing in the wings.

CBO Releases Compilation of Offsets

On Wednesday, November 13, 2013, the Congressional Budget Office (CBO) released a 318-page report outlining 103 various options for decreasing federal spending.  CBO does not advocate for specific policy proposals; rather this document represents a compendium of the major proposals it recently has scored.  These reports are helpful because in addition to providing current cost estimates, CBO generally will include some language discussing the pros and cons of the specific policy option.  CBO also released a handy summary table of the options contained in the report.

In terms of health care savings, the report identified 16 options including:

  • Overall savings for Medicare-related policies ranged from $230 billion to $869 billion over ten years.  Included in the report are options related to converting Medicare to a premium support model ($22 to $275 billion), imposing restrictions on Medigap plans ($52 to $114 billion), increasing the age of eligibility for Medicare ($23 billion), increasing Medicare Part B and Part D premiums ($20 to $287 billion), imposing additional bundled payments on providers ($17 to $47 billion), and imposing rebates on prescription drug manufactures for Part D low-income beneficiaries ($123 billion).
  • Overall savings for policies related to health insurance exchanges and employer-sponsored coverage ranged from $476 billion to $823 billion over ten years.  Included in this report are options related to eliminating the subsidies for moderate-income individuals who purchase coverage in the health insurance exchanges ($173 billion), adding a “public option” to choices available in the health insurance exchanges ($37 billion), and reducing the tax incentives for employer-based health insurance coverage ($266 to $613 billion).
  • Overall savings for veterans’ health care policies ranged from $99 billion to $150 billion over ten years.  Included in the report were options related to adding out-of-pocket cost-sharing for TRICARE for Life ($31 billion), modifying TRICARE cost-sharing for working-age military retirees ($20 to $71 billion), and restricting Veterans’ Affairs (VA) Medical Care eligibility ($48 billion).
  • The remaining policy options included block granting Medicaid ($105 to $606 billion), limiting medical malpractice claims ($57 billion), reducing funding for National Institutes of Health (NIH) ($13 to $28 billion), and increasing the cigarette tax ($37 billion).

This compendium will prove useful as Congress continues to look for offsets to pay for various priority issues (like permanently addressing the SGR).  Of course, many of these proposals have been scored by CBO over the years (e.g., increasing the age of eligibility and imposing Medicare premium support model) and the prevailing wisdom thus far seems to be that such policies would be politically challenging to enact absent some grand bargain on entitlement reform.

Health Care on the Hill: Week of November 11, 2013

Wednesday, October 13, 2013

9:30 a.m.
ObamaCare Implementation: The Rollout of Healthcare.gov
House Oversight and Government Reform Committee Hearing
2154 Rayburn House Office Building

10:00 a.m.
Cyber Side-Effects: How Secure is the Personal Information Entered into the Flawed Healthcare.gov?
House Homeland Security Committee Hearing
311 Cannon House Office Building

10:00 a.m.
Budget Conference Committee Meeting
1100 Longworth House Office Building

Thursday, October 14, 2013

10:00 a.m.
The Effects of the Patient Protection and Affordable Care Act on Schools, Colleges, and Universities
House Education and the Workforce Committee Hearing
2175 Rayburn House Office Building

10:00 a.m.
Obamacare Implementation Problems: More than Just a Broken Website
House Energy and Commerce Subcommittee on Health Hearing
2322 Rayburn House Office Building

10:00 a.m.
Self-Insurance and Health Benefits: An Affordable Option for Small Business?
House Small Business Subcommittee on Health and Technology Hearing
2360 Rayburn House Office Building

Friday, November 15, 2013

10:00 a.m.
Reviewing FDA’s Implementation of FDASIA
House Energy and Commerce Subcommittee on Health Hearing
2322 Rayburn House Office Building

Government Shutdown Now Over – But What About Sequestration?

The government may be back up and running and funded under a short-term continuing resolution (CR), but the battle is far from over as Congress heads toward new deadlines to address budgetary matters.  There has been some confusion about what the current budget agreement means in terms of sequestration’s annual cuts to discretionary and mandatory programs instituted in 2012.  The law signed by the President to address the short-term continuing resolution and temporarily raise the debt ceiling does not provide federal agencies flexibility to administer new sequestration cuts at this time.  With the government spending levels remaining at FY 2013 levels for the duration of the CR, a new round of sequester cuts are not set to kick in until January 2014.

The law established a short-term budget conference committee, with a set deadline of Dec. 13, 2013 to outline recommended spending levels and program cuts.  Of note is that the committee deadline is set in advance of when the second year of the sequester will begin.  The deadline provides a window of opportunity for the new budget conferees to address how the sequester cuts are applied in FY 2014.   The conferees may contemplate making other adjustments to entitlement programs (Medicare and Medicaid) to address health care spending issues that will be negotiated during their deliberations.  In addition, Medicare payments to physicians are set to be cut by approximately 25 percent if Congress does not address the cut by December 31, 2013 and offset the cut with a payfor that would likely include cuts to other health care entities. Any of these negotiations and decisions, if ultimately accepted by Congress, could impact the size of the Medicare sequester cuts in January FY 2014.

Shutdown Day 16 Recap

Last night the House and Senate passed, and the President signed, legislation to both fund the government and raise the federal debt limit – the shutdown has ended.

The deal contained a continuing resolution (CR) to fund the government through January 15, 2014 and a debt limit extension to February 7, 2014. The bill also contained language requiring verification of income for those eligible for the Affordable Care Act’s subsidies.

Another provision in the CR/debt ceiling legislation is a bicameral, bipartisan budget conference. This conference is to meet to discuss discretionary spending levels for fiscal year (FY) 2014 and develop a report, due December 13, 2013. The conference committee is chaired by Senate Budget Committee Chair Patty Murray (D-WA) and House Budget Committee Chair Paul Ryan (R-WI). House conferees include Representatives Diane Black (R-TN), Assistant Democratic Leader James Clyburn (D-SC), Tom Cole (R-OK), Appropriations Committee Ranking Member Nita Lowey (D-NY), Tom Price (R-GA), and Budget Committee Ranking Member Chris Van Hollen (D-MD). All Senate Budget Committee members were named as conferees.

The Senate passed the bill with a vote of 81-18 and the House then followed with a vote of 285-144. The bill passed the House with 87 Republicans and 198 Democrats.

Following the vote, the Senate adjourned until Monday, October 28th. The House is scheduled to be in session today, but no schedule has been announced.

While the deal is good news – federal employees can go back to work and will get paid, federal programs can continue, and national parks and monuments are reopened – with the short-term CR, we could be facing this all again in 90 days.

Shutdown Day 14 Recap

Yesterday Senate Majority Leader Harry Reid (D-NV) and Senate Minority Leader Mitch McConnell (R-KY) met and subsequently announced that they were working toward a deal. The deal is reported to involve a continuing resolution through January 15, 2014, a debt ceiling hike through February 7, 2014 and a deadline of December 13, 2013 for holding a bicameral budget conference to discuss alternatives to sequestration. The deal does not include a delay of the Affordable Care Act’s (ACA’s) individual mandate (or completely defunding the ACA), but including income verification requirements for the ACA’s insurance subsidies is still on the table. The plan funds the government at $986 billion until January 15th, when a $21 billion cut pursuant to sequestration would go into effect.

A White House meeting with Congressional leadership scheduled for yesterday afternoon was postponed to allow Senate leadership more time to work out a deal.

The House passed one additional limited continuing resolution (CR) yesterday, to fund the Bureau of Indian Affairs, Bureau of Indian Education, and the Indian Health Service. H.J.Res. 80 passed by a vote of 233-38.

Also yesterday the Department of Energy released guidance for furloughed workers regarding temporary employment. Under the guidance, retail and food service positions are okayed, but consulting is not.

Shutdown Days 11, 12, and 13 Recap

The last few days have been characterized by talks and negotiations rather than votes on specific proposals to end the government shutdown and/or raise the debt ceiling before the October 17th deadline. Over the weekend, the House was in session on Saturday and the Senate was in session on Sunday.

Senate Republicans met with President Obama at the White House on Friday. Like the meeting with House Republicans, the meeting was considered cordial and productive, but without a resolution. It was also reported that President Obama seemed willing to negotiate, including on the medical device tax.

It was reported Sunday that the Senate remains at an impasse over funding levels and the duration of a debt ceiling increase. Despite seeming to have made some progress with Senator Susan Collins’ (R-ME) proposal late last week, the proposal now appears to be off the table due to disagreement over some of the details in the plan. Senate Majority Leader Harry Reid (D-NV) and Senate Minority Leader Mitch McConnell (R-KY) spoke on Sunday but did not reach an agreement.

A few votes were recorded – on Friday the House passed a funding bill for the National Nuclear Security Administration (H.J. Res 76, vote of 248-176). On Saturday the Senate voted 53-45 against cloture on S. 1569, the Default Prevention Act of 2013, which would raise the debt limit through 2014 without any spending cuts.

Additionally, on Saturday morning, a number of House Members lined up to sign a discharge petition that would bring a “clean” continuing resolution to the floor for a vote.

On Saturday, New York reopened the Statue of Liberty, which is operated by the National Park Service, despite the shutdown.