This Week on the Hill
The House and Senate are both in session this week before adjourning for the July 4th holiday, and all attention will be on the Senate’s healthcare bill.
The House convenes today and will consider four bills under suspension of the rules, including H.R. 2258, which allows military reservists and active-duty members of the armed forces who drive specialized vehicles to use that experience toward obtaining a commercial truck driver’s license. For Tuesday and the balance of the week, the House will consider 11 bills including two immigration-related bills: the No Sanctuary for Criminals Act (H.R. 3003) and Kate’s Law (H.R. 3004). Several committees scheduled hearings this week: the Judiciary Committee will hold a hearing Tuesday on legislation to stop the importation of synthetic drugs; the Ways and Means Committee will hold a hearing Thursday on the payroll tax and state compliance; and the Education and the Workforce Committee will hold a hearing Wednesday on strengthening education research.
The Senate convenes today and will resume consideration of the nomination of Kristin Svinicki for an additional term on the Nuclear Regulatory Commission. The Senate is currently scheduled to vote on health care overhaul legislation, with a procedural vote likely on Wednesday; if that is successful, a “vote-a-rama” on dozens of amendments could begin on Thursday, with a vote on the final bill happening as late as the weekend. Several committees scheduled hearings this week: the Banking Committee will hold a hearing Thursday on the principles of housing finance reform; and the Appropriations Committee will hold several budget hearings.
Fiscal Year 2018 Budget Update
Last week the House Appropriations Legislative Branch subcommittee approved a $3.58 billion fiscal 2018 spending bill by voice vote with no amendments offered. The bill would provide $100 million more than the fiscal 2017 enacted level to fund operations in the House, Capitol Police, Library of Congress, Government Accountability Office and other legislative branch agencies. A full committee markup is scheduled for Thursday. Five subcommittee markups are scheduled in the House this week: the Defense subcommittee will mark up its fiscal 2018 spending bill today; the Agriculture and Energy-Water subcommittees hold markups on Wednesday; and the Commerce, Justice and Science and Financial Services and General Government subcommittees will hold markups on Thursday. The House Budget Committee may mark up the fiscal 2018 budget resolution this week, although no meeting has been scheduled at this time and no draft language has been released.
Senate Republicans Release Affordable Care Act Repeal and Replace Draft Bill
On June 22, 2017, the Senate released the discussion draft bill, H.R. 1628, the Better Care Reconciliation Act of 2017, that would amend the Affordable Care Act (ACA). An updated version, including text and summary, was released today. The Congressional Budget Office (CBO) estimate is expected by early this week, and a vote in the Senate is planned by Thursday prior to the July 4th recess.
In the draft bill, the major changes affecting Medicaid are:
- Per Capita Caps Shifts federal Medicaid funding to a per capita cap approach starting in federal fiscal year 2020. A state’s cap would be the sum of the per enrollee amounts for five categories: 1) elderly, 2) blind and disabled, 3) children, 4) expansion enrollees, and 5) other adults. Once the base amount per enrollee is set for fiscal year 2019, each state’s cap would be increased by the applicable annual inflation factor, which varies by category. For children and nondisabled adults, the annual change is based on the medical care component of the consumer price index (CPI-M) and for enrollees who are disabled or age 65 or older to no more than CPI-M plus 1 percentage point. By 2025, the cap on the growth of per-enrollee payments would be at the level of the consumer price index, a significantly lower rate than the CPI-M. Excluded from per capita expenditures: blind and disabled children, DSH payments, Medicare cost-sharing (dual eligibles), new safety-net funding.
- Per Capita Caps Base Period-Setting To set the per capita base period, the bill permits States to elect which 8 consecutive quarters to use from the 15 quarters starting with the first quarter of federal fiscal year 2014 through the third quarter of federal fiscal year 2017. States must submit their 8 quarter selections by January 1, 2018. Those per capita amounts are converted to a base fiscal year and inflated from the last month of a State’s per capita base period to September,2019 by CPI-M to determine the amounts for fiscal year 2019.
- Penalties and Rewards based on State’s Spending Provides for deductions or increases to a state’s per capita cap if a state’s per capita spending differs from the national average (mean) by 25% or more; a deduction for states with higher spending per enrollee and an increase for states with lower spending per enrollee. The amount of deduction or increase is determined by the Secretary of HHS and can range from 0.5% to 2.0%. For the first two fiscal years, 2020 and 2021, the Secretary shall apply this provision by deeming all enrollment categories into a single category.
- Per Capita Cap Notifications States shall be notified by April 1, 2018 of their provisional fiscal year 2019 per capita caps. States shall be notified by January 1, 2020 of their fiscal year 2020 per capita caps.
- Expansion Enhanced Federal Match Terminating Phases down and eliminates the enhanced matching rate to states that elected the Affordable Care Act (ACA) Medicaid expansion over a four-year period with a federal matching rate of 85% in calendar year 2021, 80% in 2022, 75% in 2023 and the state’s regular matching rate in 2024 and beyond. Freezes the early expansion state enhanced matching rate transition percentage to the 2017 levels of 80%, instead of increasing the federal share for these states in fiscal years 2018 and 2019 under current law.
- Safety-Net Funding Provides $2 billion per year for five years ($10 billion total) to non-expansion states for certain Medicaid provider payment adjustments, identified as safety-net funding: 100 percent federal funding beginning with federal fiscal year 2018 through fiscal year 2021, and 95 percent for fiscal year 2022.
- DSH Payments for Non-Expansion States Exempts non-expansion states from scheduled Medicaid DSH allotment reductions. In addition, certain non-expansion states would receive an increase starting in fiscal year 2020.
- Optional Work Requirements Provides for states to require work requirements as a condition of medical assistance to a non-disabled, nonpregnant individual. An additional 5% in federal administrative funds would be provided to states that elected this.
- Block Grant Option Adds an option for a state to elect a Medicaid flexible block grant beginning with fiscal year 2020. States are required to provide as targeted health assistance the following services: hospital, lab and x-ray, nursing facility, physician, home health care, rural health clinic, federally qualified health center, family planning, nurse midwife, pediatric and family nurse practitioner, freestanding birth center, emergency medical transportation, non-cosmetic dental, and pregnancy-related. The package of services must have an actuarial value of at least 95% of a defined benchmark coverage. A state may impose premiums, deductibles, cost-sharing, or other similar charges, except that the total annual aggregate amount shall not exceed 5% of the family’s yearly income. Maintenance of effort requirements are imposed. The amount of the block grant is determined by the per capita expenditures multiplied by the number of non-expansion enrollees increased by the state’s population increase from the base period plus 3 percentage points. States can rollover unused funds for certain allowable uses if they continue to implement a flexible block grant in the subsequent year. Provisions are included for a state to terminate the block grant and transition to a per capita cap funding plan.
- Provider Tax Limits on States The maximum provider tax rate that states can impose and use for state share of Medicaid spending is phased down from 6% to 5.8% in fiscal year 2021, 5.6% in fiscal year 2022, 5.4% in fiscal year 2023, 5.2% in fiscal year 2024, and 5% in fiscal year 2025 and beyond.
- Quality Performance Bonus Payments Provides $8 billion for four years, fiscal years 2023 through 2026, for quality performance bonus payments, to states that have lower than expected aggregate medical assistance expenditures and shows performance against quality measures determined by the Secretary of HHS.
- Medicaid Rulemaking Process Medicaid rules implementing this bill requires the Secretary to solicit advice from the state Medicaid agencies and their directors if they have a direct effect on the financing or operation of state plans.
- Eligibility Determination Provisions Limits or ends certain presumptive Medicaid eligibility processes and permits states to conduct expansion enrollee eligibility redeterminations every six months or more frequently.
FirstNet Releases Individual State Plans
On June 19 the First Responder Network Authority (FirstNet) and AT&T announced the delivery of individual state plans, which were released via an online portal. According to the release, states and territories have up to 45 days to review the plans and will also have the opportunity to exchange feedback with FirstNet before an official 90-day clock starts for each state or territory’s governor to make an “opt-in/opt-out” decision on its state plan. FirstNet and AT&T are partnering to build the first nationwide high-speed data network for first responders.
Education Releases FAQ for Feedback on State ESSA Plans
Last week the Department of Education released a set of frequently asked questions (FAQ) on the state consolidated plans required under the Every Student Succeeds Act (ESSA). The document was released following initial department feedback on the state plans submitted by Delaware, New Mexico, and Nevada; each of these states submitted completed consolidated state plans on or before April 15, 2017. The FAQ includes information on the state feedback, resources available to states, and the state plan process. The state plans submitted to date, along with initial feedback for the three states, can be found here.
House Passes Mobile Workforce Bill
On Tuesday the House approved by voice vote the Mobile Workforce State Income Tax Simplification Act of 2017 (H.R. 1393), which aims to simplify state income tax laws for employees who work multiple days per year outside the state of their residence. The bill is sponsored by Representatives Mike Bishop (R-UT) and Hank Johnson (D-GA) and has 57 bipartisan co-sponsors. The bill provides that an employee would only be subject to another state’s taxes if he or she works there more than 30 days per calendar year; an employee’s earnings would still remain subject to full tax in the state of their residence. The Senate companion bill is S. 540, led by Senators John Thune (R-SD) and Sherrod Brown (D-OH).
States Face Loss of Federal Funding from Transit Safety Deadline
On June 19 the Federal Transit Administration (FTA) announced its notification to 30 states where rail transit systems operate that federal law requires they establish an FTA-certified State Safety Oversight Program by April 15, 2019. If a state fails to obtain certification for its program by the deadline, FTA indicated it is prohibited by federal transportation law from obligating any funds to public transportation agencies throughout the state until certification is achieved. This timeframe was established through a rule finalized in April 2016. To help states achieve certification, FTA provided a toolkit with guidance for managing the program certification process and also posted a status table that shows each state’s progress toward FTA certification, along with the approximate amount of transit funds that would be withheld if a state fails to meet the deadline. Nine states still require legislative action at the state level prior to FTA certification.
Bipartisan Lawmakers Send Letter to Treasury on Preserving State and Local Tax Deduction
Last week a bipartisan group of lawmakers, led by Representatives Bill Pascrell, Jr. (D-NJ) and Leonard Lance (R-NJ), sent a letter to Treasury Secretary Steve Mnuchin protesting the administration’s plan to eliminate the federal deduction for state and local taxes. The letter notes that “eliminating this deduction would single out and harm the highest-taxed states in the country” and highlights that in New Jersey, the deduction primarily benefits middle-and lower-income earners. Further, the letter notes that the National Governors Association, U.S. Conference of Mayors, and the National Conference of State Legislatures have spoken out against eliminating the state and local deduction.
House and Senate Release FAA Reauthorization Bills, Markups Scheduled This Week
The House and Senate each introduced bills last week to reauthorize the Federal Aviation Administration (FAA), whose current authorization expires September 30. In the House, the 21st Century Aviation Innovation, Reform and Reauthorization Act (21st Century AIRR Act) provides a six-year reauthorization of the FAA and also includes a provision to spin-off air traffic control operations to a non-profit corporation. Funding of $51.1 billion is provided for the first three years of the bill. On the Senate side, committee members introduced S. 1405, the Federal Aviation Administration Reauthorization Act of 2017, which reauthorizes federal aviation programs for four years (through fiscal year 2021). The bill provides $68 billion in total funding, including $51 billion in the first three years, but it does not include the air traffic control provision. The Senate is scheduled to markup its bill on Thursday while the House will hold its markup on Tuesday.
Administration Makes Final FY2017 LIHEAP Allocations
Recently the Administration for Children and Families (ACF) released the second and final round of fiscal year 2017 funding available for the Low Income Home Energy Assistance Program (LIHEAP). A total of $378 million was released; Congress appropriated total funding of $3.39 billion under the fiscal year 2017 omnibus bill (P.L. 115-31) signed into law on May 5. A table showing state and territorial funding amounts can be found here.
Recently Released Reports
Health Expenditures by State of Residence, 1991-2014, Centers for Medicare & Medicaid Services
June 2017 Report to Congress on Medicaid and CHIP, Medicaid and CHIP Payment and Access Commission (MACPAC)
Equity in Education: Key Questions to Consider, Education Commission of the States
Medicaid and CHIP for Children: Trends in Coverage, Affordability, and Provider Access, Urban Institute
CDC Surveys Find Increase in the Number of U.S. Counties with Mosquitoes that Can Spread Zika, Centers for Disease Control and Prevention
Economic News
Unemployment Rates Stable in Most States in May
New data from the Bureau of Labor Statistics shows that many state unemployment rates saw little change in May; 38 states and the District of Columbia had stable unemployment rates, 3 states had higher rates and nine states had lower rates. Compared to one year earlier, 28 states and the District of Columbia had little or no change, while 22 states had unemployment rate decreases. The national jobless rate, 4.3 percent, was little changed from April but was 0.4 percentage point lower than in May 2016. Nonfarm payroll employment increased in 9 states and the District of Columbia in May, decreased in 4 states and was essentially unchanged in 37 states. Over the year, 28 states added nonfarm payroll jobs and 22 states and the District of Columbia were essentially unchanged.
Real State Personal Income Grew 4.1 Percent in 2015
According to new data from the Bureau of Economic Analysis, real state personal income grew on average 4.1 percent in 2015, after increasing 3.6 percent in 2014. Growth of real state personal income – a state’s current-dollar personal income adjusted by the state’s regional price parity and the national personal consumption expenditure price index – ranged from -2.3 percent to 7.0 percent across states.