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September 25, 2017 - Washington Report

By Leah Wavrunek posted 09-25-2017 04:20 PM

  

This Week on the Hill

The House and Senate are both in session this week. The Senate begins this week focused on the Graham-Cassidy-Heller-Johnson bill to repeal and replace portions of the Affordable Care Act and impose a per capita cap on Medicaid, starting with a Senate Finance Committee hearing on the bill today. Last week, Senate Majority Leader Mitch McConnell (R-KY) indicated that he intends to bring the legislation to the floor this week, though he stopped short of promising a vote. The full Senate has until September 30 to take up the measure before the reconciliation instructions in the fiscal 2017 budget resolution (which allow for passage by a simple majority) expire. More details and updates on the proposal are provided in the story below. Later this week, the Senate Environment and Public Works Committee has a hearing scheduled on wildfire mitigation and the Senate Agriculture, Nutrition and Forestry Committee will hold a hearing on the 2018 Farm Bill and rural development.

The House is scheduled to take up eight bills under suspension of rules tonight, including the Disaster Tax Relief and Airport and Airway Extension Act of 2017. This bill would extend the Federal Aviation Administration (FAA) for six months, with the current authorization set to expire September 30, as well as extend certain public health and Medicare programs set to expire, encourage the development of a private flood insurance market, and provide temporary tax relief to the victims of Hurricanes Harvey, Irma and Maria. However, this afternoon, House Democrats announced their opposition to the bill, making it unlikely to pass under the expedited suspension procedure. House leadership will likely have to bring up the FAA extension later this week. This Wednesday, GOP leaders plan to unveil their tax reform framework, while House Republicans are scheduled to participate in a retreat to review the plan. Also this week, the House Natural Resources Committee’s Subcommittee on Oversight and Investigations will hold a hearing on reducing wildfire risks and the House Water Resources and Environment Subcommittee holds a hearing on water infrastructure.

Meanwhile, with the Senate’s current focus on the Graham-Cassidy bill, it remains uncertain when Congress will act to extend funding for the Children’s Health Insurance Program (CHIP), which expires this Saturday, September 30.

 

Senators Release Revised Bill to Repeal and Replace ACA, Cap Medicaid

Senators Lindsey Graham (R-SC), Bill Cassidy (R-LA), Dean Heller (R-NV), and Ron Johnson (R-WI) this morning released a revised version of a bill to repeal and replace parts of the Affordable Care Act (ACA) and impose a per capita cap on federal Medicaid funding. The bill sponsors have posted updated legislative text, a section-by-section analysis, and other related materials on Senator Cassidy’s website.  According to early analyses, the revised bill would alter funding streams and the block grant distribution formula in ways that benefit the home states of Republican Senators who have criticized the bill, as well as give states more flexibility to waive certain ACA regulations. On Friday, Senator John McCain (R-AZ) said he cannot support the bill due to the rushed, partisan process through which it was developed. According to reports, Senators Rand Paul (R-KY) and more recently Ted Cruz (R-TX) have also come out in opposition to the measure, and Sen. Susan Collins (R-ME) remains a sharp critic of the bill as well. Leadership can only afford to lose the support of two out of 52 Republican senators, as the bill requires 50 votes (plus a tie-breaking vote from the Vice President) for passage. Senate Republicans face a September 30th deadline to consider the legislation without having to overcome a filibuster; after that date, the fiscal 2017 reconciliation instructions used by the Senate in their efforts to repeal and replace the ACA will expire, at which time the Senate will no longer be able to pass the bill by a simple majority vote. 

The Congressional Budget Office (CBO) announced this morning that today it plans to provide a preliminary assessment of the budgetary impacts of the proposal, as revised and posted this morning on Senator Cassidy’s website. The analysis is not expected to provide firm estimates on the bill’s effects on the deficit, health insurance coverage or premiums, based on CBO’s statement last week. In the meantime, several think tanks and consulting firms produced their own analyses of the estimated impacts of the original proposal (prior to the revisions made over the weekend), a few of which are listed below:

 

 

The Senate Finance Committee is holding a hearing this afternoon to examine the details of the revised bill. The proposed legislation would replace the federal money currently being spent on Medicaid expansion, tax credits, cost sharing reductions, and basic health program dollars with block grants to states. Under the bill, the block grants are funded from fiscal 2020 to fiscal 2026, at which time Congress would need to decide whether to continue funding the program. The bill would repeal both the authority and the enhanced match for the Medicaid expansion as of January 1, 2020, and would convert Medicaid financing to a per capita cap beginning in fiscal 2020 for 4 enrollee groups. The per capita cap would increase by the medical component of the consumer price index (CPI-M) for adults and children and by the CPI-M plus one percentage point for the elderly and disabled for 2020 through 2024. For fiscal 2025 and beyond, the amounts would increase per-enrollee by the CPI-U for adults and children and by the CPI-M for the elderly and disabled. The proposal gradually phases down the Medicaid provider tax threshold from 6 percent to 5.6 percent in fiscal 2021, reaching 4 percent in FY 2025 and beyond. On Thursday, the National Association of Medicaid Directors (NAMD) released a statement on the bill, referring to the proposal as “the largest intergovernmental transfer of financial risk from the federal government to the states in our country’s history.”

 

Bill Text Released for Five-Year CHIP Extension Proposal

Last week, Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) introduced the Keeping Kids' Insurance Dependable and Secure (KIDS) Act (S 1827). The bipartisan proposal would extend the Children's Health Insurance Program (CHIP) for five years, retaining the 23-percentage point enhanced matching rate through FY 2019. The enhanced match would then decrease to 11.5 percent in FY 2020 and return to pre-Affordable Care Act rates by FY 2021. Federal Funds Information for States (FFIS) released an issue brief (available to subscribers only) summarizing the bill’s major provisions and state-by-state federal matching rates for CHIP through fiscal 2021. It is unclear if this bill will be able to pass before current funding expires on September 30, given the shift in focus to the Graham-Cassidy bill that faces the same deadline. The Senate Finance Committee has not yet marked up the CHIP proposal, and the House has not introduced a companion bill. A short-term extension may be needed to give lawmakers more time to pass a CHIP funding bill. An issue brief from the Kaiser Family Foundation looks at the current status of state planning for the future of the CHIP and how states and children would be affected if Congress does not extend funding by the September 30, 2017 deadline. This summer, the Medicaid and CHIP Payment and Access Commission (MACPAC) also released a brief presenting data on when states are projected to exhaust current federal CHIP funds.

 

Senators Announce Path Forward for Tax Reform Through Fiscal 2018 Budget Resolution

Senators Bob Corker (R-TN) and Patrick Toomey (R-PA), members of the Senate Budget Committee, announced last week that they reached agreement on including reconciliation instructions in the fiscal 2018 Senate budget resolution to reduce taxes over the next decade. While the senators did not specify the reduction amount, reports indicate the deal could allow for about $1.5 trillion in tax cuts over 10 years. The White House and Congressional GOP leadership are expected to unveil details of their tax reform framework later this week. Last week, the National Governors Association (NGA) joined a coalition of state and local organizations and other stakeholders to send a letter to House and Senate leadership urging Congress to preserve the state and local tax (SALT) deduction, viewed as one of the key deductions at risk of elimination to offset tax cuts. A Congressional Research Service report published last week estimates that the deductibility of state and local income or sales taxes will cost the federal government $74.1 billion and that the real estate property tax deduction will cost $36.4 billion in fiscal 2018.

 

Bipartisan Talks on Health Care Stabilization Break Down

Last week, Senate Health, Education, Pensions and Labor (HELP) Committee Chairman Lamar Alexander (R-TN) released a statement saying that he and Ranking Member Patty Murray (D-WA) were unable to reach an agreement on stabilizing the individual health insurance market in 2018 that could be enacted by Congress. The statement came shortly after House Speaker Paul Ryan (R-WI) and the White House reportedly informed Senate Republican leadership that they would reject the bipartisan plan, as Congressional Republicans and the Trump Administration shifted focus to the Graham-Cassidy bill to repeal and replace parts of the Affordable Care Act (ACA). According to CQ Roll Call last week, a White House spokesman confirmed that the Trump administration plans to make September cost-sharing reduction (CSR) payments to health insurers, but decisions on future payments have not been made. Meanwhile, the Center for Consumer Information and Insurance Oversight (CCIIO) at the Centers for Medicare and Medicaid Services (CMS) continues to update the map of projected health insurance exchange coverage at a county level in 2018. It is unclear whether the effort would resume should the Graham-Cassidy bill fail to pass.

 

Senators Reintroduce Bill to Reform Federal Wildfire Funding

On September 20, a bipartisan group of senators from Western states (including California, Colorado, Idaho, Oregon, Utah and Washington) introduced the Wildfire Disaster Funding Act of 2017 (WDFA). The bill, an updated version of previous legislation introduced by the group, would fund wildfires as natural disasters. It would also put a freeze on the budget costs of the 10-year average cost of wildfire suppression, which has been on the rise thanks to longer and more expensive wildfire seasons recently, and instead permit agencies to fund fire suppression spending above the frozen average through disaster funding streams. The measure aims to end the practice of “fire borrowing,” when the U.S. Forest Service raids other funding accounts to support fire suppression activities, which ends up limiting its ability to fund preventative actions. Bill text is available here. A companion measure (HR 2862) was introduced in the House in June.

 

Intergovernmental Task Force to Hold Next Hearing

The House Speaker’s Task Force on Intergovernmental Affairs has scheduled its next hearing this Thursday, September 28. At the meeting, lawmakers will hear from several academic experts on federalism. Going forward, the task force aims to hold a hearing roughly once every other month, and tentatively plans to hear from state legislators at a meeting this November. Adam Stewart, lead staffer for the panel and Legislative Director for the task force chair, Rep. Rob Bishop (R-UT), will deliver an overview of the task force’s goals and activities at NASBO’s Fall Meeting on October 6 in Alexandria, Virginia.

 

States Submit ESSA Plans for Federal Review

September 18 marked the second and final deadline for states to submit their state plans under the Every Student Succeeds Act (ESSA) to the U.S. Department of Education, though a few states have been granted extensions (for example, due to Hurricanes Harvey and Irma) and are expected to submit soon. These consolidated plans primarily describe state approaches to school accountability and long-term goals for student achievement under the new law, which gives states more flexibility to measure school performance, fund programs, and improve low-performing schools. Sixteen states and the District of Columbia had submitted their plans for review by the first deadline this spring, and most of these have already received approval from the Department. Plans for the following 14 states (plus the District of Columbia) have been approved as of September 22: Arizona, Connecticut, Delaware, Illinois, Louisiana, Maine, Massachusetts, Nevada, New Jersey, New Mexico, North Dakota, Oregon, Tennessee and Vermont.

 

Recently Released Reports

State Retiree Health Care Liabilities: An Update

Pew Charitable Trusts

Student Debt and the Class of 2016

The Institute for College Access and Success

Students Need More Information to Help Reduce Challenges in Transferring College Credits

U.S. Government Accountability Office

50-State Comparison: Teacher License Reciprocity

Education Commission of the States

A Principled Federal Role in Higher Education

Urban Institute

The 2017 Distressed Communities Index

Economic Innovation Group

Timely Justice: Improving JDAI Results Through Case Processing Reforms

Annie E. Casey Foundation

 

Economic News 

Federal Reserve Begins to Slowly Sell Off Assets

The Federal Reserve announced last week that it would begin selling off some of the $4.5 trillion in investments it bought up in the wake of the Great Recession at a rate of $10 billion per month initially, which is likely to very slowly raise borrowing costs. The decision was widely expected and points to the Fed’s confidence in the national economy. In its statement, the Federal Open Market Committee (FOMC) – the Fed’s policymaking body – also indicated its decision to maintain the target federal funds rate range to be 1 to 1.25 percent, after raising the benchmark rate twice earlier this year. The statement notes that the labor market and economic conditions continue to strengthen, while inflation is running below 2 percent. The Fed’s statement also noted the devastating impacts of Hurricanes Harvey, Irma and Maria, but expects their effects on economic activity to be temporary and not carry beyond the near term.

 

Real GDP Growth in 2016 for U.S. Metropolitan Areas

On September 20, the U.S. Bureau of Economic Analysis released a report on gross domestic product by metropolitan area for 2016. According to the data, across metro areas in 2016, real gross domestic product (GDP) grew 1.7 percent. Real GDP growth by metro area ranged from a high of 8.1 percent to -13.3 percent at the low end. Professional and business services grew 2.7 percent, information services grew 6.5 percent, and finance, insurance, real estate, rental and leasing grew 1.2 percent, while natural resources and mining declined 5.3 percent.