Federal News for AHIP’s Individual Members
February 1, 2010
(1) Discussions Continue on Comprehensive Health Reform as House Prepares to Act on Narrowly Focused Bills
Congressional leaders are considering options for moving forward with health reform legislation following President Obama’s State of the Union address last week in which he urged lawmakers to “come together and finish the job.”
While there is no clear consensus at this time, there has been considerable discussion this week about a scenario under which the House would vote on the Senate-passed health reform bill (H.R. 3590), while a package of modifications to the Senate bill – sometimes referred to as a “sidecar” – would be passed by both chambers using budget reconciliation procedures. There is some uncertainty about the workability of this approach, partly because some of the key differences between the Senate and House bills are non-budgetary issues that may not necessarily fall within the scope of a reconciliation bill. Still, there is very strong interest in exploring this legislative strategy at this time.
Meanwhile, House leaders are planning to schedule floor votes – possibly as early as this week – on a number of narrowly focused health bills, some of which may be structured with the goal of attracting Republican support. Consideration of these bills is not intended to preclude action on comprehensive health reform at a later date.
(2) President Obama Calls for Health Insurance Reform to Ease Burden on Middle Class
On January 27, President Obama delivered his State of the Union address before a joint session of Congress, placing a strong emphasis on job creation, economic issues, and the concerns of middle class families.
The President stated that “jobs must be our number one focus in 2010.” He also emphasized his support for health insurance reform, financial regulatory reform, energy and climate legislation, a national export initiative, investments in education, and deficit reduction. The President urged Democrats and Republicans to work together on these issues, stating that he remains committed to “changing the tone of our politics” and would like to begin meeting on a monthly basis with congressional leaders from both parties.
On the topic of health reform, the President stressed that legislation is needed to ease the burden on middle class families, and he encouraged everyone to “take another look at the plan we’ve proposed.” The President added: “But if anyone from either party has a better approach that will bring down premiums, bring down the deficit, cover the uninsured, strengthen Medicare for seniors, and stop insurance company abuses, let me know.”
The President concluded his comments on health reform by urging Congress: “Do not walk away from reform. Not now. Not when we are so close. Let us find a way to come together and finish the job for the American people.”
(3) Bipartisan Commission Will Focus on Deficit Reduction
In his State of the Union address this week, President Obama announced that he plans to issue an executive order that will establish a bipartisan fiscal commission to develop recommendations for addressing the federal budget deficit.
In explaining the need for the commission, the President stated: “Now, even after paying for what we spent on my watch, we will still face the massive deficit we had when I took office. More importantly, the cost of Medicare, Medicaid, and Social Security will continue to skyrocket. That’s why I’ve called for a bipartisan fiscal commission, modeled on a proposal by Republican Judd Gregg and Democrat Kent Conrad. This can’t be one of those Washington gimmicks that lets us pretend we solved a problem. The commission will have to provide a specific set of solutions by a certain deadline.”
Last Thursday, Sen. Kent Conrad (D-ND), chairman of the Senate Budget Committee, announced that he had received a letter confirming that House and Senate leaders have made a commitment to allow votes on the bipartisan commission’s recommendations before the end of the 111th Congress.
(4) CBO Issues Report on Budget and Economic Outlook
Last week the Congressional Budget Office (CBO) released its annual report entitled “The Budget and Economic Outlook: Fiscal Years 2010-2020.”
The CBO report projects that the federal government will run a budget deficit of approximately $1.349 trillion in fiscal year 2010, only slightly less than the $1.414 trillion deficit that was recorded last year. CBO said that the large deficits in 2009 and 2010 can be attributed to a combination of factors: an imbalance between revenues and spending that predated the recent economic downturn; sharply lower revenues and elevated spending associated with the weak economy; and the costs of federal policies implemented in response to the recession and turmoil in the financial markets.
Looking forward, CBO projects that the budget deficit will average about $600 billion a year over the 2011-2020 timeframe. The deficit is projected to decline, as a share of gross domestic product (GDP), from 9.2 percent in 2010 to 3.0 percent by 2020. At the same time, the federal government’s annual spending on interest is projected to increase from $207 billion in 2010 to $723 billion by 2020. These projections are based on a continuation of current law and do not reflect the possibility, for example, that Congress may extend certain tax cuts that are scheduled to expire. Extending most of these tax cuts could add as much as $400-$500 billion per year to the deficit by the middle of the decade.
The CBO report states that “economic growth in the next few years will probably be muted in the aftermath of the financial and economic turmoil.” CBO suggests that the economic recovery may be dampened by the continuing fragility of some financial markets and institutions, the waning impact of the American Recovery and Reinvestment Act of 2009, slow wage and unemployment growth, and a large excess of vacant homes. CBO projects that real GDP will increase by 2.1 percent in 2010 and 2.4 percent in 2011.
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