McDonald Hopkins Government Strategies Advisory: This Week in Washington -- March 20, 2015
The doc fixed?
There may finally be a permanent doc fix, something that has evaded members of both chambers for years despite plenty of pressure to find one. A bipartisan deal between leading healthcare authorizers in both parties was reached in the House to permanently replace the Sustainable Growth Rate (SGR) formula, which determines reimbursement rates for various Medicare services. Since 2003, Congress has passed short-term “patches” to the SGR to prevent providers from turning away patients because of looming drastic cuts to services. This week’s agreement is one of the most promising deals to finally reach a long-term solution.
The permanent fix takes a number of major steps to reform provider reimbursement. It replaces the SGR formula for individual services with a value-based performance program. It incentivizes coordination of care and preventive care through alternative payment models. It also provides more transparency to patients so they can find better and more affordable providers. If adopted, the legislation would cost roughly $200 billion, according to preliminary estimates.
To cross the finish line, a deal must not only pass in the House, but it must also pass in the Senate. The prospects of success in the upper chamber improved when Senator Orrin Hatch (R-UT), chairman of the Senate Finance Committee, lent his support to the agreement.
Several hurdles still remain. On the Republican side, some conservatives – egged on by groups like Heritage Action – are insisting that any deal be completely offset with spending cuts, something that isn't likely given the high price tag for a permanent fix. On the Democratic side, many Senate Democrats are insistent that the new formula be coupled with a long-term extension of the Children’s Health Insurance Program (CHIP) that funds state efforts to insure low-income children. Those Democrats prefer a four-year extension of CHIP over the deal’s two-year extension.
Budget time on the Hill
The House and Senate both unveiled their Fiscal Year 2016 budgets this week. On Thursday, McDonald Hopkins Government Strategies issued a detailed breakdown of the budget proposals. Click here to read the advisory.
Rep. Aaron Schock to resign
On Tuesday afternoon, Rep. Aaron Schock (R-IL) announced he will resign from Congress effective March 31.
In a statement released by Schock, the Peoria-based Congressman, who had endured a month-and-a-half of damaging stories, said, "I do this with a heavy heart. Serving the people of the 18th District is the highest and greatest honor I have had in my life.”
Schock continued, "but the constant questions over the last six weeks have proven a great distraction that has made it too difficult for me to serve the people of the 18th District with the high standards that they deserve and which I have set for myself."
For Schock the trouble started with a Washington Post story on the congressman's Downton Abbey-themed office, which has since spiraled into media investigations of Schock's spending and a slew of possible ethics violations.
The lavish office, Politico reported last month, was just the beginning: Schock reportedly employed a personal photographer, chartered private planes, and stayed in five-star hotels. It was also discovered that Schock sold his home to a donor for more money than it was worth. A National Journal public records review last week also determined that an outside group had paid for a companion of his to travel to India, in possible violation of House ethics rules.
The latest scandal to emerge is a Tuesday Politico report that Schock charged the government for about 90,000 more miles than he actually logged on his personal Chevy Tahoe. Though he was reimbursed for 170,000 miles, when he sold the car in July 2014, it only registered about 80,000 miles. The story was published shortly after the congressman's resignation announcement.
The ongoing investigations into Schock's spending weren't a definite death knell for his political future. The congressman has been a prolific fundraiser, and he has shared the wealth with Illinois Republicans, which locals believed would save him from an electoral backlash after news of his questionable spending.
Per Illinois law, the state's governor, Republican Bruce Rauner, has to order a special election to replace Schock within five days, which has to take place within 115 days of the order.
Good news for the Affordable Care Act
After years of bad news for President Obama’s signature healthcare legislation, the Affordable Care Act is finally getting some good ink: more than 16 million uninsured Americans have gained health coverage since several of the Affordable Care Act's provisions took effect, according to an Obama administration report released Monday, a week before the law's five-year anniversary.
This includes 14.1 million adults who gained health insurance from the beginning of open enrollment in October 2013 to the beginning of this month. It also includes 2.3 million young adults ages 19-25 who gained coverage between 2010 and the beginning of open enrollment because of the provision allowing them to remain on their parents' plan until they turn 26.
Since open enrollment, the national rate of uninsured Americans has dropped from 20.3 percent to 13.2 percent—a 35 percent reduction.
The uninsured rate has dropped for all races and ethnicities, the report states. The rate dropped the most for Latinos, down 12.3 percentage points, resulting in 4.2 million adults gaining coverage. African-Americans saw a 9.2 percentage point decrease, meaning 2.3 million adults gained coverage. And Caucasians saw a 5.3 percentage point decrease in unemployment, meaning 6.6 million adults gained coverage.
Debt ceiling 2015: When hitting the limit isn’t really the limit
The seemingly never ending fight over raising the debt limit should be in full swing – the U.S. legally hit the amount it is able to borrow on Monday of this week. Thanks to a series of steps the Treasury Department can take, however, Congress has until October or November of this year to act to avoid default.
The government's timeline benefits from receipts from taxes due before April 15th as well as a sliding deficit. The Congressional Budget Office projects that the deficit will stay at less than $500 billion for fiscal year 2015, meaning the debt will increase at a slower rate and thereby allow the Treasury Department to take measures to prevent default at a slower pace.
Another factor that may increase the amount of time is the Treasury Department's ability to take actions ensuring the U.S. does not default. In a letter to congressional leadership last week, Treasury Secretary Jacob Lew said he planned to take extraordinary measures to prevent a default, as the department has done in other recent debt-ceiling standoffs.
The first of the two largest measures that could be taken to prevent default is allowing the Treasury Department to postpone new investments in the Civil Service Retirement and Disability Fund, which provides defined benefits to retired and disabled federal employees under the Civil Service Retirement System. From there, the department can redeem certain existing investments in the fund. This frees up about $6.8 billion in headroom above the debt limit per month.
Another possible measure the department could undertake would be to suspend daily reinvestment of the Government Securities Investment Fund, known as the G Fund, which is a money market-defined retirement contribution fund for federal employees that is invested in special-issue Treasury securities.
Credit-rating agency Moody's also said it fully expected that if expenditure cuts needed to be made as a result of the debt ceiling, the Treasury Department would prioritize interest payments to preserve the full faith and credit of the U.S.
On previous occasions, Congress has waited until the last minute to raise the debt limit before defaulting on debt, and in 2011, Standard & Poor's downgraded the U.S. credit rating as a result. These standoffs will likely persist while Barack Obama is still president now that Republicans have a majority in both houses of Congress.
Transportation in Focus
Time running out for the Highway Trust Fund
There are less than three months remaining until the Highway Trust Fund goes belly up. The May 31 deadline is forcing members in both chambers and in both parties to focus on how to pass a new transportation bill.
While both Republicans and Democrats say they want to avoid a repeat of last month's standoff over Department of Homeland Security funding, the truth is that every single day that passes makes it more and more likely that Congress will come dangerously close to letting funding expire.
While there is broad consensus about the need for a long-term transportation bill, there is almost no agreement about how to pay for such a bill.
Some are advocating for an increase in the federal gas tax. The gas tax, which is 18.4 cents a gallon, has been the primary funding mechanism for transportation spending since the 1930s. Increasing the gas tax, however, has long been viewed as politically impossible. While some gas tax advocates say that low prices for consumers at the pumps make it easier to increase the federal tax, there is still loud opposition.
There is no doubt that the current gas tax level is insufficient to meet transportation needs. The federal government typically spends approximately $50 billion per year on transportation projects, but the gas tax only brings in about $34 billion.
To make up the shortfall, Congress has used a variety of other short-term solutions. Indeed, Congress has only approved a series of temporary infrastructure funding patches since a 2005 transportation bill expired in 2009, including an $11 billion 2014 measure that is now scheduled to expire on May 31.
A competing proposal from the White House and lawmakers like Sens. Rand Paul (R-KY) and Barbara Boxer (D-CA) relies instead on the idea of taxing overseas corporate revenue to pay for a long-term transportation bill.
The proposal, which is known as "repatriation," is supported by President Obama, who included it in a $478 billion transportation bill he sent to Capitol Hill last month.
Florida 13th Congressional District: Eric Lynn (D-FL), a senior Obama administration defense adviser, is likely to run against Rep. David Jolly (R-FL).
Illinois 10th Congressional District: Highland Park Mayor Nancy Rotering (D-IL) said she is "definitely running" for Congress, likely setting up a primary race with former Rep. Brad Schneider (D-IL), who is also considered a likely challenger to Rep. Bob Dold (R-IL).
Illinois 18th Congressional District: State Senator Darin LaHood (R-IL) announced that he will run for Aaron Schock's seat.
Michigan 10th Congressional District: State Sen. Phil Pavolv (R-MI) is the first candidate to officially enter the race to succeed retiring Rep. Candice Miller.
North Carolina 3rd Congressional District: Rep. Walter B. Jones, Jr (R-NC) has once again drawn a primary challenger. This week, 33-year-old Marine Corps veteran Phil Law (R-NC) announced he would run for the GOP nomination in 2016.
Arizona: If Senator John McCain (R-AZ) seeks re-election he may face multiple primary challengers on his right, and that’s actually good news for McCain. Rep. Matt Salmon (R-AZ) is expected to run, but State Senator Kelli Ward (R-AZ) is also making noise about a potential run. Conservatives fear multiple candidates would divide the anti-McCain vote.
Florida: Former Governor Charlie Crist (D-FL) announced he would not run for the Senate in 2016.
New Hampshire: Chris Sununu (R-NH), the son of a former governor and brother of a former U.S. senator, flirted with a run for governor last cycle, but didn’t pull the trigger. This week, Sununu said once again “very much considering” a bid to take the governor’s mansion.
New York: Rep. Chris Gibson (R-NY) is reportedly considering a bid for New York Governor in 2016. He met with Ed Cox, the NY GOP State Chair, this week to discuss electing Republicans statewide in New York.
Carly Fiorina (R-CA): Carly Fiorina’s 2010 Senate committee has been terminated and all of its debts have been retired, Federal Election Commission filings show. According to FEC documents, Fiorina — a possible presidential candidate — paid off the remaining debt, of about $487,000, herself.
Jeb Bush (R-FL): Ed Rollins, a GOP strategist and former Reagan administration official, said over the weekend on Fox News that former Florida Governor Jeb Bush had a goal of raising $500 million by June. Bush’s team immediately pushed back against the number, fearing that unrealistically high expectations could hamper Bush’s efforts.
A LOOK AHEAD
Monday, March 23
3:00 p.m. House Appropriations Committee – Hearing. Financial Services and General Government Subcommittee hearing on the Supreme Court budget.
Tuesday, March 24
9:00 a.m. House Appropriations Committee – Hearing. Interior, Environment, and Related Agencies Subcommittee hearing on "American Indian/Alaska Native Programs." (Day One)
10:00 a.m. House Appropriations Committee - Hearing. Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Subcommittee hearing on the budget for Agriculture Department research agencies.
10:00 a.m. House Appropriations Committee – Hearing. Energy and Water Development, and Related Agencies Subcommittee hearing on the Nuclear Regulatory Commission budget.
10:00 a.m. House Appropriations Committee – Hearing. Homeland Security Subcommittee hearing on the U.S. Coast Guard budget.
10:00 a.m. House Appropriations Committee – Hearing. Labor, Health and Human Services, Education and Related Agencies Subcommittee hearing on the National Labor Relations Board budget.
10:00 a.m. House Appropriations Committee – Hearing. Transportation, Housing and Urban Development, and Related Agencies Subcommittee hearing on HUD Community Development Programs budget.
10:00 a.m. House Agriculture Committee – Hearing. Full committee hearing on the costs and impacts of mandatory biotechnology laws.
10:00 a.m. House Education and the Workforce Committee – Hearing. Workforce Protections Subcommittee hearing on H.R.548, the "Certainty in Enforcement Act of 2015"; H.R.549, the "Litigation Oversight Act of 2015"; H.R.550, the "EEOC Transparency and Accountability Act"; and H.R.1189, the "Preserving Employee Wellness Programs Act."
10:00 a.m. House Energy and Commerce Committee – Hearing. Health Subcommittee hearing on "Examining the 340B Drug Pricing Program."
10:00 a.m. House Financial Services Committee – Hearing. Full committee hearing on "Examining the SEC's Agenda, Operations, and FY2016 Budget Request."
10:00 a.m. House Transportation and Infrastructure Committee – Hearing. Aviation Subcommittee hearing on "Options for FAA Air Traffic Control Reform."
10:00 a.m. House Judiciary Committee – Hearing. Courts, Intellectual Property and the Internet Subcommittee hearing on "Patent Reform: Protecting American Innovators and Job Creators From Abusive Patent Litigation."
10:00 a.m. House Ways and Means Committee – Hearing. Oversight Subcommittee hearing on "The Use of Data to Stop Medicare Fraud."
10:00 a.m. House Natural Resources Committee – Hearing. Federal Lands Subcommittee hearing on "Examining the Spending Priorities and Missions of the Forest Service and the Bureau of Land Management in the President's FY2016 Budget Proposal."
10:30 a.m. House Homeland Security Committee – Hearing. Full committee hearing on "A Global Battleground: The Fight Against Islamist Extremism at Home and Abroad."
10:30 a.m. House Natural Resources Committee – Hearing. Water, Power and Oceans Subcommittee hearing on "Examining the Spending Priorities and Missions of the Bureau of Reclamation, the Power Marketing Administrations and USGS Water Division in the President's FY2016 Budget Proposal."
11:00 a.m. House Appropriations Committee – Hearing. Financial Services and General Government Subcommittee hearing on the Federal Communications Commission budget.
11:00 a.m. House Energy and Commerce Committee – Hearing. Commerce, Manufacturing, and Trade Subcommittee hearing on "The Internet of Things: Exploring the Next Technology Frontier."
11:00 a.m. House Foreign Affairs Committee – Hearing. Asia and the Pacific Subcommittee hearing on "The U.S. Rebalance in South Asia: Foreign Aid and Development Priorities."
11:00 a.m. House Foreign Affairs Committee – Hearing. Western Hemisphere Subcommittee hearing on "Oversight of the State Department and Agency for International Development Funding Priorities for the Western Hemisphere."
1:00 p.m. House Appropriations Committee – Hearing. Interior, Environment, and Related Agencies Subcommittee hearing on "American Indian/Alaska Native Programs." (Day One)
1:00 p.m. House Agriculture Committee – Hearing. Commodity Exchanges, Energy, and Credit Subcommittee hearing on "Reauthorizing CFTC: End-User Views."
1:00 p.m. House Natural Resources Committee - Hearing. Energy and Mineral Resources Subcommittee hearing on "Examining the Spending Priorities and Mission of the U.S. Geological Survey in the President's FY2016 Budget Proposal."
2:00 p.m. House Appropriations Committee - Hearing. State, Foreign Operations and Related Programs Subcommittee hearing on the budget for assistance to Central America.
2:00 p.m. House Energy and Commerce Committee - Hearing. Environment and the Economy Subcommittee hearing on the "Improving Coal Combustion Residuals Regulation Act of 2015." (Day Two)
2:00 p.m. House Financial Services Committee - Hearing. Capital Markets and Government Sponsored Enterprises Subcommittee hearing on "The Federal Deposit Insurance Corporation's Role in Operation Choke Point."
2:00 p.m. House Foreign Affairs Committee - Hearing. Middle East and North Africa Subcommittee hearing on "Iran's Noncompliance with Its International Atomic Energy Agency Obligations."
2:00 p.m. House Veterans' Affairs Committee - Hearing. Economic Opportunity Subcommittee hearing on H.R.456, the "Reducing Barriers for Veterans Education Act of 2015"; H.R.473, the "Increasing the Department of Veterans Affairs Accountability to Veterans Act of 2015"; H.R.474, the "Homeless Veterans' Reintegration Programs Reauthorization Act of 2015"; H.R.475, the "GI Bill Processing Improvement Act of 2015"; H.R.476, the "GI Bill Education Quality Enhancement Act of 2015"; H.R.643, the "Veterans Education Survey Act of 2015"; H.R.1038, the "Ensuring VA Employee Accountability Act"; H.R.1141, to consider certain time spent by members of reserve components of the Armed Forces while receiving medical care from the Defense secretary as active duty for purposes of eligibility for Post-9/11 Educational Assistance; H.R.1187, to adjust certain limits on the guaranteed amount of a home loan under the home loan program of the Veterans Affairs Department; legislation to authorize the Veterans Affairs secretary, in awarding a contract for the procurement of goods or services, to give a preference to offerors that employ veterans; and the "Service Disabled Veteran Owned Small Business Relief Act."2:30 p.m. House Foreign Affairs Committee - Hearing. Africa, Global Health, Global Human Rights and International Organizations Subcommittee hearing on "After Paris and Copenhagen: Responding to the Rising Tide of Anti-Semitism."
Wednesday, March 25
8:30 a.m. House Appropriations Committee - Hearing. Labor, Health and Human Services, Education and Related Agencies Subcommittee hearing on the Centers for Disease Control and Prevention budget.
9:00 a.m. House Appropriations Committee - Hearing. Interior, Environment, and Related Agencies Subcommittee hearing on "American Indian/Alaska Native Programs." (Part Two)
9:00 a.m. House Appropriations Committee - Hearing. Transportation, Housing and Urban Development, and Related Agencies Subcommittee hearing on the budget for the Federal Railroad Administration, the Pipeline and Hazardous Materials Safety Administration and the Federal Motor Carrier Safety Administration.
9:30 a.m. House Appropriations Committee - Hearing. Energy and Water Development, and Related Agencies Subcommittee hearing on the budgets for National Nuclear Security Administration, Nuclear Nonproliferation and Naval Reactors.
10:00 a.m. House Judiciary Committee - Hearing. Full committee hearing on "Wrecking the Internet to Save It? The FCC's Net Neutrality Rule."
10:30 a.m. House Veterans' Affairs Committee - Hearing. Full committee hearing on "Examining Access and Quality of Care and Services for Women Veterans."12:30 p.m. House Appropriations Committee - HearingInterior, Environment, and Related Agencies Subcommittee hearing on "American Indian/Alaska Native Programs." (Day Two)
1:00 p.m. House Appropriations Committee - Hearing. Commerce, Justice, Science, and Related Agencies Subcommittee hearing on the Federal Bureau of Investigation budget.
2:00 p.m. House Appropriations Committee - Hearing. State, Foreign Operations and Related Programs Subcommittee hearing on the budget for agancies under its jurisdiction.
2:00 p.m. House Homeland Security Committee - Hearing. Transportation Security Subcommittee hearing on "Risk-Based Security: Assessing the Path Forward for TSA Pre-check."
2:30 p.m. House Appropriations Committee - Hearing. Financial Services and General Government Subcommittee hearing on the budget for the Judiciary.
Thursday, March 26
9:00 a.m. House Appropriations Committee - Hearing. Homeland Security Subcommittee hearing on the Homeland Security Department budget.
9:00 a.m. House Natural Resources Committee - Hearing. Energy and Mineral Resources Subcommittee hearing on "Effect of the President's FY2016 Budget and Legislative Proposals for the Bureau of Land Management and the U.S. Forest Service's Energy and Minerals Programs on Private Sector Job Creation, Domestic Energy and Minerals Production and Deficit Reduction."
10:00 a.m. House Appropriations Committee - Hearing. Defense Subcommittee hearing on the Army budget.
10:30 a.m. House Appropriations Committee - Hearing. Commerce, Justice, Science, and Related Agencies Subcommittee hearing on "Federal Investments in Neuroscience and Neurotechnology."
Monday, March 23
9:30 a.m. Senate Small Business and Entrepreneurship Committee - Hearing. Full committee field hearing on "How Small Businesses Are Supporting America's Energy Renaissance."
Tuesday, March 24
9:30 a.m. Senate Armed Services Committee - Hearing. Full committee hearing on U.S. Middle East policy.
10:00 a.m. Senate Commerce, Science and Transportation Committee - Hearing. Surface Transportation and Merchant Marine Infrastructure, Safety, and Security Subcommittee hearing on "Surface Transportation Reauthorization: Performance, not Prescription."
10:00 a.m. Senate Homeland Security and Governmental Affairs Committee - Hearing. Full committee hearing on "Securing the Border: Assessing the Impact of Transnational Crime."10:00 a.m. Senate Banking, Housing and Urban Affairs Committee - Hearing. Full committee hearing on "Examining the Regulatory Regime for Regional Banks."
10:00 a.m. Senate Judiciary Committee - Hearing. Full committee hearing on the nomination of Sally Yates to be deputy attorney general.
10:00 a.m. Senate Energy and Natural Resources Committee - Hearing. Full committee hearing on "Improving Forest Health & Socioeconomic Opportunities on the Nation's Forest System."
10:00 a.m. Senate Agriculture, Nutrition and Forestry Committee - Hearing. Full committee hearing on the EPA's waters of the United States rule.
10:00 a.m. Senate Health, Education, Labor and Pensions Committee - Hearing. Full committee hearing on "Continuing America's Leadership: Advancing Research and Development for Patients."10:30 a.m. Senate Appropriations Committee - Hearing. Financial Services and General Government Subcommittee hearing on the proposed budget estimates and justification for FY2016 for the Judiciary.
2:30 p.m. Senate Veterans' Affairs Committee - Hearing. Full committee hearing on the distance criteria for the Veterans Choice Act.
2:30 p.m. Senate Commerce, Science and Transportation Committee - Hearing. Aviation Operations, Safety, and Security Subcommittee hearing on "Unmanned Aircraft Systems: Key Considerations Regarding Safety, Innovation, Economic Impact, and Privacy."
2:30 p.m. Senate Banking, Housing and Urban Affairs Committee - Hearing. Securities, Insurance, and Investment Subcommittee hearing on "Capital Formation and Reducing Small Business Burdens."
Wednesday, March 25
9:00 a.m. Senate Armed Services Committee - Hearing. Seapower Subcommittee hearing on Navy and Marine Corps aviation programs in review of the Defense Authorization Request for FY2016 and the Future Years Defense Program.10:00 a.m. Senate Foreign Relations Committee - Hearing. Full committee hearing on "Securing the Border: Understanding and Addressing the Root Causes of Central American Migration to the United States."
2:30 p.m. Senate Armed Services Committee - Hearing. Readiness and Management Support Subcommittee hearing on current state of readiness of U.S. forces in review of the Defense Authorization Request for FY2016 and the Future Years Defense Program.
2:30 p.m. Senate Armed Services Committee - Hearing. Strategic Forces Subcommittee hearing on ballistic missile defense programs in review of the Defense Authorization Request for FY2016 and the Future Years Defense Program.2:30 p.m. Senate Indian Affairs Committee - Meeting. Full committee meeting "Roundtable: The Carcieri v. Salazar Supreme Court Decision and Exploring a Way Forward."
Thursday, March 26
9:30 a.m. Senate Energy and Natural Resources Committee - Hearing. Full committee hearing on the Quadrennial Energy Review.
2:30 p.m. Senate Armed Services Committee - Hearing. Airland Subcommittee hearing on Army modernization in review of the Defense Authorization Request for FY2016 and the Future Years Defense Program.
WASHINGTON BY THE NUMBERS
9 – The number of years the House Republican budget takes to balance the budget.
$5.5 trillion - The amount of spending the House Republican budget cuts over the next 10 years.
THEY SAID WHAT?
"Two years from now he'll be successful, if he's not in jail." – Rep. Aaron Schock's father to a local Chicago television station.
WASHINGTON HUMOR"According to a professor at DePaul University, if a person randomly fills out his March Madness bracket, he has a one in 9.2 quintillion chance of getting it perfect. Or as gamblers put it, “So you're saying I've got a chance!." – Jimmy Fallon
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