For more information, contact Joe Krahn, Waterman and Associates, 202/898-1444, or e-mail jk@wafed.com.
After more than a year of contentious debate, President Barack Obama signed into law on March 23 a sweeping health care reform package (HR 3590). Known as the Patient Protection and Affordable Care Act, enactment of the legislation marks the most far-reaching changes to domestic policy since the 1965 creation of the Medicaid and Medicare programs.
Joining President Obama at the White House bill signing ceremony was Santa Clara County Supervisor Liz Kniss. Supervisor Kniss, who serves on CSAC’s Executive Committee and as chair of the CSAC Health and Human Services Policy Committee, has been a strong advocate for health care reform at both the national and state levels.
Estimated to cover 94% of the country’s population once fully implemented, the landmark health care reform act (PL 111-148) will add an estimated 32 million individuals to the nation’s insurance plans. The new law, however, will not cover many of the uninsured until the year 2014.
Beginning on January 1 2014, all individuals with incomes at 133% of the federal poverty level or lower will be eligible for Medicaid coverage, with the federal government covering 100% of the benefits costs for the first three calendar years. The federal reimbursement rate will fall to 95% in 2017 and phase down to 90% in calendar year 2020 and thereafter. The state and local cost of administering the program will continue to be reimbursed at the normal 50% federal match.
As expected, the Medicaid disproportionate share hospital payment (DSH) program did not escape health reform unscathed. DSH was cut based on the assumption that there would be less need for the program given an expected reduction in the number of uninsured individuals. Notably, the Congressional Budget Office estimates that 23 million people would remain uninsured in 2019; one-third of this population represents undocumented immigrants.
Under the final health care bill, a 4% to 5% DSH cut will occur for each of the first three years, beginning in fiscal year 2014. A cut of about 14% will take place in 2017, rising to approximately 40% in 2018 and 2019. The secretary of the Department of Health and Human Services has been tasked with developing a methodology to allocate the cuts among the states, depending on how well the payments are targeted to low-income facilities and the actual reduction in the numbers of the uninsured within a state relative to the nation as a whole.
Other new investments under the legislation include $15 billion in mandatory funding for prevention and wellness activities, including a significant new competitive grant investment in state and local public health departments.
Additionally, the 40% tax on the value of so-called “Cadillac” benefit plans was paired back significantly under the final version of the legislation. The tax will not become effective until 2018, and will be applied to family plans exceeding $27,500 and $10,200 for individuals.
On a related development, Congress approved on March 25 a second package of health care modifications (HR 4872), which also includes significant changes to federal student loan programs and Pell grants. The legislation, considered in the Senate under the seldom-used budget reconciliation process, allowed Republicans one last attempt to alter the fate of health care reform.
The measure, among other things, extends health insurance coverage to a million more Americans, boosts the subsidies that middle and lower-income individuals would receive for health care premiums, and is designed to produce even steeper deficit reductions. In the end, the reconciliation package was approved largely along party lines and is awaiting President Obama’s signature.
In other news, on March 24, the House approved the Small Business and Infrastructure Jobs Tax Act (HR 4849) on a 246-178 vote. In a positive development for counties, the legislation includes a provision that would extend Emergency Contingency Funding (ECF) under the Temporary Assistance for Needy Families (TANF/CalWORKS) program.
Initially enacted under the American Recovery and Reinvestment Act (ARRA), ECF has been used by California’s counties to create nearly 15,000 subsidized jobs; the program also assists families with cash and short-term assistance. Slated to expire on September 30, 2010, ECF would receive an additional $2.5 billion in federal fiscal year 2011 funding for such purposes.
Of additional interest to counties, HR 4849 includes an extension of the Build America Bonds (BABs) program, which provides financial support to state and local governments through federal tax exemptions for interest on municipal bonds. Under the legislation, the BABs program would be extended for three years – until March 31, 2013 – under a reduced subsidy rate.
In other developments, on March 18, President Obama signed into law a $17.6 billion jobs-related bill. The centerpiece of the new law, dubbed the Hiring Incentive to Restore Employment Act (HIRE Act), is a provision that provides payroll tax exemptions to small businesses for hiring new, formerly unemployed, workers. The law also provides a $1,000 tax credit for small businesses that keep those new workers on their payroll for at least one year.
Additionally, the package includes an extension of the Highway Trust Fund through the end of the Calendar Year. The extension provides lawmakers with additional time to attempt to reach agreement on a long-term reauthorization of the nation’s surface transportation law (SAFETEA-LU).
The HIRE Act also enables municipal issuers to receive direct, BAB-style payments from the following four types of tax-credit bonds:Clean Renewable Energy Bonds (CREBs); Qualified Energy Conservation Bonds (QECBs); Qualified School Construction Bonds (QSCBs); and, Qualified Zone Academy Bonds (QZABs). Under the Act, the tax credit can be received by the issuer as a subsidy payment for the lifetime of the bonds instead of being given to the investor.
In other transportation developments, Alameda County Supervisor Scott Haggerty, who chairs the National Association of Counties’ (NACo) Transportation Steering Committee, testified at a March 18 hearing on Mobility and Congestion in Urban and Rural America before the Senate Environment and Public Works Committee.
Supervisor Haggerty recommended that Congress include in the next transportation reauthorization bill a new program that would specifically address metropolitan mobility and congestion. Haggerty stressed that local elected officials should be empowered to make decisions on which projects would be funded under the new program.
Supervisor Haggerty also spoke about several key rural transportation programs, including the importance of retaining the Off-System Bridge Program and providing funding for the High Risk Rural Road Safety Program. He also called for an increase in the rural tier in the Surface Transportation Program, improvements in project delivery, and enhanced planning authority for rural areas.