Legislative & Policy Corner

Federal Funding Update
The appropriations process officially kicked off this year with the release of the president’s budget in February. The attention is now on the House and Senate where efforts are underway to develop a budget and the annual funding bills. Below is a summary of where things stand in both chambers and our analysis about the potential impact.

The House of Representatives is currently developing a budget resolution which would establish funding levels or caps that are below the agreed upon levels established by the Budget Control Act of 2011. This will have a significant impact on overall discretionary spending further hollowing out funding for public health programs and will delay the development of bills providing funding for the U.S. Department of Health and Human Services (HHS) and other agencies. Additionally, according to media reports the House budget resolution may also contain a provision instructing House committees to come up with a plan to cut or save additional money from mandatory programs like Medicaid, Medicare and Social Security to protect the U.S. Department of Defense from sequestration (additional information about sequestration is below). This instructing provision is called reconciliation. It is anticipated that the Senate will not agree to the lower caps nor will they agree to move a reconciliation bill forward. However, in an election year, anything is possible. The House will unveil their budget proposal next week. 

The Senate, on the other hand, has agreed to develop their funding bills utilizing the overall funding caps established by the Budget Control Act. Therefore, the Senate will move much quicker than the House and may produce a bill indicating their recommendations for funding HHS by early summer. 

AMCHP staff continues to actively advocate for Congress to sustain funding for the Title V Maternal and Child Health (MCH) Services Block Grant (Block Grant) in fiscal year 2013. We will continue to monitor and provide updates as this process unfolds.

As a result of the Budget Control Act of 2011 and the super failure of the Super Committee to propose legislation reducing deficits by $1.2 trillion a process known as sequestration – a form of automatic cuts that apply largely across the board – is scheduled to occur starting in January 2013 and will cover the period through 2021. This will have a significant impact on the Block Grant.

According to an analysis by the Center on Budget and Policy Priorities in 2013, non-defense cuts will come from both mandatory (entitlement) and discretionary programs. A number of key mandatory programs are exempt from sequestration, including Medicaid, Children’s Health Insurance Program (CHIP) and Supplemental Nutrition Assistance Program. Non-defense discretionary programs, like the Block Grant should anticipate an across the board cut of about 9 percent in 2013. Using the fiscal year 2012 funding level of $645 million, the across the board cut would mean a reduction of approximately $58 million, bringing the total Block Grant allocation below $600 million. Therefore, under the tight budget caps for fiscal year 2013 combined with the automatic across the board cuts, we anticipate a significant reduction to the Block Grant in 2013.

It is also important to understand that, according to the Center on Budget and Policy Priorities, in each year from 2014 through 2021 the remaining total non-defense cuts will be applied proportionally to 1) other non-exempt mandatory programs which may include the Maternal Infant and Early Childhood Home Visiting Program (MIECHV), Personal Responsibility Education Program (PREP), and the Prevention and Public Health Fund and 2) a lower cap on non-defense discretionary spending which  means that particular programs may be targeted for elimination or additional significant cuts to meet the lower caps.

There is, however, some movement on Capitol Hill to develop a plan to avoid sequestration.  Members of Congress are urging the public health community to partner with other non-defense discretionary programs to articulate the significant impact that sequestration will have on the non-defense sectors of the federal government. Please know that in addition to advocating for the Block Grant, AMCHP will work with the broader public health community to develop strategies, messaging and other advocacy tools to further articulate the impact sequestration will have on vulnerable populations. 

Affordable Care Act Updates
Health Insurance Exchanges:
Early this week, HHS released their final rule on the establishment of health insurance exchanges. This 644 page regulation is a significant step forward and provides much needed guidance to the states as they begin to create exchanges. “Exchanges” are entities that will be set up in states to create an organized and competitive market for health insurance. Exchanges are expected to offer consumers a choice of health plans and establish common rules regarding the offering and pricing of insurance and provide information to help consumers better understand the options available to them. States must establish Exchanges by Jan. 1, 2014. If the HHS secretary determines that a state will not have an Exchange operational by 2014, the secretary must establish and operate the exchange in that state.

AMCHP staff will provide further analysis and guidance to our members about this regulation during the upcoming weeks. 

Supreme Court: On Mar. 26, the Supreme Court will begin to consider several issues related to the constitutionality of the Affordable Care Act (ACA), specifically, the individual mandate and the Medicaid expansion. According to a Kaiser Family Foundation issue brief the court also accepted two additional issues related to the individual mandate. If the court finds the individual mandate unconstitutional, it will decide whether the mandate is severable, allowing the rest of the ACA to remain in effect, or whether all or part of the entire law must be invalidated along with the individual mandate. In addition, the court will consider whether this is the appropriate time for the courts to rule on the ACA constitutionality or instead whether the Anti-Injunction Act prevents courts from deciding lawsuits about the ACA until after taxpayers actually incur the financial penalty to comply with the individual mandate.

AMCHP will follow the Supreme Court proceedings closely. It is anticipated that the Supreme Court will render a decision in June 2012.

For additional information, click here to read the entire Kaiser issue brief entitled A Guide to the Supreme Court’s Review of the 2010 Health Care Reform Law.

Strong Start: In February, the Center for Medicare and Medicaid Innovation announced a funding opportunity for providers, states and other eligible applicants to test the effectiveness of enhanced prenatal care approaches to reduce preterm births for women covered by Medicaid and at risk for preterm births. Letters of intent are due Mar. 21 and the electronic cooperative agreements are due Jun. 13. 

To assist us in tracking your interest this initiative, please inform Carolyn McCoy if you are working with your state Medicaid agency on submitting a proposal. Please also include a brief description of the overall focus of the proposal.