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Update on Tax Reform: Working Towards “Regular Order”

Joe Dowley served as Chief Counsel of the Committee on Ways & Means, U.S. House of Representatives when Congress last undertook fundamental tax reform.

In the face of many doubters, House Committee on Ways & Means Chairman Dave Camp announced this month that he was establishing a series of subject matter, Member-level working groups to begin his committee’s process of considering comprehensive tax reform in 2013. This week he announced that Speaker John Boehner has reserved the coveted “H.R. 1” number for the bill that, if Mr. Camp has his way, will become tax reform in this Congress. This announcement gave a boost to those rooting for tax reform to happen, although skeptics still abound over the real prospects for any landmark legislation this year.

Aside from the prospects for reform, however, there is something perhaps just as important in the Chairman’s announcement: his working groups will be bipartisan. Each of the eleven subject areas will include a Republican and a Democrat as co-chairs who will work with the Joint Committee on Taxation to identify current law issues and concerns. It is expected that the reports due on April 15th from each working group will reflect a bipartisan look at the technical issues involved, but that may not be the real value in the exercise.

Something very similar was done in 1985 during the development of what became the Tax Reform Act of 1986. The existence of “task forces” didn’t make much news back then because it wasn’t particularly newsworthy.  I was Chief Counsel of the Committee at the time, and although nothing was “normal” with tax reform given its breadth and complexity, the idea of both sides of the aisle working on the issues together was, more or less, “regular order.”

People are fond of saying these days that Congress is ‘dysfunctional.’ Too much ideology – not enough agreement. As a result, as noted above, some folks are pessimistic about the prospects for enacting tax reform in the 113th Congress, and seemingly anything else.

The Administration is in a “work-around mode” with Congress. Both are wrapped around the axle on how to deal with deficits and debt; sequestration is going to happen. As we just saw with passage of the American Taxpayer Reform Act (ATRA) in January, important legislation, if any, seems only to occur at a deadline, in a crisis atmosphere, crafted by a very small group (two, this time) at the top, behind closed doors.  Members of key committees, even some chairmen, often are simply informed of what has happened instead of being in the room helping to shape the result. Relationships that should exist in and around committees are often frayed or non-existent. Then again, who needs relationships if decisions are made by just a few?

Tax reform is really tough to do even when folks get along, and things might seem to be shaping up for what could be déjà vu all over again in terms of the gridlock of recent years.

Hopeless? Maybe not. “Regular order” means participation. It’s hard and tedious, but it can have a transforming effect. Not every issue is or needs to be partisan. Lots of regional, economic and industrial concerns arise in tax reform that don’t relate to party affiliation. Even where strong ideological opposition to proposals exists, if members on both sides have had a real opportunity to participate in the effort – and maybe even get a small piece of the action – some helpful language, for example – in the process – there is bred a sense of investment in the legislation and some understanding of the other side’s position. Sweat equity breeds a level of support. Understanding helps encourage trust and a willingness to compromise, if only a bit. Just as they are in most common endeavors, these are the essential ingredients in the secret sauce of enacted legislation.

More than the well-chronicled lack of civility and good will that clearly exists on the Hill, the departure from “regular order” is a central cause (along with gerrymandered districts) of Congress’ dysfunction. It robs the public of some essential transparency. It disenfranchises and disengages duly-elected members.  As hard and rough as legislating can be under “regular order”, it isn’t nearly as damaging to the institution of Congress as when the process is confined from the beginning to a select few decision-makers in a backroom, backed up against a deadline.

So, here’s to Chairman Camp and his Ranking Member,  Rep. Sandy Levin, for not only persevering on tax reform, but for going back to the future in terms of “regular order.”

Update on Tax Reform: Working Towards “Regular Order”

Weekly Health Policy Update: HHS Releases Final Rules Related to Essential Health Benefits, Actuarial Value and Accreditation

Weekly Health Care Wrap-Up

HHS Releases Final Rule on Essential Health Benefits, Actuarial Value

The Department of Health and Human Services (HHS) issued final rules this week related to essential health benefits, actuarial value and accreditation. The final rule is largely consistent with the proposed rule released in late November.

Simpson and Bowles Release New Plan

Erskine Bowles and Alan Simpson, co-chairs of the 2010 National Commission on Fiscal Responsibility and Reform, have released a new deficit reduction plan. The plan aims to shrink the federal deficit by $2.4 trillion over the next ten years, a point in the middle of President Obama’s proposed $1.5 trillion and the $4 trillion proposed by House Republicans. One-quarter of the savings, or $600 billion, would stem from new revenue, another quarter would come from cuts to Medicare and Medicaid, and half would come from cuts in discretionary spending. Read an outline of the plan here.

HHS Awards State Innovation Model Funding

The Department of Health and Human Services has granted $300 million in funding to 25 states to test new models of care that will improve health and lower costs. Arkansas, Maine, Massachusetts, Minnesota, Oregon, and Vermont received Model Testing awards to support the implementation of plans for health care delivery system transformation. Nineteen additional states received funding to further develop their own proposals for comprehensive health care transformation. Funding for the State Innovation program is awarded under the Center for Medicare and Medicaid Innovation.  The announcement was accompanied by a new report titled “Medicaid Moving Forward,” which highlights recent state efforts to achieve the goals of improved care and lower costs in Medicaid and CHIP. Additional information may be found here

Johanns Leaving Senate in 2015

Nebraska Republican Senator Mike Johanns has decided to retire at the end of his term, leaving an open seat in the state in the 2014 election cycle. Though the former governor of Nebraska and Secretary of Agriculture was only in his first term as senator, Johanns gained popularity in the senate and served as a part of the deficit reduction “Gang of Eight.” Senator Johanns is the latest of five senators to announce retirement. Read more here.

Health Insurance Exchanges: State of the States update

With additional details on which states applied for State Partnership Exchanges and HHS releasing two batches of final rules, our attention returns to Washington this week. Let’s start with news from the federal level before moving into the states.

We learned on Tuesday in a blog post by Secretary Kathleen Sebelius that HHS received Blueprint applications from Iowa, Michigan, New Hampshire and West Virginia to operate State Partnership Exchanges. Currently, only Arkansas, Delaware, and Illinois have received Conditional Approval from HHS to run State Partnership Exchanges, and if last week’s applicants are approved, seven states will likely have Partnership exchanges in 2014. Also in her post, Secretary Sebelius hinted that states defaulting into a Federally-facilitated Exchange (FFE) might have an opportunity to take on a plan management role in their states. While details were few, she wrote in her blog post that in addition to the states applying for State Federal Partnership Exchanges, “several other states have suggested their own approaches to contributing toward plan management in their Marketplace in 2014.”

Along those lines, in a sign that HHS is interested in sharing plan management responsibilities even with states that have chosen the FFE route, on Wednesday, CCIIO posted a FAQ discussing the plan management roles available to states that do not submit a Blueprint. To adopt a plan management role, a state’s Governor or Commissioner of Insurance needs to write a letter to HHS that includes “specific attestations” of the plan management functions a state will perform. To fund regulatory activities, a state can apply for Exchange Establishment Grants. At this time, it appears likely that both Virginia and Ohiocould be pursuing this path.

Also on Wednesday, HHS released a long-awaited final rule for essential health benefits, accreditation requirements for QHP’s and actuarial value. Overall, the rule was quite similar to the proposed rules published in November of 2012. In addition to the rule, HHS released a fact sheet, CCIIO published a proposed Minimum Value calculator and the Department of Labor published a FAQ on cost-sharing. In addition today (Friday), HHS released a final rule on health insurance market reforms and rate review with a fact sheet summarizing the rule.

Moving into the states, all eyes were on Idaho this week, as exchange-enabling legislation, SB 1042, moved to the floor of the Senate for debate. After six hours of debate, the Senate voted 23-12 to pass SB 1042. Most of the discussion focused on two topics: control and cost. Proponents of the legislation viewed SB 1042 as a chance for the state to retain control over its insurance exchange, and to an extent, its insurance market. Also, Governor Otter’s (R) office released projections estimating that Idaho could operate its own exchange for roughly $10 million per year at an annual cost of $58 per user. The same projections showed that if Idaho ended up using the FFE, with its proposed 3.5 percent fee on all QHP’s sold on the exchange, Idaho users would pay nearly $150 per year in fees to support the FFE. SB 1042 now heads to the House where it could face a tepid reception from lawmakers. Last week, a group of House Republican freshman lawmakers pledged to support Governor Otter’s exchange bill if it included additional language to increase the legislature’s oversight of the exchange. The legislation passed by the Senate does not include additional oversight provisions, so expect to see additional negotiations between lawmakers next week.

As previously reported, the Minnesota legislature has been making steady progress advancing legislation to authorize the Minnesota Health Insurance Exchange. Legislation has so far cleared six committees in both the House and Senate, but at the same time, differences in both chambers’ have emerged that will likely need to be resolved. One of the main differentiating points centers around how to fund Minnesota’s exchange, which is estimated to have annual costs ranging between $50 and $60 million per year. Legislation moving through the House would authorize the exchange to levy a fee on plans sold through the exchange as a funding source, while the Senate bill would redirect some of the state’s revenue from tobacco taxes to the exchange. That isn’t the only bone of contention between legislators as they discuss Minnesota’s future exchange. While language in both bills currently allows the exchange to be an active purchaser, business groups in the state are said to be actively advocating for a “clearinghouse” model.

In Kentucky, as the state Senate moved forward with a bill that would prohibit the state from creating a State-based Exchange without consent of the legislature, we learned additional details about the potential funding source of the state’s exchange. This week, legislation that would prohibit Kentucky from creating a State-based Exchange without legislative approval, SB 40, passed a crucial committee vote. The bill now heads to the full Senate for consideration. At the same time, Carrie Banahan, executive director of the Kentucky exchange, said in an interview that while the Kentucky exchange currently has 14 employees, an additional 16 will likely be hired by the end of the year. While a funding source for the exchange has not been determined, exchange planners are considering repurposing an existing 1 percent fee on insurance premiums and combining that revenue with leftover funds from a settlement with tobacco companies to fund the exchange.

Finally, California published additional details on how the exchange, Covered California, envisions compensating in-person assistors. According to a presentation to stakeholders earlier this month, the exchange proposes paying in-person assistors $58 per person they enroll and an additional $58 person for each dependee they enroll. In the future, assistors would receive $25 per successful renewal application they submit. Assistors will not be compensated for attempting to enroll individuals not qualified to enroll in the exchange or for offering advice or services that do not result in a person enrolling in the exchange.

 

Weekly Health Policy Update: HHS Releases Final Rules Related to Essential Health Benefits, Actuarial Value and Accreditation

US Supreme Court Opens the Door to Reexamination of Contribution Limits

Yesterday, the United States Supreme Court noted probable jurisdiction over McCutcheon et al v. Federal Election Commission, a case that has the potential to open the door to a fundamental re-examination of the constitutional issues surrounding contribution limits.  The legal questions presented by the case itself are not the headline to this story.  On its face, the case presents an appeal to a failed effort by a wealthy donor to convince a three judge panel in the United States District Court for the District of Columbia that federal “biennial contribution limits” – aggregate two-year contribution limits for individual donors – violate the First Amendment.  That the lower court concluded, under the analysis prescribed by Buckley v. Valeo, 242 U.S. 1 (1976), that the limits are closely drawn to match an important state interest, is not noteworthy.  That the united States Supreme Court appears poised to extend its reasoning of Citizens United v. Federal Election Commission, 130 S.Ct. 876 (2010) and recognize the highest free speech protections to individual campaign contributions is.

Since the Court’s seminal decision in Buckley, the Court has applied a lesser level of First Amendment scrutiny to contribution limits than it has to expenditures.  See e.g., McConnell v. Federal Election Commission, 540 U.S. 93, 136 (2003).  To survive challenge, contribution limits needed only be “closely drawn to match an important state interest” and not survive a “strict scrutiny” test of validity.

The lower court in McCutcheon noted that the Supreme Court’s opinion in Citizens United appears to put the Court on a path toward treating contributions as “core political speech”, and thus subject to the highest level of scrutiny, but had not ruled so explicitly.  McCutcheon, p. 6.  Because the lower court lacked the authority to “anticipate the Supreme Court’s agenda”, the lower court applied Buckley’s lower standard and upheld the law.  Id.

Now, with the Supreme Court poised to take up McCutcheon, are personal contribution limits – and even corporate contributions to federal candidates – unconstitutional infringements on free speech?  We’ll have to wait and see.

US Supreme Court Opens the Door to Reexamination of Contribution Limits

Weekly Health Policy Update: HHS Final Deadline for State Partnership Exchange

Weekly Health Care Wrap-Up 

President Opens Door for “Modest” Medicare Reforms in the SOTU

In his State of the Union address, President Obama addressed Medicare reforms briefly, in addition to tax reform, as a means to tackle the looming budget crisis, saying “Those of us who care deeply about programs like Medicare must embrace the need for modest reforms… I’m prepared to enact reforms that will achieve the same amount of health care savings by the beginning of the next decade as the reforms proposed by the bipartisan Simpson-Bowles commission…why would we choose to make deeper cuts to education and Medicare just to protect special interest tax breaks?” Republicans accused the President of “playing politics” with Medicare and asked, “when is the President going to offer his plan to save it?” It remains unclear what appetite Congress will have for significant tax and entitlement reforms this year. Stay tuned.

HHS letter to Senate Appropriations Details Sequester Impact

Senate Appropriations Chairwoman Barbara Mikulski has posted on the Committee website letters from various government agencies detailing the effects of sequester on their departments.  In the letter from HHS, Secretary Kathleen Sebelius writes that “our efforts to protect the health and enhance the well-being of all Americans” will be weakened.  She specifically cites the impact on services for families and children, mental health services, the CDC, the FDA and the NIH.  While many health safety net programs, including Medicaid, are exempt from the cuts, payments to Medicare providers will be cut by two percent by the sequester.


From the States

A complete roundup of this week’s exchange action in the states is available through our State of the States: Health Insurance Exchanges publication here.

North Carolina Will Not Expand Medicaid

Republican Governor Pat McCroy of North Carolina has chosen not to expand Medicaid, citing that the current program is already too troubled. Governor McCroy also said the state will play no role in setting up a health insurance exchange. Read more here.

Wisconsin Rejects Medicaid Expansion

Governor Scott Walker has rejected the expansion of Medicaid in Wisconsin proposing instead to remove people from the state’s Medicaid program and place them in the federally-facilitated exchange. Read more here.

Health Insurance Exchanges: State of the States update

oday, February 15, was the final deadline for states to inform HHS if they intend to pursue a State Partnership Exchange for the 2014 plan year. While we spent much of this week anticipating a flurry of letters and announcements, instead, it’s been an eerily quiet day. Expect additional information on which states ended up applying for State Partnerships to be released in the future, but until then, let’s review what happened this week.

Yesterday, the Senate Finance Committee held a hearing titled, “Health Insurance Exchanges: Progress Report” to check in on health insurance exchange implementation progress. The Director of CCIIO, Gary Cohen, received multiple questions from Committee Chairman Max Baucus (D-MT) who expressed concern that CCIIO might be behind schedule.  Cohen reiterated that CMS is on track, meeting deadlines, and has ample contingency plans. Cohen also fielded questions on whether the data hub would be ready, CCIIO’s plans to market the exchanges, and efforts CCIIO is taking to ensure that the process to sign up for insurance is user friendly and streamlined. During the course of the hearing, Cohen disclosed a few key time periods for exchange implementation. For insurers interested in offering plans on the Federally-facilitated Exchange, HHS will accept applications from March 28 to April 30 and decide by July which plans will be offered. Also, around June, HHS will launch a large media campaign to educate the public about exchanges and direct people to Healthcare.gov. Toward the end of the hearing, Senator Baucus asked Cohen to provide him with a timeline of major dates for exchange implementation so he can track CCIIO’s progress. The Committee has posted a video recording of the hearing and witness testimony.

On Wednesday, Governor Pat Quinn (D) of Illinois received some welcome news when he learned that his state had received conditional approval to operate a State Partnership Exchange to perform plan management and consumer assistance activities. However, the approval came with a long to-do list for the state.  In addition to signing memorandums of understanding with the Illinois Department of Human Services and with CMS, the state needs to hire an IT vendor to customize its SERFF system by February 28, if the state plans to use SERFF to collect health plan data.

Also on Wednesday, Governor Margaret Hassan (D) of New Hampshire sent a Declaration Letter to HHS declaring the state’s intention to enter into a State Partnership Exchange to perform plan management and consumer assistance activities. In a press release, Hassan explained her decision by saying, “Because of action taken by the last legislature, pursuing a partnership health benefit marketplace is the best option we have left to maintain control at the state level of health insurance coverage offered to our citizens and businesses.” She also finalized that New Hampshire will not operate its own reinsurance program.  Governor Hassan’s letter was announced the day after the legislature’s Joint Health Care Reform Oversight Committee signed off on the Governor’s plan to pursue a State Partnership Exchange.

And late last night, Governor Terry Branstad (R) of Iowa is reported to have submitted a Blueprint application for a State Partnership Exchange. The application comes after Governor Branstad sent a letter to HHS on December 14, 2012, declaring that Iowa would not operate a state-based exchange, but would “partner with the Federal government” to keep control over its insurance regulation and Medicaid eligibility.

In an interesting move, Governor Bob McDonnell (R) sent a letter to Gary Cohen yesterday stating that Virginia “will choose to evaluate whether a plan or issuer meets particular certification standards and conduct other specified plan management activities as part of its long-standing regulatory role and in connection with market reform standards.” The letter from Governor McDonnell coincides with legislation that was passed by the Virginia General Assembly yesterday, which would authorize the State Corporation Commission to supervise insurers and health plans offered on Virginia’s Federally-facilitated Exchange.Senate Bill 922, which was passed by the Virginia Senate earlier this month, specifically says Virginia has the authority to perform any  “analyses and reviews necessary to support the certification, decertification, and recertification of qualified health plans and stand-alone dental plans for the federal health benefit exchange,” as long as the federal government provides funding for those activities.

Ohio Insurance Commissioner Mary Taylor (R) sent a similar letter to CCIIO on Thursday as well, stating that the Ohio Department of Insurance had the authority and capacity “to oversee the certification of Qualified Health Plans.” She also said her department would continue to regulate health plans by collecting information on rates, ensuring plan compliance, resolving consumer complains, helping manage plan certification and would continue to collect, review and approve premium rate and benefit information, among other duties. It remains to be seen how CCIIO interprets and responds to these letters; however, HHS has said in the past that it intends to coordinate regulatory activities with states to avoid duplication, to the extent possible.

For a map of states that have received conditional approval to operate either State-based Exchanges or State Partnership Exchanges, see the attached PDF.

In Idaho, efforts to pass exchange-enabling legislation championed by Governor C.L. “Butch” Otter (R) have slowed. After being approved last week by the Senate Commerce and Human Resources Committee, the bill has  yet to come to a vote on the floor of the Senate. Meanwhile, in the House, a group of freshman legislators pledged to support Governor Otter’s bill if he supported their trailer bill, House Bill 179, which would increase the size of the exchange’s Board of Directors from 16 to 18 by adding one member of the House of Representatives and one member of the Senate. The bill would also increase legislative oversight of the Idaho Health Insurance Exchange.

To the south in New Mexico, lawmakers are now wrestling with two exchange bills and two very different visions for how the New Mexico Health Insurance Exchange will operate. At the heart of the debate is whether the exchange will be an “active purchaser” or a clearinghouse offering all approved QHP’s. House Democrats, favoring an “active purchaser” exchange, have been moving their bill, HB 168, through the House. On Tuesday, the legislation was passed along party lines by the House Health, Government and Indian Affairs Committee. In contrast, House Republicans only just this week introduced their bill, HB 563, which would establish an exchange governed by a 14 person board of directors and would specifically ban the exchange from being an active purchaser. As for which bill will emerge, it’s too soon to say. Governor Susana Martinez (R) favors the clearinghouse approach, but her administration has been negotiating with House Democrats on their bill.

Also this week, the Virgin Islands Health Care Reform Implementation Task Force received a long-awaited report on whether the territory’s IT systems could be upgraded to support a health insurance exchange. After examining the territory’s current legacy IT systems, the report concluded that the Virgin Islands could not create a health insurance exchange and recommended that the territory link to an exchange developed by another state. The concept of using another state’s IT system is not unheard of for the Virgin Islands. Currently, the territory uses West Virginia’s Medicaid Management System to process Medicaid claims. The task force is scheduled to meet on February 28 to discuss the report’s conclusions.

Finally, with the exchange plans for numerous states still unknown, we will continue to monitor Blueprint Application submissions and report back next week with any new developments.

Weekly Health Policy Update: HHS Final Deadline for State Partnership Exchange

Tax Reform Moving Ahead Even As Congress Grapples with Sequestration

Joe Dowley served as Chief Counsel of the Committee on Ways & Means, U.S. House of Representatives when Congress last undertook fundamental tax reform.

Skeptics are questioning whether comprehensive tax reform can happen in 2013 given the concern that Congress may use revenues needed for tax reform to avoid the so-called “sequester” cuts now set to occur on March 1st. The notion is that closing “loopholes” and adopting other measures now to avoid sequestration eliminates their use in a larger reform package later, dampening prospects. Some experts say not to worry – there are plenty of revenue-raising options to go around. Even if that is true, others aren’t so sure that Congress has much of an appetite for passing more than the bare minimum when it comes to tax increases.

In spite of such concerns, Ways & Means Chairman Dave Camp (R-MI) has just organized eleven bipartisan working groups within his committee to begin the process of considering fundamental tax reform. What follows is a summary of developments on the eve of Congress’ President’s Day Recess:

Sequestration: To avoid the impending sequester the President has suggested that Congress take a “balanced approach”: adopt an equal amount of spending reductions and revenue increases, but in total just enough to provide sufficient time for Congress to pass a budget and implement longer-term solutions in 2013.  He advocates closing corporate loopholes and asking wealthier taxpayers to contribute some more to the budget reduction effort – on top of the $600 billion recently enacted in the American Taxpayer Relief Act (ATRA).

Senate Democrats have now responded with a specific proposal to be taken up after the recess, which provides equal measures of revenue increases and spending reductions totaling $110 billion – the amount of the March 1st Sequester. It is intended to provide Congress with about 10 months to work out longer-term budget solutions (although it doesn’t address the next ‘crisis’ point: the March 25th expiration of the Continuing Appropriations Resolution that funds the federal government’s operations).

Spending cuts – $55 billion – would come equally from defense cuts that are to be credited now but will not occur until FY 2015, after the planned Afghanistan withdrawal is completed, and from reductions in farm production payments. The lion’s share of an equal amount of new revenues would come from a new minimum tax on adjusted gross incomes in excess of $1 Million – an idea that investor Warren Buffett has endorsed. The balance would come from the denial of tax deductions for certain outsourcing costs for relocating a U.S. business unit to a foreign country, and a new provision making tar sands petroleum subject to taxes that support the federal Oil-Spill Liability Trust Fund.

Republicans have roundly criticized the proposal’s revenue provisions, and it remains to be seen whether it, or something like it, can pass the Senate. House Speaker Boehner, while critical of the proposal, has indicated that at least it provides a basis for some momentum on finding a solution.

Tax Reform: Meanwhile, undaunted, Ways & Means Chairman Dave Camp (R-MI) has organized eleven bipartisan working groups within his committee to begin the process of considering fundamental tax reform.

Last week, the Chairman announced the creation of eleven “bipartisan working groups” to “sort out” the issues the members will face when tax reform legislation is considered. The stated purpose of the groups is to do “fact finding and information gathering about present law, and in the process identify key sticking points and areas of agreement with regard to the issue areas.”

The areas and chairs selected are:

Charitable and Exempt Organizations: Rep. Dave Reichert (R-WA), Rep. John Lewis (D-GA)

Debt, Equity, and Capital: Rep. Kenny Marchant (R-TX), Rep. Jim McDermott (D-WA)

Education and Family Benefits: Rep. Diane Black (R-TN), Rep. Danny Davis (D-IL)

Energy: Rep. Kevin Brady (R-TX), Rep. Mike Thompson (D-CA)

Financial Services: Rep. Adrian Smith (R-NE), Rep. John Larson (D-CT)

Income and Tax Distribution: Rep. Lynn Jenkins (R-KS), Rep. Joe Crowley (D-NY)

International: Rep. Devin Nunes (R-CA), Rep. Earl Blumenauer (D-OR)

Manufacturing: Rep. Jim Gerlach (R-PA), Rep. Linda Sanchez (D-CA)

Pensions and Retirement: Rep. Pat Tiberi (R-OH), Rep. Ron Kind (D-WI)

Real Estate: Rep. Sam Johnson (R-TX), Rep. Bill Pascrell (D-NJ)

Small Business and Passthroughs: Rep. Vern Buchanan (R-FL), Rep. Allyson Schwartz (D-PA)

This development is noteworthy for three reasons. First, it shows that Chairman Camp is continuing to act as though he will take up tax reform in 2013, as he has said he will. Second, it demonstrates the Chairman’s (and Ranking Member Levin’s) respect for the work of the Committee and all of its members regardless of party. Both leaders know that tax measures must arise in the House, and that Ways & Means must have the basic role in developing tax reform legislation. Bringing both sides together in this bipartisan working exercise helps each member gain a measure of commitment to doing the hard work of reform. Third, it provides a clear pathway for the public to provide input to the Committee on what they think the issues are and how they should be resolved.

The working groups have until April 15th to submit reports to the full committee summarizing their findings. Those with views on the subjects outlined are well-advised to take advantage of this working group structure and get engaged in the process. Although the creation of these working groups doesn’t guarantee a tax bill will be produced, it may ultimately prove to be pivotal in the development of tax reform legislation.

Tax Reform Moving Ahead Even As Congress Grapples with Sequestration

Chairman Camp, Ways and Means: Getting Serious About Tax Reform?

Joe Dowley served as Chief Counsel of the Committee on Ways & Means, U.S. House of Representatives when Congress last undertook fundamental tax reform.

Yesterday (2/13), Chairman Dave Camp (R-MI) of the Ways & Means Committee announced the creation of eleven “bipartisan working groups” to “sort out” the issues the members will face when tax reform legislation is considered. The stated purpose of the groups is to do “fact finding and information gathering about present law, and in the process identify key sticking points and areas of agreement with regard to the issue areas. The areas and chairs selected are:

  • Charitable and Exempt Organizations: Rep. Dave Reichert (R-WA), Rep. John Lewis (D-GA)
  • Debt, Equity, and Capital: Rep. Kenny Marchant (R-TX), Rep. Jim McDermott (D-WA)
  • Education and Family Benefits: Rep. Diane Black (R-TN), Rep. Danny Davis (D-IL)
  • Energy: Rep. Kevin Brady (R-TX), Rep. Mike Thompson (D-CA)
  • Financial Services: Rep. Adrian Smith (R-NE), Rep. John Larson (D-CT)
  • Income and Tax Distribution: Rep. Lynn Jenkins (R-KS), Rep. Joe Crowley (D-NY)
  • International: Rep. Devin Nunes (R-CA), Rep. Earl Blumenauer (D-OR)
  • Manufacturing: Rep. Jim Gerlach (R-PA), Rep. Linda Sanchez (D-CA)
  • Pensions and Retirement: Rep. Pat Tiberi (R-OH), Rep. Ron Kind (D-WI)
  • Real Estate: Rep. Sam Johnson (R-TX), Rep. Bill Pascrell (D-NJ)
  • Small Business and Passthroughs: Rep. Vern Buchanan (R-FL), Rep. Allyson Schwartz (D-PA)

This development is noteworthy for three reasons. First, it shows that Chairman Camp is continuing to act as though he will take up tax reform in 2013, as he has said he will. Second, it demonstrates the Chairman’s (and Ranking Member Levin’s) respect for the work of the Committee and all of its members regardless of party. Both leaders know that tax measures must arise in the House, and that Ways & Means must have a basic role in developing tax reform legislation. Bringing both sides together in this bipartisan working exercise helps each member gain a measure of commitment to doing the hard work of reform. Third, it provides a clear pathway for the public to provide input to the Committee on what they think the issues are and how they should be resolved.

The working groups have until April 15th to submit reports to the full committee summarizing their findings. Those with views on the subjects outlined are well-advised to take advantage of this working group structure and get engaged in the process. Although the creation of these working groups doesn’t guarantee a tax bill will be produced, it may prove to be pivotal in the development of tax reform legislation.

Chairman Camp, Ways and Means: Getting Serious About Tax Reform?

White House Issues Executive Order and Presidential Policy Directive To Enhance Critical Infrastructure Cybersecurity

This blog post was co-authored by Beth Ferrell, Katherine Veeder, and Patrick Stanton. 

After several months of anticipation, on February 12, 2013, President Obama signed an executive order to enhance measures to protect the nation’s critical infrastructure from cyber attacks, entitled “Improving Critical Infrastructure Cybersecurity”  (the “Executive Order” or “Order”).  Accompanying the Order, the White House issued the Presidential Policy Directive on Critical Infrastructure Security and Resilience (the “Directive”), updating the national approach to critical infrastructure security.  A more detailed discussion of the Order and Directive can be found in our client alert.

As an initial note, the new Order and Directive only apply to companies that own or operate critical infrastructure.  Critical infrastructure is defined as systems whose incapacity or destruction would result in a debilitating impact on national security, the economy, or public health and safety.

Those companies that do operate or own critical infrastructure now will have the option to take part in a voluntary Critical Infrastructure Cybersecurity Program, which will allow agencies to assist the companies in implementing new cybersecurity standards that will be established by the National Institute of Standards and Technology (“NIST”).  While these standards will reflect industry best practices and be shaped by a period of public review and comment, the burdens imposed by these standards remains to be seen.  As such, contractors that own and operate critical infrastructure should monitor and participate in the development of these standards to minimize any resultant burdens.

The Order also allows the owners and providers of critical infrastructure to participate in an expanded Defense Industrial Base Information Sharing program (See MLA Advisory, Interim DoD Regulation Expands Defense Industrial Base Pilot To Facilitate Government-Industry Cooperation on Cybersecurity, May 14, 2012).  While this program will facilitate near real time information sharing between the Government and critical infrastructure companies, it also presents the risk of public disclosure of sensitive information.  Companies must therefore evaluate the information protection provided by the Order and weigh the risks of participation.

Finally, the Order and Directive could impose substantial new security requirements on critical infrastructure providers.  The Directive requires the General Services Administration to ensure that all government-wide contracts for critical infrastructure systems include audit rights for the security and resilience of these systems.  Additionally, the Order requires the Department of Defense and the General Services Administration, in consultation with the Department of Homeland Security and the Federal Acquisition Regulatory Council, to examine the feasibility and security benefits of incorporating critical infrastructure security standards into acquisition planning and contract administration.  Contractors should keep an eye out for any heightened security requirements or expanded government audit rights in their contracts.

MLA’s Cybersecurity group will continue to monitor developments in this area, and are available to advise contractors as to how they can potentially shape the implementation of the Order and Directive and the potential impact that the Order and Directive will have once fully implemented.

White House Issues Executive Order and Presidential Policy Directive To Enhance Critical Infrastructure Cybersecurity

Weekly Health Policy Update: IRS, HHS Release New Proposed Rules

Weekly Health Care Wrap-Up

PCORI Seeking Advisory Board Members

The Patient-Centered Outcomes Research Institute (PCORI)  is seeking patients, caregivers, clinicians, researchers and other health care stakeholders to fill positions on four advisory panels. The panels do not serve in a decision-making capacity, but are designed to set research agendas. The four panels will focus on: Addressing Disparities; Assessment of Prevention, Diagnosis, and Treatment Options; Improving Healthcare Systems; and Patient Engagement. The announcement may be found here.

CMS Announces Bundled Payment Pilot Program Participants

CMS announced this week that over 500 organizations will begin participating in the Bundled Payments for Care Improvement Initiative. Thirty-two awardees have been selected for Model 1, which was previously suspended due to lack of interest. Model 1 participants will begin testing payments for acute care hospital stays beginning as early as April. The announcement also marked the beginning of phase 1 for Models 2-4. From now until July, 100 participants working with 400 health care organizations will receive CMS data on care patterns and engage in shared learning on how to improve care. CMS will soon announce a second opportunity for participation..

IRS, HHS Release Proposed Rules on Minimum Essential Coverage, Individual Mandate

The IRS and HHS released new proposed rules this week surrounding the individual mandate and minimum essential coverage. The regulations include several exemptions, including one for people who would have been eligible for Medicaid under the expansion, but reside in states that chose not to expand Medicaid. The rules and associated fact sheets can be found here, here andhere.

Director of AHRQ Leaving

After 10 years with the Agency for Healthcare Research and Quality, Carolyn Clancy is stepping down as director.  HHS Secretary Sebelius made the decision known to employees through an email, and stated that Director Clancy would remain in her position for a few additional months while a replacement is found.  Republicans in the House have introduced legislation to do away with the agency as a part of efforts to rein in federal spending.

Chambliss Adds to List of Veteran Retiring Senators

Two-term Senator Saxby Chambliss announced this week that he will not seek reelection. Chambliss, the Ranking Member on the Senate Intelligence Committee and member of the “Gang of 8” deficit reduction talks, joins a growing list of retiring veteran Senators. Senators Jay Rockefeller (D-WV) and Tom Harkin (D-IA) have also announced this will be their final term.

Letter from House Chairmen Seeks Answers from IRS and Treasury

Dave Camp (R-MI), Chairman of the House Ways and Means Committee, and Darrell Issa (R-CA), Chairman of the House Oversight Committee, have sent a letter to the IRS requesting an explanation regarding its authority to allow individuals within federally run exchanges to receive insurance subsidies. The letter may be found here.


From the States

A complete roundup of this week’s exchange action in the states is available through our State of the States: Health Insurance Exchanges publication here.

Florida Lawmakers More Open to Medicaid Expansion

Some officials in Florida, such as State Senator Rene Garcia, who were previously opposed to the ACA provision expanding Medicaid are now considering the idea after study found that expansion could save Florida up to $100 million a year in health care costs. Two-thirds of Florida citizens are in favor of expansion. Read more here.

Idaho Governor Introduces Exchange Legislation

Governor C.L. “Butch” Otter (R) introduced exchange enabling legislation in the Idaho Senate Commerce and Human Resources Committee. The bill sets up the exchange not as a state agency, but a body governed by a 16-member board, including the director of the Idaho Department of Health and Welfare. Governor Otter also launched an online petition urging lawmakers to pass the legislation, which has been countered by a petition from the Idaho Freedom Foundation. Read more here.

 

Health Insurance Exchanges: State of the States update

After last week’s conditional approvals and without an announcement from HHS on the status of Exchange Establishment Grant applications submitted in mid-November, our attention returns to the states. This week, many legislators returned to statehouses to reexamine the exchange issue, and a few states now find themselves having to pass legislation quickly in order to stay on track for October 1, 2013 open enrollment.

In Minnesota, lawmakers introduced health insurance exchange legislation (H.F. 5/S.F. 1) on Wednesday to create the “Minnesota Insurance Marketplace.” H.F. 5 calls for the exchange to be governed by a seven-member board, act as an “active purchaser” when negotiating with health plans and “collect up to 3.5 percent of premiums” to provide the exchange a revenue stream. The bill also gives the Commissioner of Management and Budget initial authority to determine commissions paid to brokers who sell through the exchange. While some legislators believe that H.F. 5 is on the fast-track to passage, concerns remain over how some Republican legislators will respond. According to Governor Mark Dayton’s (D) administration, Minnesota needs to pass health exchange-enabling legislation by March 31 to stay on track to meet federal requirements. Also this week, in Virginia, Delegate Patrick Hope (D) introduced legislation (HB 1664) that if approved would create a State Partnership Exchange.

Governor C.L. “Butch” Otter (R-ID) has a host of deadlines rapidly approaching on the way to launching Idaho’s exchange, and not a lot of time to meet them. According to Senate President Pro Tem Brent Hill (R), Governor Otter will introduce exchange implementation legislation soon, potentially next week. Idaho has to act quickly on the exchange issue because in its conditional approval letter to the state, CCIIO wrote that Idaho had to “confirm its Information Technology and Project Management vendor” selection by February 15. According to Tricia Carney, public information officer for the Idaho Department of Insurance, the Department of Insurance cannot award those contracts until the legislature makes a decision.

Moving east, the Connecticut Health Insurance Exchange announced this week that it had received notifications from nine insurance companies interested in offering health or dental coverage on the Exchange. Five health insurance carriers, including Aetna, Anthem, ConnectiCare, Healthy CT, and United Healthcare, and four dental insurers, Delta Dental, The Guardian Life Insurance Company, MetLife, and Renaissance Dental, said they plan to offer products.

Meanwhile, Mississippi made news this week as its exchange saga continued to unfold. According to Insurance Commissioner Mike Chaney (R), he had a discussion with HHS on Monday (1/7) to discuss his pending Blueprint application. Chaney believes HHS’s main concern is whether a state-based exchange would be able to effectively interface with other parts of Mississippi’s government, such as the state’s Medicaid program, if Governor Phil Bryant (R) continues to oppose its creation.  But exchange-watchers should see a decision from HHS soon. On Thursday, while speaking to the Mississippi Economic Council, Chaney said that he expects a decision on his Blueprint from HHS in 10 to 15 days. Chaney also said this week that if his application for a state-based exchange was denied, he would pursue a State Partnership Exchange.

Finally, according to the Washington Business Journal, the D.C. Health Benefit Exchange has awarded a contract to Infosys Public Services to build DC’s exchange IT system for both the individual exchange and the SHOP. The $49.5 million contract initially runs through September 2013, but includes options that could increase the value of the contract to $86 million. Dell, HCL Technologies and Deloitte also bid on the contract, but only Deloitte and Infosys responded when the DC exchange requested a second round of bids.

Weekly Health Policy Update: IRS, HHS Release New Proposed Rules

New Private Travel Regulations from the House Ethics Committee

The House Ethics Committee has adopted new regulations for the acceptance of reimbursement for travel expenses incurred by House members and staff  from a private source for purposes related to their official duties. The new rules are effective April 1, 2013. According to the Committee, the regulations “supersede any prior inconsistent Committee regulations and guidance regarding privately-funded, officially-connected travel, including the 2008 House Ethics Manual.” Whereas the regulations in the past had been set forth in a lengthy memorandum format as part of the House Ethics Manual, the new regulations are set forth in a regulation-type format, with extensive definitions.

The Committee did not make significant substantive changes. For example, “lobbying firms,” registered federal lobbyists, and registered foreign agents still cannot act as trip sponsors and entities that employ or retain federal lobbyists or foreign agents may not involve any federal lobbyist or foreign agent in planning, organizing, requesting, or arranging a trip. However, the new regulations contain more detail and specificity than prior iterations, including a detailed section on the types of entities that may act as trip sponsors.

Some of the substantive highlights of the new regulations include:

  • Pre-travel Sponsor and Traveler forms will need to be submitted 30 days prior to the trip, as opposed to the current 14 days;
  • The new forms will require additional information about trip sponsors;
  • Sponsors will be required to complete and submit a post-travel form to be filed by the travelers within 10 days after the trip;
  • New categories of permissible sponsoring organizations and requirements for such organizations are detailed;
  • “Grantmaking Sponsors” (which includes public charities and private foundations) will be  required to certify that they conducted an audit or review to ensure that funds used to sponsor travel were spent in accordance with the terms of its grant or donation.
New Private Travel Regulations from the House Ethics Committee

New Contribution Limits for 2013-2014 Federal Election Cycle

Yesterday,  the FEC announced new Contribution Limits for the 2013-2014 federal election cycle.   The Individual contribution limit was increased from $2,500 to $2,600 per person per election.  The limit for individual contributions to a national party committee was raised from $30,800 to $32,400 and the total individual overall biennial limit was raised to $123,200 ($48,600 to all candidates and $74,600 to all PACs and parties).  The cap on how much a national party may give to a Senate candidate was raised from $43,100 to $45,400.   Please see the full chart of contribution limits here.

The threshold for the amount of campaign contributions subject to reporting by a candidate committee or leadership PAC as a  “bundled contribution” was increased $17,100.  Please see the full information here.

New Contribution Limits for 2013-2014 Federal Election Cycle