APPROPRIATIONS MOVE FORWARD

Appropriations move forward...

May 17, 2004

Until a few weeks ago hopes were high that Congress, for a change, would complete work on one of its most pressing priorities for the year—passing an overall spending plan that sets the parameters for the 13 appropriations bills that keep the federal government running.   The House and Senate had each passed a budget resolution for fiscal year 2005, and negotiators were prepared to iron out their differences.  But problems arose when Senate GOP moderates joined with Democrats and insisted that any future tax cuts or entitlement spending increases be offset, so as not to worsen the deficit problem.  The disagreement over so-called "pay/go" enforcement rules could mean negotiations over the spending plan are dead, or at the very least, put off for several months.

Under the rules of the budget process, if Congress is unable to pass a resolution by May 15, the Appropriations committees are free to move forward with appropriations bills, so long as the committees impose some overall spending limits on themselves. 

With that in mind, House Appropriations Committee Chairman Bill Young on May 12 set the wheels in motion by assigning spending targets, called 302(b) allocations, to each of his 13 subcommittees.  Under Young's plan, total spending by the subcommittees is capped at $821 billion, or about $2 billion less than President Bush requested for discretionary programs. 

In the case of the Labor-HHS-Education bill, the 302(b) allocation is $142.3 billion,  barely 2 percent higher than this year's funding level and about the same as the president's request for the programs contained in this bill. 

Now that allocations have been made, appropriations bills may begin moving soon after Congress returns from its Memorial Day recess.  Predictions are that the Labor-HHS bill will be marked up in June or by mid-July at the latest.  But given the resources available, it's fair to assume that some programs will have to be cut to accommodate increases in those areas deemed priorities by the president and Congress.

...but in what form?

Still to be decided is how—or if—Congress will complete work on appropriations before it adjourns in October.  Some lawmakers contend that their colleagues simply don't have the political will to make tough choices just before an election.  They predict that the process will grind to a halt soon after Labor Day, with final decisions left until after a new Congress convenes next year.

But other lawmakers are exploring ways to avoid a meltdown, one of which would group the 13 appropriations bills into three "mini-bus" bills.  Each of the three would be built around a "must-do" bill that would serve as its engine, specifically Defense, Homeland Security and Military Construction. 

Regardless of how the process moves, this will undoubtedly be a very challenging year. 

Conflicts of interest scrutinized at NIH

At a May 12 hearing, members of a House subcommittee were bipartisan in their criticism of consulting deals through which some National Institutes of Health scientists have received hundreds of thousands of dollars from pharmaceutical and biotechnology companies--sometimes the same companies seeking grant money from NIH.

Members of the House Energy and Commerce Subcommittee on Oversight and Investigations also found fault with the recommendations of a blue ribbon panel named by NIH Director Elias Zerhouni to recommend ways to guard against conflicts of interest. They said the panel's recommendations did not go far enough to guard against real or perceived conflicts of interest at NIH.

The blue ribbon panel said that only 120 of NIH's more than 17,000 employees participate in outside consulting arrangements and recommended that NIH senior management and NIH extramural employees who are responsible for program funding decisions and recommendations should be barred from outside consulting activities with pharmaceutical or biotechnology companies or paid consulting for academia. The panel said that for other employees, the total amount earned annually from compensated consulting with industry or academia should not exceed an amount equal to 50 percent of the employee's annual salary, and compensation cannot be in the form of stock options.

Some members of thepanel took issue with this recommendation, arguing that if so few NIH employees engage in outside consulting, why allow it in any form?  Others also complained of a lack of cooperation on the part of some at HHS throughout the panel's investigation into NIH practices.

As the subcommittee grilled Dr. Zerhouni, lawmakers pointed to the recent doubling of NIH's budget over the course of five years.  Rep. Joe Barton (R-Texas), the chairman of the House Energy and Commerce Committee, warned that the scrutiny of NIH is in its infancy. 

"We have found NIH to be less than cooperative and that's going to change. ... They can cooperate cooperatively or we'll make them cooperate coercively," Barton added.

Senate GOP task force issues report on the uninsured

A Senate Republican task force May 11 unveiled an array of recommendations to expand health coverage to the uninsured and reduce health care costs that the group's chairman, Sen. Judd Gregg (R-N.H.), likened to "a cafeteria line" of ideas for members to choose from as they craft legislation.

Senators on both sides of the aisle acknowledged that little, if any, legislative action to expand health insurance coverage and address health costs is likely in 2004, given the upcoming elections and the short amount of time left in this session of Congress.

The task force recommendations included both President Bush's refundable, up-front tax credit to defray the cost of health coverage for low- and moderate-income families and his proposal to create a tax deduction for premium costs associated with high-deductible health plans tied to newly created health savings accounts.

According to the task force report, between 17 million and 23 million Americans would gain health coverage, if all of its proposals were enacted, and 5 million more uninsured would gain access to care through increased funding for community health centers.

Aides estimated that the proposals would cost the federal government $93 billion over five years, but would more than pay for themselves by generating $104 billion in savings over the same time span. Moreover, they estimated that the proposals would save the health system $137 billion annually.

The tax credit subsidy for health insurance and the tax deduction for premiums linked with high deductible health plans would account for $85 billion of the five-year price tag, aides said.  Another $2 billion in the price tag would come from expanded enrollment in Medicaid and the State Children's Health Insurance Program. The task force wants to improve outreach efforts aimed at encouraging already eligible people to enroll in the programs. The panel also recommended steps to increase flexibility under SCHIP for employer-plan participation. 

An additional $1 billion in costs of the proposal would be spent to bolster community health centers and $5 billion would be spent on incentives for young adults to obtain health insurance, aides said.

According to the aides, federal savings generated by the proposals would include an estimated $20 billion from health information technology enhancements; $20 billion from reductions in health care waste, fraud, and abuse; and $15 billion in costs associated with "defensive medicine" that aides said would be eradicated by medical tort overhaul proposals.

The panel's members were divided on one issue—a proposal allowing small businesses to band together to purchase health insurance through association health plans that would be exempt from most state insurance laws.

A copy of the task force report can be found at:

http://republican.senate.gov/costcoveragecare/index.cfm.