Legislative Update

from National FV:

CHIP Funding

As reported in the October 12 Update, both the Senate Finance Committee and the House Energy and Commerce (E&C) Committee have approved very similar bills to extend funding for the Children's Health Insurance Program (CHIP) for an additional five years (through 2022). For more details on both bills, see the October 6 special edition of the Washington Update.

In the House, the CHIP bill (HEALTHY KIDS Act) subsequently was combined with the CHAMPION Act, which includes an extension of funding for Family-to-Family Health Information Centers (F2Fs) (more below) to create the ''Continuing Community Health And Medical Professional Programs to Improve Our Nation, Increase National Gains, and Help Ensure Access for Little Ones, Toddlers, and Hopeful Youth by Keeping Insurance Delivery Stable Act of 2017.''

The bill was passed by the House on November 3, along mostly partisan lines. Although Democrats agree with the policies in the legislation, they object to the "offsets" used to pay for the costs of extending the programs. Among other offsets is a significant cut in the Prevention and Public Health fund, which is used to pay for a number of important health programs.

At this point, there is bipartisan and bicameral (House and Senate) agreement on CHIP policy, including a five-year extension. But, most observers think the legislation will not be taken up in Congress until December, as part of a larger with must-pass bill (to be determined). At that point, the time pressure will force compromise on the offsets.

Meanwhile, states are in danger of running out of funds to run their CHIP programs. (See the November 2 Update.)

Family-to-Family Health Information Center (F2F) Funding

The CHAMPIONING HEALTHY KIDS Act passed by the House last week (see above) includes a provision (section 103 of the bill) to extend F2F funding through FY 2019 at $6 million per year (an increase of $1 million per year), AND calls for F2Fs to be developed in five territories and for at least one Indian tribe. The territories are Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Northern Mariana Islands.

As reported last week, the Senate Finance Committee released an unnamed "discussion draft" of legislation that would, among other things extend F2F funding through FY 2019, as in the House bill. Unlike the House bill, however, the Finance Committee's discussion draft does not increase F2F funding or expand the program for territories and tribes. Eventually, the difference in the House and Senate F2F provisions will have to be worked out in a conference committee or informal negotiations.

Tax Bill - In General

On November 3, House Ways and Means Committee Kevin Brady (R-TX) unveiled a tax bill - The Tax Cuts and Jobs Act (H.R. 1; summary) - that comports with President Trump's tax-policy priorities. The cost of the tax cuts (lost revenue to the federal treasury) is not offset; the bill would add $1.5 trillion to the deficit over ten years.

The House bill is being considered ("marked up") in the Ways and Means Committee this week and is likely to be taken up by the full House next week.

Senate Finance Committee Chairman Orrin Hatch (R-UT) is developing a separate tax bill, which may be released within the next week. The president and congressional leaders are hoping to have a tax bill enacted by the end of the year, but it may be difficult to reach agreement on a number of thorny issues.

House Tax Bill - Repeal of Medical-Expense Deduction and More

There are several elements of the bill that of concern to health and disability advocates.

First, as of tax years beginning after 2017, the bill would repeal the medical expense deduction, which currently can be used when the out-of-pocket medical expenses of the taxpayer, a spouse, or a dependent exceed 10 percent of the taxpayer's adjusted gross income. This could hurt families of children and youth with special health care needs and others, such as those in nursing homes, who have very high out-of-pocket medical expenses. See House Tax Bill Would Scrap Deduction For Medical Expenses.

In addition, H.R. 1 would repeal the work opportunity credit, which encourages businesses to hire people with disabilities and other targeted populations; the disabled access tax credit, which helps small businesses that incur expenses to improve access for people with disabilities; and the orphan drug tax credit, which encourages pharmaceutical manufacturers to develop treatments for rare diseases.

Finally, many advocates are worried that the large deficit increase this legislation would cause would give Congress a rationale to propose cuts to important programs for children and families, such Medicaid, Medicare, and numerous other programs.

Tax Bill - Possible Vehicle for Repeal of Individual Mandate

The president and some conservative Members of Congress advocated for including in the tax bill a repeal of the Affordable Care Act's individual mandate (or more precisely, the tax penalty for not having insurance). Chairman Brady's bill does not include this provision and it is not expected to be in Senator Hatch's bill either. It is possible, however, that such an amendment will be offered in committee or on the House and/or Senate Floor. A repeal of the mandate would allow Congress to enact even larger tax cuts, since it would save the federal government billions of dollars (due to fewer subsidies). In December, the Congressional Budget Office estimated that a repeal of the individual mandate would result in a 20 percent increase in premiums and 15 million fewer people with insurance by 2026.