Washington Update

Western Reserve Chapter, AAHAMNE Ohio HFMA Chapter

February 21, 2013

How Government Really Works

Throw out all preconceived notions you have about government and how it is “supposed” to work.

In reality, it works nothing like what you learned in school or read about in books.

“One doesn’t have to spend much time in DC to understand why the streets are designed in circles.”

–Ronald Reagan

“The Problem with political jokes is they have a habit of getting elected.”

-Henry Cate

Welcome to Washington

1357

622

Can anyone tell me what these numbers represent?

1357 Days Until the 2016 Presidential Elections

622 Days Until the 2014 Congressional Elections

Before We Look Forward We Have to Do A Painful look Back At 2012

Where Republicans Started

You will see some of these faces again as they once again run for President in 2016

This is where we Ended

2012 Presidential Election Votes by Demographic

2012 Congressional Elections

51 Seats Needed For Majority

Senate: New Make-up

Democrats: 53Republicans: 45Independents: 2

(Really Democratic Seats – Sen. Angus King (ME) and Sen. Bernie Sanders (VT))

2014: Democrats have to defend 20 seats Republicans have to defend 13

Quick Takeaways•While GOP remains the minority, retains filibuster power •Expect GOP soul-searching after failure to knock down 2006 Dem Senators•Sens.-elect Joe Donnelly of IN, Ted Cruz of TX, and Elizabeth Warren of MA may be brightest stars in new Senate

2012 Congressional Elections

House of Representatives: New Make-up

Democrats: 201

Republicans: 231

2013 A Look Forward

2013 A Look Forward 60 Minutes Interview

President Obama suggests joint appearance on 60 Minutes with outgoing Secretary of State Hilary Clinton.

Looks like 2016 endorsement to me.

Biden can’t catch a break.

Then Obama supporters pay-off Clinton remaining debt from 2008 campaign

2013: A look Forward

The Filibuster

political delaying tactic: a tactic used to delay or prevent the passage of legislation, e.g. a long irrelevant speech

Crisis averted when, shocking, Senate overwhelmingly approved new Filibuster rules, which look like the old one’s.

2013: A look Forward

Gun Control

- President pushes for new reforms- Democrats uneasy about Presidents plans- Republicans opposed to Presidents plans

- Public open to reform- NRA likely to prevail yet again

- Best gun control advocates can hope for is universal background checks and closing gun show loophole and maybe limiting magazine size

Just when you think you get Congress to focus on fiscal issues shooting takes them off focus

2013: A look Forward

Presidents 2nd Term Agenda

- Climate change- gun control

- Immigration reform- Equal pay for women

- Voting Reform- Gay rights

- Debt (the one issue not addressed in the President’s inaugural address)

2013: A look Forward

Had we gone off the fiscal cliff we would have defaulted on our debt loans and would have likely seen another downgrade of our overall debt making the US on par with other third world nation’s

2013: A look ForwardFiscal Cliff

- There are some who say going over the “fiscal cliff” would have had serious consequences

- Others say it wouldn’t have done much since this was a self imposed “cliff”

- Both political parties spent a lot of time calculating the political ups and downs to going over the cliff

- "Crisis" ultimately avoided (temporarily)

Fiscal Cliff "Deal"

-- Income tax rates: Extends decade-old tax cuts on incomes up to $400,000 for individuals, $450,000 for couples. Earnings above those amounts would be taxed at a rate of 39.6 percent, up from the current 35 percent. Extends Clinton-era caps on itemized deductions and the phase-out of the personal exemption for individuals making more than $250,000 and couples earning more than $300,000.

-- Estate tax: Estates would be taxed at a top rate of 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates. In 2012, such estates were subject to a top rate of 35 percent.

-- Capital gains, dividends: Taxes on capital gains and dividend income exceeding $400,000 for individuals and $450,000 for families would increase from 15 percent to 20 percent.

-- Alternative minimum tax: Permanently addresses the alternative minimum tax and indexes it for inflation to prevent nearly 30 million middle- and upper-middle-income taxpayers from being hit with higher tax bills averaging almost $3,000. The tax was originally designed to ensure that the wealthy did not avoid owing taxes by using loopholes.

Fiscal Cliff "Deal"

-- Other tax changes: Extends for five years Obama-sought expansions of the child tax credit, the earned income tax credit, and an up-to-$2,500 tax credit for college tuition. Also extends for one year accelerated "bonus" depreciation of business investments in new property and equipment, a tax credit for research and development costs and a tax credit for renewable energy such as wind-generated electricity.

-- Unemployment benefits: Extends jobless benefits for the long-term unemployed for one year.

-- Cuts in Medicare reimbursements to doctors: Blocks a 27 percent cut in Medicare payments to doctors for one year. The cut is the product of an obsolete 1997 budget formula.

-- Social Security payroll tax cut: Allows a 2-percentage-point cut in the payroll tax first enacted two years ago to lapse, which restores the payroll tax to 6.2 percent.

-- Across-the-board cuts: Delays for two months $109 billion worth of across-the-board spending cuts set to start striking the Pentagon and domestic agencies this week. Cost of $24 billion is divided between spending cuts and new revenues from rule changes on converting traditional individual retirement accounts into Roth IRAs.

Debt Ceiling

- The maximum amount of monies the United States can borrow. The debt ceiling was created under the Second Liberty Bond Act of 1917, putting a "ceiling" on the amount of bonds the United States can issue. As of the end of July, 2011 the debt ceiling was set at $14.3 trillion.

- Funny or not so funny thing with the debt ceiling is no one is sure what would actually happen should we default.

- A three month deal was struck in Congress.

- Also includes provision suspending lawmakers pay if they don’t pass a budget by April (nice add, but unconstitutional).

- 27th Amendment, which states: "No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened."

- This was Republican’s efforts to force Senate Democrats to put forward a budget. Senate has not passed a budget in 4-years.

2013: A look Forward Sequestration

* The debt limit deal enacted on August 2 calls for about $900 billion in cuts in discretionary programs over the next decade and would impose further automatic, across-the-board spending cuts in many programs if Congress fails to enact an additional $1.2 trillion in deficit-reduction measures by January 15, 2012.

* Those across-the-board cuts would first take effect in January 2013, a year later than many people have mistakenly believed, and would represent approximately a 9 percent annual cut in affected non-defense programs, along with roughly a 9 percent cut in defense programs in 2013.

SEQUESTRATION

- On Aug. 2, President Obama signed into law the Budget Control Act of 2011 (BCA).

- The bill allows the president to increase the debt ceiling by up to $2.8 trillion, but it will reduce the deficit by $2.3 trillion over 10 years, with at least $840 billion coming from discretionary spending cuts over the next decade. In the first year of enactment, fiscal year 2012, discretionary programs will see a cut of $44 billion (4 percent).

- There are two ways the federal deficit can be cut – through automatic “caps” on categories of spending or through a proposed budget hammered out by a “Super Committee” of 12 members of Congress.

- The automatic caps exempt some mandatory programs like Social Security, food stamps, and Medicare. However, no revenues would be raised to help retire the deficit. The Super Committee could cut any program or raise revenues.

2013: A look ForwardSequestration

- President would like to do away with Sequestration

- Other Democrats would like to push Sequestration back another 3-months

- Republicans now re-thinking letting Sequestration go into effect

- Speaker Boehner looking for a way out

2013: A look Forward

What Does This Mean for Healthcare?

* Repealing "Obama Care" not realistic from the beginning and not

now that the President has been re-elected.

* What is possible and likely are changes, tweaks, and modifications to the law.

* All sides have signaled the need to make "modifications."

Healthcare: Still a lot of provisions from the Patient Protection & Affordable Care Actkick in in 2014.

* Guidelines for Federally mandated exchange officially out Feb 1 Federal Register Notice.

* Exchanges need to be implemented by states. As of today fewer than 15 states havebuilt or implemented their own plans. 25 States declined to set-up and 18 that will and 7 pursuing partnership exchange.

Employer Requirements:

The U.S. Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS) released on January 30, 2013, two proposed rules and a final rule relating to the Affordable Care Act's (ACA) requirement that individuals maintain "minimum essential coverage" (MEC) or be subject to a "shared responsibility" payment.

IRS Final Rule: The IRS issued final regulations in May 2012 addressing eligibility for the health insurance premium tax credit, which is available to certain low-income individuals purchasing a qualified health plan on a health insurance exchange. The January 30, 2013 final rule supplements these regulations by finalizing the requirement that "affordability" of coverage available for the employee under an employer-sponsored group health plan is determined based on self-only coverage (and not family coverage). http://www.mwe.com/files/Uploads/Documents/Pubs/IRS-FR-02-01-2013.pdf

IRS Proposed Rule: The proposed rule addresses (1) the obligation each taxpayer has to make a "shared responsibility payment" for himself, herself and any dependents who, for a calendar month, do not have MEC, and (2) exemptions to this payment obligation. The limited exceptions for this payment obligation include individuals who lack access to affordable MEC. The proposed rule addresses the difference in determining affordable MEC for an employee eligible for coverage under a group health plan (as described above) versus affordability for a "related individual." A "related individual" is one for whom an Internal Revenue Code Section 151 deduction can be claimed. http://www.mwe.com/files/Uploads/Documents/Pubs/IRS-PR-02-01-2013.pdf

HHS Proposed Rule: The HHS proposed rule sets forth standards and processes by which a health insurance exchange will make eligibility determinations and grant exemptions from the shared responsibility payment. This proposed rule also (1) identifies certain types of coverage deemed to be MEC , and (2) sets forth standards by which HHS may designate certain health benefits coverage as MEC. http://www.mwe.com/files/Uploads/Documents/Pubs/HHS-PR-02-01-2013.pdf

Medicaid Expansion:

Just how expensive would this expansion be, and who would pay?

* For the first three years starting in 2014, the federal government will cover 100 percent of the cost for states’ Medicaid expansion, while dwindling down that percentage to 90 percent within the decade, leaving states accountable for 10 percent of the cost.

* Through 2022, the expansion will increase states’ spending by 2.8 percent compared to what they would be spending without it.

* Governor John Kasich (R) has agreed to expand Medicaid in Ohio

* A lot of Republican Governor’s came out against expansion, but now have come out in support. (Funny how 2013-2014 elections have that affect on people).

*Medicaid rules on expansion and provider payments just released: http://www.medicaid.gov/AffordableCareAct/Provisions/Eligibility.html

DOC FIX:

* Always been a dance we do in Washington – temporarily fix it each year

* This year be different. Efforts to permanently address this issue

* This year may be opportunity to finally fix this issue

* Rep. Allyson Schwartz (D-PA) and Rep. Joe Heck (R-NV) introduce bi-partisan legislation to address permanent fix

* This is only possible due to recent Congressional Budget Office cutting the original cost of this issue ($243.7 billion) in half ($138.3 billion)

* Other bills being floated so Schwartz-Heck legislation may not be final vehicle, but with new scoring number for the first time a real discussion about permanently addressing this issue

2013: A look Forward

* Independent Payment Advisory Board: Top priority to be on the chopping block – concern this will lead to "rationing" of healthcare and undermine congressional authority over Medicare payment policy.

* CLASS ACT: Created a federally administered long-term care insurance plan. HHSdeclined to implement in 2012 ruling that it was impossible to create a program in amanner that would be actuarially sound. (OFFICIALLY DEAD – REPUBLICANS CLAIM VICTORY)

* Individual Mandate: Republicans believe pushing to continue to repeal has politicalbenefit, but numbers have shown it does save government money. Supreme Court didrule it constitutional.

* Medical Device Tax: This is a revenue tax on device Mfgs. Critics on both sides say thisis an assault on small businesses.

* FSA & HSA Limits: Law placed caps on how much money can be set aside pretax in 2kinds of health accounts. Opponents believe this cap discourages people from puttingaway as much money for out-of-pocket medical expenses.

2013: A look Forward

* ACA allows insurance carriers to charge seniors 3 times more than young people for premiums.

* New House bill HR 544 (The LIBERTY Act) allows insurance carriers to charge 5 times as much.

http://gingrey.house.gov/news/documentsingle.aspx?DocumentID=319048

ACA Timeline - 2013* Additional CHIP Funding: Under the new law, states will receive two more years of funding to continue coverage for children not eligible for Medicaid.

*Improve Preventive Health Coverage: To expand the number of Americans receiving preventive care, the law provides new funding to state Medicaid programs that choose to cover preventive services for patients at little or no cost.

* Increase Medicaid payments to primary care doctors: As Medicaid programs and providers prepare to cover more patients in 2014, the Act requires states to pay primary care physicians no less than 100% of Medicare payment rates in 2013 and 2014 for primary care services. The increase is fully funded by the federal government.

* Expand authority to bundle payments: The law establishes a national pilot program to encourage hospitals, doctors, and other providers to work together to improve the coordination and quality of patient care. Under payment “bundling,” hospitals, doctors, and providers are paid a flat rate for an episode of care rather than the current fragmented system where each service or test or bundles of items or services are billed separately to Medicare.

ACA Timeline – 2014* Establishing health insurance marketplace: Starting in 2014 if your employer doesn’t offer insurance, you will be able to buy it directly in the Health Insurance Marketplace. Individuals and small businesses can buy affordable and qualified health benefit plans in this new transparent and competitive insurance marketplace.

* Promote Personal Responsibility: Under the new law, most individuals who can afford it will be required to obtain basic health insurance coverage or pay a fee to help offset the costs of caring for uninsured Americans.

* Increased access to Medicaid: States will receive 100% federal funding for the first three years to support this expanded coverage, phasing to 90% federal funding in subsequent years.

* Makes care more affordable: Tax credits to help the middle class afford insurance will become available for those with income between 100% and 400% of the poverty line who are not eligible for other affordable coverage. (In 2010, 400% of the poverty line comes out to about $43,000 for an individual or $88,000 for a family of four.)

ACA Timeline – 2014* Eliminates limits on coverage: The law prohibits new plans and existing group plans from imposing annual dollar limits on the amount of coverage an individual may receive.

* No discrimination over pre-existing conditions: The law implements strong reforms that prohibit insurance companies from refusing to sell coverage or renew policies because of an individual’s pre-existing conditions. Also, in the individual and small group market, it eliminates the ability of insurance companies to charge higher rates due to gender or health status.

* Tax credit for small business: The law implements the second phase of the small business tax credit for qualified small businesses and small non-profit organizations. In this phase, the credit is up to 50% of the employer’s contribution to provide health insurance for employees. There is also up to a 35% credit for small non-profit organizations.

ACA Timeline – 2015

* Doctor pay based on value not volume: A new provision will tie physician payments to the quality of care they provide. Physicians will see their payments modified so that those who provide higher value care will receive higher payments than those who provide lower quality care.

Expect delays on some of these issues. Would expect all phases to be in place by 2017-2018.

Telephone Consumer Protection Act (TCPA)

Issue: More than one-third of Americans use a wireless device as their primary or only means of communication, and that number continues to grow. As a result, the ability to make contact via mobile phone is becoming increasingly crucial for businesses and the consumers they serve. Unfortunately, the outdated Telephone Consumer Protection Act (TCPA) hinders informational calls (about drug and other product recalls, fraud alerts, data breaches, flight delays, and other important and time-sensitive information) from being made to mobile devices.

In the 112th Congress, an ad-hoc multi-industry coalition worked with Representatives Lee Terry (R-NE) and Ed Towns (D-NY) to introduce the Mobile Informational Call Act, legislation that would have modernized TCPA regulations regarding informational calls to mobile devices. Unfortunately, the numerous negative news stories misrepresenting the bill's goals tainted the public's perception of the Act and created such a toxic legislative environment that the bill's co-sponsors requested that their legislation not move forward.

Telephone Consumer Protection Act (TCPA)

* LEGISLATIVE DAY IS CRITICAL * April 3-4, 2013 in Washington, DC * AN EVENT YOU CANNOT AFFORD TO MISS!!!!

* Contact Rep. Bob Latta (R-OH) – Vice Chairman of the Energy & Commerce Committee

We need your help and want to ask you to call or write Rep. Latta and ask him to take the lead on modernizing the TCPA

Paul A. Miller

(703) 930-7790pmiller@mwcapitol.com

www.mwcapitol.com