A federal court has sent back (vacated and remanded, in regulatory-speak) to the Bush administration a rule aimed to limit government reimbursement for Medicaid providers. The rule is one of several the administration is attempting to codify in an effort to undermine the entire Medicaid program.

The process by which the Centers for Medicare and Medicaid Services finalized the rule was particularly sneaky, even by Bush administration standards. A New York Times editorial explains:

In a decision issued last week, Judge James Robertson of the Federal District Court in Washington ruled that the administration had overstepped its authority last year with a maneuver "deliberately designed to outfox a clear directive of Congress." The administration was seeking to evade the annoying fact that Congress had enacted a one-year moratorium on the administration's efforts to alter — and in the process cut — Medicaid reimbursements to public hospitals and nursing homes.

Congress had already passed, but President Bush had not yet signed, a broad funding bill that included the moratorium when the secretary of the Department of Health and Human Services rushed through a typo-ridden rule for "emergency display" on May 25, 2007, the very day the moratorium took legal effect. The rule, which had been in preparation for some time, was officially published a few days later. That shifty maneuver was too much for Judge Robertson to swallow. He found ample reason to overturn the rushed-through rule as a violation of Congressional intent.

The ruling should serve as a reminder to Bush administration higher-ups that Congress, not the Executive Branch, is primarily responsible for crafting federal policy. The role of federal agencies is to faithfully enforce the law in the spirit Congress intended, not to undermine it based on personal views — in this case, an ideological aversion to government programs meant to help the needy.

In his opinion, Judge Robertson writes to that effect:

[T]he Secretary treated an act of Congress seeking to control the substantive rules of Medicaid reimbursement as an "emergency," and prioritized issuance of his own rule over Congress's plain intent to prohibit his actions ... Although administrative law has evolved to allow agencies significant leeway to fill in the interstices of broad congressional mandates … control over the substance of the rules that govern the nation has always remained with Congress first. The Executive must comply with the duly enacted commands of Congress.

Yesterday, the Senate passed an amendment to the war supplemental bill that will put the brakes on several controversial Medicaid regulations. The Bush administration has finalized, or is preparing to finalize, the regulations in an effort to cut federal funding for a variety of Medicaid programs administered by the states. (More details on the regulations here.)

The administration developed the regulations under the guise of "fiscal integrity," arguing state Medicaid programs are using loopholes to inappropriately claim federal funds. Bush has threatened to veto the bill. Fortunately, the amendment passed the Senate in a 75-22 vote and also cleared the House by a veto-proof margin.

On May 6, more than 100 hospitals, providers, school districts and public interest groups (including OMB Watch) wrote to Congress in support of the legislation, which will place moratoria on all seven of the regulations until April 1, 2009. The letter says, "Taken together, the impact of these regulations would undermine the viability of our nation's health care safety net and reduce or eliminate access to health care services for many millions of low income patients."

Critics also question the administration's authority to make such major changes to Medicaid. For example, one of the proposed rules would limit the ability of state governments to provide rehabilitation services (such as transitions to independent housing) for people with mental illnesses or developmental disabilities. The Bush administration floated this limitation as a legislative proposal in 2006, but Congress rejected it.

Kudos to members in both chambers voting yea: they stood up to the administration's efforts to hobble state Medicaid programs.

From a government operations standpoint, Congress should also be commended for reestablishing control over issues that are properly within its purview and rebuking the administration's efforts to reinterpret federal law through administrative means.

Posted by Matt Madia, 12:00:40 PM

Thursday, May 22, 2008

Posted by Adam Hughes, 09:02:59 AM

Wednesday, May 21, 2008

GAO: The Nation's Long-Term Fiscal Outlook, April 2008 Update

The Government Accountability Office released an updated report on the nation's long-term fiscal outlook last week.

The outlook is still bleak, but the GAO is getting on the same page as the CBO in pointing toward rapidly rising health care costs as the prime cause of the gargantuan fiscal gap.

Although Social Security is a major part of the fiscal challenge, it is far from the biggest challenge. Spending on the major federal health programs (i.e., Medicare and Medicaid) represents a much larger, faster growing, and more immediate problem. In fact, the federal government's future obligations for Medicare Part D alone exceed the unfunded obligations for Social Security.

(click to enlarge)

Posted by Craig Jennings, 11:39:40 AM

Friday, May 16, 2008

GI Bill Surtax Would Affect 0.3% of All Taxpayers

When the House approved the domestic spending amendment to the war supplemental spending bill, it approved not only a $52 billion expansion of the GI Bill, but a 0.5% surtax on income for millionaire couples (individuals earning more than $500,000).

According a recent Citizens for Tax Justice report, the tax would affect about 0.3% of all taxpayers.

"The surtax would simply scale back the Bush tax cuts for the richest 0.3 percent of taxpayers, by an average of just 7 percent, to help the men and women returning from the wars and their families," said Robert S. McIntyre, director of Citizens for Tax Justice. "Lawmakers who oppose this proposal will prove that they really do value tax cuts for the wealthy over all else."

Annual effects of a proposed 0.47% surtax on adjusted gross income in excess of $1 million for married couples and $500,000 for others (at 2007 levels)
	Number affected by surtax	% of all taxpayers affected	Total tax change ($-billion)	Average tax change
Married couples	291,300	0.5%	$+3.0	$+10,240
Others	152,500	0.2%	+0.9	+5,960
ALL	443,800	0.3%	+3.9	+8,770
Source: Citizens for Tax Justice, "Surtax on Millionaires to Help Veterans Would Be A Tiny Sacrifice for the Richest 0.3 Percent of Taxpayers"

(click here to see full report chart)

Posted by Craig Jennings, 10:37:13 AM

Tuesday, May 13, 2008

Entitlement Panel Legislation Unlikely This Year

CQ reports ($) that Senate Budget Committee Chair Sen. Kent Conrad (D-ND) has cast serious doubt on the probability that legislation to create a commission to look at Social Security and Medicare reform will make any progress this year. Conrad had hoped to have a committee markup for the Bipartisan Task Force for Responsible Fiscal Action Act of 2007 (S. S 2063), but has been convinced there is scant appetite in Congress for any such measures.

Posted by Craig Jennings, 10:19:25 AM