The Senate missed an opportunity this week to beat back a Bush administration policy that will keep low-income kids from receiving government insurance.

In August 2007, the Centers for Medicare and Medicaid Services (CMS) announced a policy, to take effect this August, which will make it more difficult for uninsured kids to qualify for the State Children's Health Insurance Program (SCHIP). For example, New York state wants to set its eligibility limit at 250 percent of the poverty level. While that may sound like a lot, it's only about $44,000 for a family of three. Unfortunately, CMS thinks those folks are too wealthy to qualify.

Sens. Max Baucus (D-MT) and John Rockefeller (D-WV) are trying to stop the policy by using a little-known law called the Congressional Review Act which allows Congress to disapprove of agency regulations.

But the Senate has run into a bit of a sticky wicket. CMS did not release the policy as a formal rule; rather, they issued it as a guidance document — a less formal class of government policy that is not subject to Congressional Review Act challenges.

On April 17, 2008, the Government Accountability Office said that the CMS guidance document should be considered a rule for the purposes of the Congressional Review Act. So that means Congress can challenge the rule…right?

The problem, it turns out, is timing. Congress only has 60 "session" days to introduce a resolution of disapproval. The 60-day clock starts the day the agency informs Congress of its rule. After GAO's April ruling, CMS sent a letter May 7 saying the agency would ignore GAO, and it refused to submit the policy to Congress as it would a normal rule.

So GAO says the policy is a rule, a decision Baucus and Rockefeller prefer because it means they can file a Congressional Review Act challenge; but CMS says the policy is not a rule and won't submit it to Congress. The question becomes: When does the 60-day clock start?

The Senate parliamentarian sent a letter to Baucus and Rockefeller this week that says the clock started April 17, the day of the GAO ruling. That means the deadline for introducing the resolution was July 8. (Don't bother trying to figure out how the Senate counts days. Nobody knows.) Baucus and Rockefeller introduced the measure on July 17.

The parliamentarian's determination doesn't make much sense — not that any other date would make much sense either. This is uncharted territory for the Congressional Review Act.

But this shouldn't even be an issue. Why did it take Baucus and Rockefeller so long to introduce the resolution? As a result of the parliamentarian's decision, they had to postpone a scheduled markup of the resolution. Now, the Senate will miss out on the expediencies that an official Congressional Review Act challenge carries (limited debate and no filibuster).

Those expediencies could have been valuable, since time is of the essence for low-income families. If Congress can't find another way to nullify the CMS policy by August 17, many deserving kids will be left without insurance.

The law that created the Medicare drug benefit, or Medicare Part D, mandates that Medicaid beneficiaries who were also eligible for Medicare ("dual eligibles") receive their drug coverage from the Medicare drug program rather than Medicaid. So, rather than be allowed dual eligibles to choose between two programs, when the new Medicare law went into effect, it shifted Medicare-eligible Medicaid beneficiaries into the new program. As it turns out, drug manufacturers benefited handsomely from the switch.

In 2006 and 2007, the private Part D insurers spent $18.7 billion to purchase the top 100 drugs for dual eligible beneficiaries. On average, the Part D insurers received rebates and otherdiscounts from drug manufacturers that reduced these costs by 14%, lowering the total cost of providing these drugs to dual eligible beneficiaries to $16.2 billion.

Medicaid purchases the same drugs for low-income beneficiaries who are not dual eligible and pays significantly lower prices. If the private Part D insurers had paid the same prices as Medicaid, their total cost for the drugs used by the dual eligible beneficiaries would have been $12.4 billion. The higher prices paid by the private Medicare Part D insurers increased the costs to the taxpayer for these drugs by 30%.

Responding to the committee's findings, CMS Acting Administrator Kerry Weems said, "Beneficiaries moved from a state-run price fixing program into a risk-based insurance product where they have the dignity of choice, broader access to more drugs and no limits on the number of prescriptions," "Diginity of choice" is an odd way to say that Medicaid beneficiaries must participate in the Medicare drug benefit. It's certainly a "choice" that drug manufactures certainly prefer.

House Committee on Oversight and Government hearing: The Medicare Drug Benefit: Are Private Insurers Getting Good Discounts for the Taxpayer?

Those wacky legislators in Congress are at it again. Democrats have added language to once again increase the national debt ceiling, or debt limit, which is the maximum amount of debt the federal government can issue. Democrats added language to a housing relief bill increasing the limit by another $800 billion to an astounding $10.615 trillion (that's trillion with a "t"). While the current national debt stands at $9.456 trillion, about $400 billion below the current debt limit according the Treasury Department, their projections show that limit might be reached before the year is over and after Congress has ajourned for the year. It seems the Dems are taking this action mostly as a precautionary move.

This will mark the sixth time in the last seven years that Congress has increased the debt limit (see chart below). Most of those increases came during Republican control of Congress, although the last two increases have been while Democrats control both chambers.

Unfortunately, it is unlikely the trend will change anytime soon as Congress has only given lip-service to issues of fiscal responsibility. Congress' current committment to pay-as-you-go (PAYGO) rules is tenuous at best, and Craig posted last week about a Congressional Budget Office report showing some pretty dire consequences for the national debt if Congress does not adopt more responsible tax policies than they are currently considering.

The Center on Budget and Policy Priorities has once again released an analysis of state government budget health, and the news continues to deteriorate. In their lastest analysis, they rank all 50 states according to changes in three main economic indicators - employment, poverty, and housing foreclosures. The report finds:

States across the country have projected budget shortfalls totaling at least $48 billion for 2009. To meet their balanced budget requirements, they are being forced to raise taxes and/or cut expenditures — both of which reduce overall demand and thereby weaken the impact of the recent federal stimulus package. Federal fiscal relief would limit the need for such actions.

CBPP argues pretty convincingly that because the states that are showing the most economic problems are the same ones that are having budget issues, fiscal relief for state budgets would go a long way to improving econonmic conditions. Good stuff. Maybe Congress should consider this, huh?

CBPP: ECONOMIC DATA CAN BE USED TO TARGET STATE FISCAL RELIEF EFFECTIVELY

The Center on Budget and Policy Priorities has released a report from leading economists and budget experts criticing a recent paper from the Brookings Institute and the Heritage Foundation called "Taking Back Our Fiscal Future." From the CBPP press release:

Sixteen leading economists and budget experts issued a major critique today of a recent proposal to address future federal budget deficits through radical changes in budget procedures for Social Security, Medicare, and Medicaid.

These experts, who include a Nobel Laureate in economics, two former Office of Management and Budget Directors, and a former Deputy Director of the Congressional Budget Office, agree that the nation faces large, persistent budget deficits that would ultimately risk significant damage to the economy. They also concur that policymakers should begin now to make the tough choices needed to avert such deficits.

But they believe the methods set forth in "Taking Back Our Fiscal Future" (TBOFF), a recent proposal by some analysts at the Brookings Institution, the Heritage Foundation, and other groups, are misguided. Instead, they believe policymakers should begin the hard work of building consensus on specific spending and tax measures that would start reducing longterm deficits, and they recommend a series of such measures.

So, the Brookings/Heritage paper was signed by 16 "longtime federal budget and policy experts" and now CBPP has released their own report from another 16 prominent and expert folks. Seems like the right-of-centrists and left-of-centrists are gearing up for what could be major reforms to fundamental federal government supports and programs in 2009. Should be quite a fight - stay tuned.

Reports:
CBPP: A Balanced Approach to Restoring Fiscal Responsibility
Brookings/Heritage: Taking Back Our Fiscal Future

Commentary:
Matthew Yglesias (The Atlantic): Fiscal Sanity How?
Matthew Yglesias (The Atlantic): Leninism's Return
Robert Kuttner (The American Prospect): Sensible Budget Wonks Strike Back Against Conservatives
Mark Schmidt (The American Prospect): "Leninist Strategy" 2.0
Matt Lewis (Inclusionist): A Better Way on Long-Term Deficits
Diane Lim Rogers (EconomistMom): But Really, Fiscal Responsibility Is Easier Under a Benevolent Dictatorship