Week Ending January 12, 2018

• Countdown to Possible Government Shutdown and Negotiations Over Must-Pass Legislation
• Trump Health Care Nominee Backs Cuts to Medicaid

Countdown to Possible Government Shutdown and Negotiations over Must-Pass Legislation

Congress has only four working days to pass another bill to keep the federal government running or risk a shutdown.  The delay in finalizing fiscal year (FY) 2018 spending makes it difficult for state and local governments to know what resources they can count on from the federal government, which provides about one in three state budget dollars.  But, at this time it is unclear whether an agreement will be reached by January 19 or whether another short-term, stop-gap spending bill will be needed to allow negotiations to continue.

The negotiations involve more than how current FY 2018 spending levels will be allocated among various federal programs.  There is bipartisan support for raising overall FY 2018 and FY 2019 spending levels, but differences over how the increased budget would be divided between defense and nondefense spending.  Democrats have held firm for maintaining parity between defense and nondefense spending and have opposed efforts by conservatives to allocate most of the new spending to defense priorities.  Other matters that are part of the budget negotiations include:

• Hurricane Relief 
  Negotiations also continue over a bill to provide additional relief to Puerto Rico, Texas and other states devastated by hurricanes last year.  Puerto Rico is still severely hobbled by insufficient resources to achieve a full recovery.  Along with full funding and other assistance, AFSCME is pressing for increased Medicaid funding to help address increased health care needs of these American citizens.
• Protection for Dreamers
  There are negotiations over legislation to protect Dreamers from deportation – young adults who were brought to the U.S. as children and who, aside from their status, are Americans in every sense of the word.  President Trump repealed protections that had been implemented by President Obama.  Every day, more than 100 Dreamers lose the ability to legally work, serve in the armed services or attend college, and without a solution all Dreamers will lose their protection by early March.  There is bipartisan support in Congress to protect Dreamers and provide them a path to citizenship, but President Trump has zigged and zagged during the negotiations and has most recently appeared to pour cold water over a legislative fix.  As widely reported, he continues to insist on funding a wall at the Mexican border, which has bipartisan opposition in Congress.
• Delay in the 40% Tax on High Cost Health Plans 
  There are discussions over a plan to delay health care taxes in the Affordable Care Act, including a delay in the implementation of the 40% excise tax on high cost health plans.  While the tax does not take effect until 2020, it is already having an impact on health plans covering AFSCME members as many affected employers are demanding increases in deductibles, copays and other changes to avoid the tax.
• Other Health Care Matters
  Congressional leaders need to renew the Children’s Health Insurance Program (CHIP) which expired at the end of September.  Many states are planning reductions in their CHIP rolls because they have exhausted federal funding.  A final budget deal is likely to include a CHIP renewal.  There is also bipartisan agreement to block scheduled cuts in disproportionate share hospital (DSH) payments made by Medicaid to safety-net hospitals.  We expect this agreement to be part of a final deal.  There are also ongoing discussions over a measure to reverse President Trump’s decision to end payments to Affordable Care Act (ACA) plans that reduce deductibles and other cost sharing for low-income individuals covered by ACA plans.

Trump Health Care Nominee Backs Cuts to Medicaid

At his Senate confirmation hearing this week, Alex Azar, President Trump’s nominee to head the Department of Health and Human Services, backed a proposal that would repeal the Affordable Care Act and cut funds for state Medicaid programs. Azar, a former executive of the Eli Lilly drug company, also refused to support allowing Medicare to negotiate directly for prescription drug prices under Medicare Part D.  AFSCME continues to oppose his nomination.