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Funding For Key Health Reform Provisions: Less Endangered Than You Might Think



January 4th, 2011

With the shift in Washington’s political order, there’s been increasing talk about dismantling Federal health care reform. Outright repeal is highly unlikely. First, it would face opposition from the Democratic majority in the Senate. Even more critically,  President Obama would almost certainly use his veto pen on any repeal legislation and a supermajority needed to overturn a veto is doubtful.

Another strategy that has received attention is for Congress to use its power of the purse to starve health care reform of funding it needs to take hold. But a closer look at the law reveals that many of the provisions central to implementing health care reform already have access to funding and do not require going back to Congress for more.

The pillars of the law’s health insurance expansion strategy—increased eligibility for Medicaid and the new premium and cost-sharing subsidies for private health insurance—are exempt from the annual appropriations process. These so-called “mandatory” or “entitlement” programs are permanent and have permanent funding authority. Furthermore, the Department of Health and Human Services has the ability to fund related provisions without seeking additional appropriations from Congress. For example, Federal grants to states to plan and build the new health insurance exchanges fall into this category. It also includes funding necessary to immediately lower insurance costs for uninsured individuals with preexisting conditions and early retirees.

In addition to insurance coverage expansions, the health reform law also provides a strong financial footing for improved access to health care providers and for efforts to start  reforming the health care delivery system. The law includes $11 billion to expand community health centers so they can double the number of individuals they serve to 40 million. It establishes a new entity—the Center for Medicare and Medicaid Innovation—dedicated to testing and implementing innovative payment and service delivery models and sets aside $10 billion for each of the next two decades to support these efforts. On top of the allocation for the Innovation Center, appropriations are provided for a number of Medicare and Medicaid demonstrations, including those that promote independent living and help reduce hospital readmissions among the chronically ill.  

It would take another act of Congress to defund these programs and that’s not likely.

Potential Defunding Targets

The health law does leave some provisions unfunded, however, and that’s where Congress could create some roadblocks to implementation. The Congressional Research Service published two reports outlining the provisions by funding status—one focuses on provisions with appropriations; another much longer report lists those with funding authorizations but no appropriations.

Looking at the coverage expansion “wish list” items, the law provides just one year’s worth of funds for what needs to be a multi-year effort to educate and enroll consumers in health insurance. “Such sums as necessary” or no-funding-at-all is made available for “multi-state” health plans. The law leaves many health care workforce provisions without necessary appropriations. Many Medicare and Medicaid payment reform demonstrations lack dedicated implementation funds. But, the rich resources of the Innovation Center could be another source of funding for these demonstrations.

Perhaps the major gap in funds is for Federal personnel. Successful implementation of the vast law will require substantial Federal efforts—a recent New York Times article touches on the huge Federal rulemaking enterprise underway—and the law only made a $1 billion down payment toward those. The Congressional Budget Office estimates the Internal Revenue Service and Department of Health and Human Services will each need $5 billion to $10 billion to carry out their mandates. Securing the additional funds will require support from Congressional appropriators. This is not likely to be easy.

Summing Up

The Obama Administration already has much of the funding it needs to carry out the main elements of reform, and this funding will not likely come under serious threat.

At least some additional appropriations will be needed. But—just like a strategy of outright repeal—defunding the law may work better as talking points than action.

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1 Response to “Funding For Key Health Reform Provisions: Less Endangered Than You Might Think”

  1. Roger Collier Says:

    The Summing Up section is perhaps a little optimistic. The CBO estimated in its May 11, 2010 letter (the source of the reference in the penultimate paragraph) that each of the IRS and HHS will need $5 billion to $10 billion over ten years to implement PPACA provisions, presumably with most of this funding required starting in 2013, in time for full implementation in 2014. While the $1 billion mandatory appropriation included as part of PPACA will fund current efforts, there will be a need for additional funding no later than the 2013 appropriation cycle—with potentially (Republicans hope) a newly-elected Republican President and Republican-majority Senate. At this point, Republicans may feel there is no longer a need for a repeal battle, they can simply let major features of reform die for lack of funding. In any case, in a Republican-dominated Congress, it would be hard to find votes for appropriating up to $2 billion a year for reform.

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