Earlier this week in a speech, newly sworn-in Secretary of Health and Human Services Mike Leavitt addressed the issues surrounding Medicaid reform, remarking that the problem is “big enough to see and small enough to solve”. During the speech, Sec. Leavitt did make several policy statements by saying there would be no block grants, no cuts in available resources, and mandatory populations would not have their coverage changed.

The Secretary also mentioned three Medicaid reforms that could save the federal government money. First, allowing states to purchase pharmaceuticals for less than they presently do, second, closing down loopholes that allow people to become eligible for Medicaid by giving away assets to their children and third, proposing an “uncomfortable, but necessary conversation” with states about shutting down financing loopholes.

Finally, Secretary Leavitt mentioned three opportunities in Medicaid reform. The first, an emphasis on home and community based care (as opposed to institutional care). The second is expanding access to more children. While details have not been provided, the President recently announced a plan to conduct a $1 billion outreach campaign designed to bring eligible but unenrolled children onto Medicaid and the State Children’s Health Insurance Program (SCHIP). The third is the opportunity to restructure coverage of Medicaid’s currently optional populations. The Secretary proposed allowing states to use SCHIP levels of benefits to provide “quality basic health coverage” for optional populations.

Some Senate Republicans helped derail a House leadership plan to overhaul the subcommittee structure of the House and Senate Appropriations panels.

The House plan would change the job descriptions of several Appropriations subcommittee "cardinals" stripping three of their positions altogether. With the Senate expressing clearly its wish to keep the status quo, the possibility now exists that the two chambers could begin FY06 budget negotiations with completely different appropriations panels. Such an outcome would significantly raise the chances of another end-of-year omnibus spending bill.

Rep. Ernest Istook (R-Oklahoma) acknowledged on Sunday (January 30) that he will not be chairing any subcommittee of the House Committee on Appropriations this Congress. Istook is the first casualty of the reorganization of the committee, which is reducing the number of subcommittees from 13 to 10.

The Transportation-Treasury Subcommittee will continue to operate largely as before. Under the reorganization plan, the Veterans Affairs and Housing and Urban Development, the Legislative Branch, and the District of Columbia subcommittees would be eliminated. Their jurisdiction would be spread out among the remaining 10 subcommittees.

It remains to be seen which other current subcommittee chairs will lose their status in the reorganization. We will keep you posted on further developments.

The Washington Post is reporting that 40 states and the District of Columbia have banded together to build the technical infrastructure necessary to begin charging sales tax on internet transactions. From the article:

Working together under the auspices of the Streamlined Sales Tax Project, 40 states and the District of Columbia have issued two requests for bids from technology companies to design the software and Web-based networks to track millions of online purchases and process the appropriate sales tax payments.

A request issued by the states last Friday seeks bids to build a registration system where all Internet retailers -- ranging from giants like Amazon.com to smaller companies -- would go to declare their intent to collect and remit taxes on online sales made to customers in the project's participating states.

The second request, issued last November, is aimed at making it easier for online retailers to collect sales taxes. The states plan to award contracts to multiple vendors who would provide sales tax collection systems to online retailers. As currently envisioned by the states, Web merchants would pay nothing for the services. Instead, the vendors would take a small cut from the revenues.

The National Governor's Association estimates that in fiscal year 2003, at least $15.1 billion worth of state sales taxes were lost through internet transactions.

After coming close to negotiating a final bill before Congress adjourned in December, House and Senate committee leaders intend to reintroduce separate versions of the Water Resources Development Act (WRDA) next month. Congress usually adopts a WRDA bill every two years, but controversy over how the U.S. Army Corps of Engineers evaluates projects has stalled the legislation since 2001. House Committee leaders originally intended to move a bill directly to the House and Senate floor based on compromises reached late last year. Instead, the House Transportation and Infrastructure Committee and the Senate Environment and Public Works Committee will introduce separate bills, requiring the committees to reconsider the bills, possibly as early as February or March. Both committees also have jurisdiction over the highway bill, whose passage also eluded lawmakers last year and is generally considered a higher priority and could delay WRDA consideration.

The House leadership has delayed making Appropriations subcommittee assignments while it considers reorganization plans. House Majority Leader Tom Delay (R-Texas) has been pushing to restructure the committee and reduce from 13 to 10 the number of subcommittees. Committee insiders say that a range of options is on the table for discussion, but any change will meet with resistance from some committee members and interest groups concerned about programs being shifted from one subcommittee to another. Further complicating the reorganization is the reception any plan will receive in the Senate. The House and Senate subcommittees must be identical in order to more effectively conference final bills before they're sent to the President. Senate leaders do not share the same degree of enthusiasm or interest in a reorganization. Five subcommittees are considered to be exempt from restructuring plans: Agriculture, Commerce-Justice-State, Foreign Operations, Labor-HHS-Education, and Homeland Security. A final decision is expected in early February, about the time the President's budget request is sent to Congress, kicking-off the appropriations process.

Condoleezza Rice was confirmed as Secretary of State by the Senate today in a 85 to 13 vote. 12 Democrats and one Independent voted against her confirmation.

In other nomination news, Alberto Gonzales's nomination passed through the Judiciary Committee along a party line vote of 10-8. His nomination now moves to the Senate floor.

We've obtained a list of the various deadlines for appropriations issues in the House for Fiscal Year 2006. The chart follows, but we'll continue to update the dates and times as the information becomes aware to us, so be sure to check back often.

Deadline for various appropriations issues for FY 2006 in the House

January 26, 2005

The Congressional Budget Office has released revenue projections through 2010 for the Highway Trust Fund. Similar to assumptions made last year by the Bush Administration, CBO estimates that Trust Funds revenues will be $201 billion through fiscal year 2009 and $245 billion from fiscal year 2005 to 2010. These projections will have an impact on the size of the highway bill re-authorization, which is expected sometime this year. Last year Congress and the White House failed to reach a compromise on the cost of the authorization when the Bush Administration insisted on a bill no larger than $256 billion over the next six years. These new numbers indicate that unless Congress agrees on new sources of revenue for the trust fund, reauthorizing TEA21 will be constrained by the same funding levels as last year.

President Bush nominated former Deputy Treasury Secretary Michael P. Jackson to the number two spot at the Department of Homeland Security. Jackson had served in the Treasury Department from 2001-2003, later leaving to work for AECOM Technology Corp. He has been active in the government for a number of years, originally working for President George H.W. Bush first as Cabinet liaison at the White House and afterwards as chief of staff at the Transportation Department

Yesterday Carlos Guitierrez was approved by the Senate to head up the Commerce Department.

Guitierrez was the head of Kelloggs Corporation previously. He will be forced to tackle a record trade deficit of more than $600 billion as well as the continued loss of jobs overseas. Guitierrez replaces outgoing Secretary Don Evans.

HHS Secretary Tommy G. Thompson has announced the final regulations establishing the new Medicare prescription drug benefit. The prescription drug benefit and the other provisions included in the regulations are key elements of the Medicare Modernization Act passed by Congress and signed into law by President Bush on Dec. 8, 2003.

The new regulations will provide a prescription drug benefit available to everyone who is in Medicare, regardless of their income, how they get their health care now (whether through traditional fee-for-service Medicare or Medicare Advantage plan) or how they currently get their drug coverage.

The rules will say that every prescription drug plan must provide “adequate coverage of the types of drugs most commonly needed” by Medicare beneficiaries. These include drugs to treat high blood pressure, heart disease, cancer and Alzheimer’s disease. On the other hand, the rules say that a plan can establish a list of preferred drugs and can refuse to pay for other medicines. In general, the list, known as a formulary, must have at least two drugs for treating each condition or illness.

The rules also embody other important policy decisions that will determine exactly how the new program works and whether it succeeds. Consumers, insurers, drug companies and politicians have been sparring over almost every detail of the rules.

The final rules address many concerns that people expressed about a preliminary version, issued in late July. One concern centered on the fact that Medicare will replace Medicaid as the source of drug coverage for many of the elderly poor.

About 6.3 million low-income people are enrolled in both insurance programs. Medicaid, which is financed jointly by the federal government and the states, now pays for their drugs, but will not do so after Jan. 1, 2006. State officials and advocates for low-income people had expressed alarm that many of these beneficiaries would lose coverage for months, while they moved from Medicaid to a Medicare drug plan.

The law, the biggest expansion of Medicare since its creation in 1965, depends on private health plans to deliver the new benefit. Insurers, eager to control costs, wanted to limit the number of drugs they must cover. Doctors, drug companies and advocates for beneficiaries wanted to maximize the number.

The government offered a compromise. It allows the use of formularies and says insurers must cover only one drug in a therapeutic category or class if only two drugs are available and one is clearly superior.

Many employers have cut retiree health benefits in the last 15 years. The law offers subsidies to employers to encourage them to continue providing drug benefits to retirees.

The Congressional Budget Office (CBO) is slated to release tomorrow (January 25) its latest estimates on revenues and spending baselines for government programs. Included in their report will be a re-estimate of revenues expected in the Highway Trust Fund. Early reports leaking out of Capitol Hill indicate the CBO projections for income from the Federal motor fuels tax and other taxes supporting the trust fund will be lower over the next six years than they had projected last summer. While the new estimate may only be a few billion dollars below the old one, every few billion dollars means something at the margins -- particularly when the political climate for getting a bill done continues to be difficult.

We will keep our friends and clients posted on developments in the days ahead.

The Wall Street Journal is reporting that Federal Communications Commission Chairman Michael Powell will be resigning today.

Powell, the son of outgoing Secretary of State Colin Powell, has led the FCC during a controversial period, causing dissatisfaction from many groups encompassing various sides. During his tenure the FCC weighed in on indecency fines, communications company mergers and a heated battle between various telecom groups. His ideological bent has been hard to classify.