Bipartisan funding bill contains numerous health provisions, even more CHIP

After a brief government shutdown, the Bipartisan Budget Act (BBA) was signed into law Friday, February 9. BBA contains numerous health policy provisions that will likely have long-term implications for states, providers, and patients.

Notably, the BBA added an additional four years to the Children’s Health Insurance Program’s statutory authorization. CHIP had been reauthorized for six years in January’s budget standoff, and the BBA extension ensures the program will run through September 30, 2027. This extension actually saves the federal government money because of an interaction with the repeal of the Affordable Care Act’s (ACA) individual mandate in last year’s tax package.

The BBA also includes $6 billion over two years to address the opioid epidemic. However, there may be procedural questions as to how that funding will be allocated between health and law enforcement programs, and critics argue this amount—while helpful—will not be enough.

The BBA also provides support for two programs created in the ACA. First, it includes an additional two years of support for a special fund for community health centers that supplements regular appropriations for these safety-net providers. The BBA also extends the Maternal, Infant, and Early Childhood Home Visiting Program through September 30, 2022. The extension requires participating states to conduct a statewide needs assessment and allows them to establish an incentive program for successful outcomes. At the same time, the BBA reduces the ACA’s Prevention Fund, which has become a common offset for other funding priorities.

Given that the BBA extends many expiring Medicare provisions and deals with many other issues such as the debt limit, several political pundits believe Congress has “cleared the deck” of major health policy debates for the remainder of the year.

New Jersey Governor Murphy Announces Nation’s Largest Offshore Wind Target

Last week, Governor Phil Murphy announced plans to develop 3.5 gigawatts of wind power off the coast of New Jersey by 2030, joining officials in a number of states, mostly in the east, who have committed to promoting the nascent sector. Murphy’s announcement is the largest commitment of any state so far, and came on the heels of New York Gov. Andrew Cuomo’s release of the New York Offshore Wind Master Plan, which details how the Empire State will support 2.4 gigawatts of ocean-based wind by 2030.

The offshore wind industry is still in its infancy in the United States, where the first and only offshore wind farm, a 30-megawatt pilot, began operating off the coast of Block Island, Rhode Island in late 2016. Nevertheless, studies have shown that abundant wind resources in U.S. waters offer the potential for large-scale electricity generation. The U.S. Energy Department estimates that offshore wind could produce 2,000 gigawatts of power per year, nearly double the nation’s annual energy use.

Breezes that flow along the Atlantic Seaboard are considered to offer some of the most favorable conditions for ocean-based wind generation in the world, but until recently, formidable cost and regulatory barriers have hampered progress here.

Now, several massive wind farms are on the verge of moving forward.  More than 15 gigawatts of offshore wind generation have been proposed along the east coast, enough to power more than 10 million homes. Nationwide, 24 gigawatts are in various stages of development in federal waters along the east and west coasts of the United States, in the Great Lakes and off the coast of Hawaii. Federal waters begin three miles from shore.

U.S. offshore wind project pipeline by state as of June 2017. Source: U.S. Department of Energy.

States that have been promoting offshore wind are hoping that a thriving sector will help them meet multiple public-policy goals, including: fulfilling clean-energy and carbon-reduction targets; procuring zero-carbon replacement power for planned or potential nuclear plant retirements in the coming years; and creating skilled, local jobs.  New York, for example has pledged to get half its power from renewable sources by 2030, and reduce its carbon emissions 40 percent by that time. Officials there estimate that offshore wind could be a $6 billion industry by 2030, support 5,000 jobs, power 1.2 million homes and provide an annual $400 million in health benefits from avoided emissions.

Other states that are aggressively promoting the sector include Massachusetts, where a 2016 law requires the state’s three investor-owned utilities to procure 1.6 gigawatts of offshore wind by 2027. The Massachusetts Clean Energy Center, a state economic-development agency, has identified eighteen potential waterfront sites that might be available for private investment by the offshore wind industry.

In Maryland, regulators last May approved two wind farms for construction at least fourteen miles off the state’s coastline, and as part of the deal, they are requiring that developers invest in a steel-fabrication plant and provide upgrades to a Baltimore port. When completed, the wind farms will have a combined generating capacity of 369 megawatts.

Gov. Murphy’s executive order directs the New Jersey Board of Public Utilities to implement the 2010 Offshore Wind Development Act, which allows state agencies to develop an Offshore Renewable Energy Credit (OREC) program. The order directs regulators to begin the rulemaking process to fill in the gaps in the current regulations governing the program, and to create a process to approve financial plans submitted by offshore wind developers. In addition, the order directs the BPU to:

  • Issue a solicitation calling for proposed offshore wind projects for the generation of 1.1 gigawatts of electricity;
  • Engage with neighboring states on the potential benefits of regional collaboration on offshore wind; and
  • Develop an Offshore Wind Strategic Plan for New Jersey.

While the offshore wind industry is in its early stages in the United States, the technology has flourished in European waters, where ocean-based turbines have been generating power for more than two decades. Currently, European countries have more than 15 gigawatts installed, which support 70,000 to 80,000 jobs.

USDA Helped 7 Million Rural Residents with $1.5 Billion in 2017

From the January 29, 2018 “Morning Ag Clips”

The Morning Ag Clips article presents a summary of the USDA Rural Development report to President Trump from Secretary Perdue for 2017. The USDA carries the report on its website, but news articles are, at best, hard to find on the site. We think you may want to know what Rural Development has done this past year for your constituents.

USDA Rural Development provided loans and grants to rural areas of the country to aid those areas with money to help schools, libraries, fire and police facilities, and other public/community needs. In 2017 the USDA provided loans and grants, mostly low interest loans, amounting to $1.5 billion to help a total of seven million people with approximately 400 projects.

Our CSG Eastern Region had nine of its eleven states participate. Only Massachusetts and New Hampshire did not have a project included this year. One example that affected one of our states is a $775,000 loan for two counties in north central Pennsylvania to purchase a building to house Head Start in Williamsport.

The 43 page report states “The USDA provides loans and grants to help expand economic opportunities and create jobs in rural areas.” Through assistance with business opportunities, housing, infrastructure and community services that help people, such as schools, health care facilities, and high speed internet availability.

The Morning Ag Clips article can be found here, and the full Report from USDA Rural Development to the President can be found here.

Labor Department calls for comments on “association health plans,” which some fear will destabilize state insurance markets

Last year, President Trump issued an executive order directing federal agencies to develop “a healthcare system that provides high-quality care at affordable prices for the American people.” Recently, the U.S. Labor Department began implementing one of the stated goals of this executive order by issuing a proposed rule on “association health plans” (AHPs).

On January 5, the Labor Department asked for comments on this proposal, which would allow business associations to sell to small business an insurance plan similar to what many large companies offer to their employees under the federal Employee Retirement Income Security Act (ERISA). Health insurance plans that comply with ERISA are exempt from state law and are regulated by the Labor Department, but to create such a plan is cumbersome even for some large businesses. Proponents say that small businesses would be able to obtain the economies of scale and flexibility that large companies enjoy under ERISA, but opponents argue that AHPs would destabilize state insurance markets and put consumers at risk.

The proposed regulation turns on how to interpret ERISA’s interpretation of “employer.” Currently, business associations like local Chambers of Commerce may offer health insurance to their members, but these insurance policies are regulated by state insurance commissioners. Under Labor’s proposal, the definition of an “employer” would be broadened so that small businesses in the same industry or same geographic region could band together and create an association that could offer a plan similar to a large company might under ERISA. (For a more in-depth overview, click here.)

Many business groups have supports AHPs as a way to achieve equity between large and small businesses. For example, the National Restaurant Association noted that allowing AHPs would be “a key step in leveraging the buying power of small businesses.” The Society for Human Resource Management added that AHPs “could provide an option for small employers to offer competitive and affordable health benefits to their employees, thereby increasing the number of Americans who receive coverage through their employer,” but likely would have little effect on most midsize-to-large employers.” On the other hand, consumer groups, state officials, and Blue Cross plans argue that AHPs would weaken existing state and federal protections, destabilize the individual and small group markets, and prevent state insurance regulators from policing bad actors. Opponents point to problems with a similar policy, multiple employer welfare arrangements (MEWAs), which ultimately led to Congress to pass a law clarifying that states could regulate MEWAs. Additionally, groups like the National Governors Association and the National Association of Insurance Commissioners have opposed legislative attempts to create AHPs for similar reasons.

Comments on the proposal are due to the Labor Department by March 6.

NAFTA – Implications of Termination

While the United States Government negotiators prepare to enter into the seventh of the North American Free Trade Agreement (NAFTA) discussions in Mexico City, a new report has been published by the Business Roundtable and Trade Partnership Worldwide, LLC, entitled ‘Terminating NAFTA: The National and State by State Impact on Jobs, Exports and Output.

The Executive Summary section of this report issues dire warnings of the negative consequences the U.S. would fact should it terminate the NAFTA agreement.

“Using a methodology that enables us to capture the full impacts (both positive and negative; direct and indirect) across the U.S. and international economies, we find that a termination of the North American Free Trade Agreement (NAFTA) would have significant net negative impacts on the U.S. economy and U.S. employment, particularly over the immediate years after termination. Termination would re-impose high costs of tariffs on U.S. exports and imports, which would reduce the competitiveness of U.S. businesses both domestically and abroad. U.S. exports would drop, both to Canada and Mexico and globally, as U.S. output becomes more expensive and therefore U.S. businesses would be less competitive in these markets. Foreign purchasers would shift away from U.S. goods and services in favor of lower-cost goods and services made in other international markets, particularly those made in Asia.

These efficiency losses and trade shifts would have an impact on U.S. production of both goods and services, and thus also on U.S. employment. We estimate that, if NAFTA is terminated and most-favored nation (MFN) duties are re-imposed for U.S. trade with Canada and Mexico, the level of U.S. real output would fall 0.6 percent below levels that would prevail if NAFTA were in effect in each of the first one to five years after termination. Lower output means less employment after all the gains and losses are tallied: on balance 1.8 million workers would immediately lose their jobs in the first year with full termination and the return of MFN tariffs.

While the focus of our study is the short- to medium-term, we also examine the national impacts of terminating NAFTA over the longer term (i.e., 10 years and after). Terminating NAFTA would have negative impacts on jobs, exports and output even after new supply chains are formed. In this longer run, we estimate that U.S. GDP would remain depressed by over 0.2 percent, permanently.”

A January 30 Market Watch article pointed out that, despite slow progress, Merrill Lynch reduced the odds of the U.S. exiting NAFTA this year to just 25%. A few months ago, many trade watchers thought the chance of a U.S. withdrawal was at least 50-50, if not higher.

As always, we will continue to keep you abreast of the status of the negotiations.