Minimum Wage Increase Moves through House

On January 10, the House of Representatives passed the Fair Minimum Wage Act (H.R. 2), a measure to increase the minimum wage by $2.10 over a two-year period. There would be three incremental increases leading up to the final increase to $7.25 an hour. The legislation passed by a vote of 315 to 116 and will now be sent to the Senate for consideration. Although the House bill dealt strictly with an increase to the minimum wage, the Senate is expected to debate the inclusion of tax relief to small businesses as part of the package. Also on January 10, Senate Finance Committee Chair Max Baucus (D-Mont.) stated during a hearing on the minimum wage and tax incentives in his committee that he was committed to the incentives for small business either as stand-alone legislation or as part of a minimum wage bill. The tax provisions discussed in the committee included helping business owners to afford new equipment and property for their businesses; allowing leaseholders and restaurants to quickly recover the cost of improvements to their establishments; simplifying the way that small businesses keep records for tax purposes; and how small businesses provide jobs for workers who have experienced barriers to entering the workforce. The Senate is expected to address the minimum wage increase next week.

House Democrats Introduce Bill for Medicare Drug Price Negotiations

On January 5, House Energy and Commerce Committee Chairman John Dingell (D-Mich.), House Ways and Means Committee Chairman Charles B. Rangel (D-N.Y.), and 190 co-sponsors introduced H.R. 4, a bill that would require the government to negotiate lower drug prices for those enrolled in the Medicare drug program. The Medicare Prescription Drug Negotiation Act of 2007 aims to help seniors and people with disabilities to get better prices on prescription drugs under Medicare. Current law explicitly prohibits Medicare from negotiating for lower prices. Meanwhile, on January 11, Senate Finance Committee Chairman Max Baucus (D-Mont.) held a hearing that included testimony from various academics and the Government Accountability Office on the issue of direct negotiating authority. Senate Majority Leader Harry Reid (D-Nev.) has introduced a placeholder bill in the Senate (S. 3), intending to show Democratic support for the proposal. On January 10, the Congressional Budget Office (CBO) released a report estimating that the proposal to allow for negotiation of drug prices for the Medicare program would not produce savings. The CBO letter was sent to Rep. Dingell and stated that the negotiations “would have a negligible effect on federal spending because we anticipate that the secretary would be unable to negotiate prices across the broad range of covered Part D drugs that are more favorable than those obtained by PDPs [Prescription Drug Plans] under current law.” H.R. 4 is available at http://thomas.loc.gov.

CMS Releases U.S. Health Spending Estimates Through 2005

On January 9, the Centers for Medicare and Medicaid Services (CMS) released a report by the Office of the Actuary showing that health care spending growth in the United States slowed for the third consecutive year in 2005, increasing 6.9 percent, compared with 7.2 percent growth in 2004 and 8.1 percent in 2003. The 6.9 percent growth in 2005 marks the slowest rate of growth in health spending since 1999, when growth was 6.2 percent. Health care spending reached almost $2.0 trillion in 2005, or $6,697 per person, up from $6,322 per person in 2004. The study found that Medicaid spending growth continued the deceleration that began in 2002, increasing 7.2 percent to $311 billion in 2005, compared with 7.5 percent in 2004. Efforts by states to implement cost containment initiatives, such as provider payment cuts or freezes, pharmacy cost and usage controls, increased fraud and abuse control activities, and greater use of disease or case management programs, contributed to the slowdown. Data were also reported on Medicare spending, private insurance premiums, and nursing home expenditures. Additional information is online at this link.

CMS Convenes State Coordinating Committee for Part D Implementation Issues

In December, in response to a request from the National Association of State Medicaid Directors, CMS established a “State Coordinating Committee” to enable state staff and Medicare and Medicaid staff at CMS to discuss ongoing transition and implementation challenges with Medicare Part D. States may submit topics for discussion during the call, and there is also a question and answer period. CMS staff has used the time to brief states on new guidance issued by the agency. For more information, please contact Andrea Maresca.

CMS Will Waive Late Part D Enrollment Penalty for Low-Income Beneficiaries

This week, CMS announced that it would waive the 2007 late enrollment penalty fee for any beneficiaries eligible for the low-income subsidy (LIS) for a Part D plan even if they failed to sign up by the program’s initial deadline. Medicare beneficiaries eligible for the LIS may enroll in a plan without incurring a penalty through December 31, 2007, similar to the policy that CMS implemented for 2006.

Schwarzenegger Proposes Health Coverage for All Uninsured Californians

This week, California Gov. Arnold Schwarzenegger (R) announced a proposal requiring health care coverage for all 6.5 million of the state’s currently uninsured residents (about 19.4 percent of the state’s population, according to U.S. Census Bureau estimates). Funding for the governor’s proposal would come from a variety of sources: (1) employers of 10 or more employees would be required to either provide health coverage for all workers or pay 4 percent of payroll toward a statewide pool designed to help workers purchase their own coverage; (2) individuals would be able to purchase coverage with pre-tax income, and the cost of coverage would vary based on individual income; (3) California’s health insurance providers would be required to sell coverage to any individual, regardless of existing medical condition; (4) physicians and hospitals would have to contribute 2 percent and 4 percent of their revenue, respectively, toward the cost of the proposal; and (5) $5 billion in federal matching funds would be available due to a restructuring of the current state health care programs and funding. In addition, the proposal would include an expansion of Medi-Cal coverage (California’s Medicaid program) to cover all adults with incomes up to 100 percent of the federal poverty level (FPL) and to all children in households up to 300 percent FPL, regardless of immigration status, and to provide subsidies to other low-income residents. Individuals who do not obtain coverage would face possible reductions in state income tax refunds. More information is available at this link.

Survey Finds Expanded Access, Implementation Challenges in Medicaid and SCHIP

The Kaiser Commission on Medicaid and the Uninsured released a report titled Resuming the Path to Health Coverage for Children and Parents: A 50 State Update on Eligibility Rules, Enrollment and Renewal Procedures, and Cost-Sharing Practices in Medicaid and SCHIP in 2006. Among the key findings from the annual survey was that between July 2005 and July 2006, a third of states (17 in all) expanded access to health care coverage through Medicaid and SCHIP, and for the first time in four years no states cut income eligibility requirements. The survey also found a large disparity between income eligibility requirements in the states, with some states as low as 50 percent FPL and others as high as 200 percent FPL. Another key finding of the study covers the impact of the citizenship documentation requirements included in the DRA on eligibility and enrollment in Medicaid and SCHIP. According to the survey, several states reported a decrease in enrollment following implementation of the new requirement, at least in part due to processing backlogs and incomplete applications. Only one state has thus far implemented the cost-sharing option for Medicaid and SCHIP beneficiaries, another component of the DRA. The full survey is available here.

Medicaid Commission Report Released

Late last week, the Department of Health and Human Services released the final report from the federal Medicaid Commission. The report recommends a variety of changes in long-term care, benefit design, eligibility, health information technology, and quality and care coordination. The report is available online here.