The Fiscal Responsibility Act, the result of intense negotiations between the White House and the Republican leadership of the House, suspends the debt limit and outlines cuts in public spending.
The legislation passed its first hurdle on Tuesday, passing the House Rules Committee by a narrow margin. After the rules committee, the legislation is expected to go to the floor for a vote Wednesday night. The Senate would begin drafting legislation immediately, but it could be slowed down by an individual senator using various procedural tools.
The agreement between the parties, which met over the weekend, provides:
- Suspension of the debt limit until January 2025
- Discretionary spending limits in fiscal years 2024 and 2025
- Expands work requirements for select adults receiving Supplemental Nutrition Assistance Program (SNAP) benefits
- Terminates approximately $28 billion of unencumbered COVID-19 cash
- Repurposes $20 billion in Internal Revenue Service funding for discretionary non-defense spending
- Restart student loan repayments in September 2023
- Changes to environmental permits for energy projects
While some health care policies have been pitched for inclusion in the bill, including Medicaid job requirements and Medicare Advantage cuts, negotiators have declined to include major health care policy changes in the bill. The biggest impact for the healthcare sector comes in the form of the withdrawal of COVID-19 relief funds that have gone to government agencies but have not yet been spent.
It is estimated that multiple programs through the Department of Health and Human Services (HHS) have permanently canceled their non-compulsory balances. Since these numbers are estimates, there is no certainty about the impact these recoveries of COVID-19 relief funds will have on future programs.
The following is a breakdown of these programs and activities.
- The Public Health and Social Services Emergency Fund which has provided funding to prevent, prepare for and respond to the coronavirus, domestically or internationally. The estimated amount of the unencumbered funds release is $10.419 billion. however, the The Biden administration has protected priority investments by withholding $5 billion in funding for vaccines and next-generation therapies. Additionally, maintaining funding for test procurement capacity, long-running COVID research, and other critical needs. Approximately the total estimate of all these assets is $10 billion remaining in the fund after the termination.
- The Defense Production Act enabled HHS to help address medical supply shortages during COVID-19 with a estimated termination of $864 million. Some $800 million in funds will remain after the termination as there are protected priority investments such as strengthening pharmaceutical supply chains.
- Centers for Disease Control and Prevention (CDC) – Extensive activities and program support an estimated $1.739 billion termination, which provided funding to prevent, prepare for and respond to the coronavirus, domestically or internationally. This included grants to states, localities, territories, tribes and tribal organizations, and funds for global disease detection and emergency response. The Biden administration protected priority investments such as genomic surveillance and investments in vaccine safety and efficacy, where about $1.5 billion will remain after the rollback, as well as about $500 million in the Response Reserve Fund rapid to infectious diseases.
- The Food and Drug Administration (FDA) rescission of an estimated $123 million for vaccine efficacy and supply chain monitoring; however, some funding is protected to allow FDA personnel to continue certain supply chain monitoring activities.
- Centers for Medicare and Medicaid Services – Program Management, which has provided funding to prevent, prepare for and respond to the coronavirus, domestically or internationally. These charges were made available for the Survey and Certification Program, prioritizing nursing home facilities in locations with community transmission of the coronavirus.
- Funding for testing activity, which included performing COVID-19 testing, contact tracing, and mitigation activities; and lead global health activities to combat current and emerging infectious disease threats globally.
- Funding for expand and sustain the public health workforce awarding awards to state, local and territory public health departments and the Medical Reserve Corps.
- Funding for investment in public health, which involved awarding grants and cooperation agreements for COVID-19 activities for health centers and community care; funding of the Health Service Corps and the Nursing Corps; tuition funding for health centers that administer graduate medical education; and family planning funding.
- Funding for mental health programs and substance use disorder, which included training for healthcare professionals; implementation of an education and awareness campaign aimed at health professionals to seek support for mental health services and substance use disorders; funding grants for health professionals to promote mental health among their staff; funding for the education and training of behavioral health personnel; and funding for access to pediatric mental health care.
- Funding for providers for the purpose of making payments to eligible healthcare providers for healthcare-related expenses and lost revenue attributable to COVID-19.
- Funding for a state option to provide qualifying community-based mobile crisis intervention services.
- Funding for support to skilled nursing facilities in response to COVID-19which includes providing infection control support to qualified nursing facilities through contracts with quality improvement organizations.
The House and Senate are expected to vote on this legislation before June 5, which is the deadline by which Treasury Secretary Janet Yellen has said the US government will reach its current debt limit and begin declaring defaults on its debts.
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