The bill expands government, subsidizes big business, and ignores the interests of taxpayers while circumventing regular order in Congress.
The bill expands government, subsidizes big business, and ignores the interests of taxpayers while circumventing regular order in Congress.
T he omnibus is Washington at its worst. It’s a huge end-of-year $1.7 trillion spending bill loaded with significantly expanded government authorities and programs and little opportunity for most members of Congress, much less the American public, to review it. This bill also shows that neither Congress nor the White House is serious about huge annual budget deficits and 40-year-high inflation, choosing instead to double down on reckless fiscal policy. Of course, special interests are never fully happy, but this is a windfall for industries with lobbying power. While there were some members in Congress fighting to keep some of the worst provisions out, unfortunately, the bill expands government, subsidizes big business, and ignores the interests of taxpayers while circumventing regular order in Congress.
The Food and Drug Administration (FDA) has come under significant scrutiny following controversies relating to Covid-19, infant formula, and slower drug approvals. Congress reauthorizes the agency every five years and usually takes the opportunity to reform its operations.
This year, however, reforms were not included in the FDA’s reauthorization process, removing the chance for substantive debate around reform. The omni is being used as a vehicle to stuff some of those priorities into a larger bill. You’ve probably seen the endless advertisements for some of the provisions different industries have been pushing. The spending bill includes a broad expansion of the FDA’s authority regulating cosmetics (e.g., lipstick, hair dyes, makeup, or nail polish). The FDA will be able to issue recalls of products and increase requirements on manufacturers to disclose information. This expands government power without meaningful consideration and debate in the Congress.
At a time when the FDA’s use of its existing authority has been deemed questionable at best, it makes no sense to pass even more regulations that increase the FDA’s power, raise costs, and hamper access to products that consumers may prefer. That broken process extends to other public-health provisions, including new spending for the CDC and the NIH, in the bill.
Public trust in these agencies is at historic lows and failures from their Covid-19 responses are significant. Yet in Washington, failure is too often rewarded with bigger budgets — $2.5 billion more for the NIH and $760 million more for the CDC. Instead of going through regular order to address these systemic problems, Congress simply throws more money at both agencies. Further, significant portions of the PREVENT Pandemics Act — a proverbial Christmas gift for the CDC — are in the bill, including much higher subsidies for the public-health workforce, a boon for higher-education institutions.
The problems with PREVENTS go further. The bill establishes a new Office of Pandemic Preparedness outside of the CDC, adding another layer of bureaucracy to the nation’s pandemic-response apparatus. These reforms should have gone through regular order and allowed for a process where a sober, critical analysis, including of the federal Covid-19 response, could have yielded more thoughtful and targeted reforms.
And if increasing the size and scope of these failing agencies wasn’t enough, Congress authorized a new one — ARPA-H — to the tune of $1.5 billion. This new agency will fund scientific endeavors best left to the private market.
Yet different players in the swamp are still upset there wasn’t money for their pet issue. Those fighting to keep extraneous provisions out of the bill should be commended. Broader public-health provisions had been under discussion throughout the lame-duck session — including legislation that would have even further expanded the FDA’s regulatory scope. The merits of those pieces should be debated in both Houses of Congress, not behind closed doors in the Capitol basement right before Christmas.
Medicaid
In March 2020, Congress increased the federal share of state Medicaid expenditures by 6.2 percentage points, on the condition that states cease Medicaid-eligibility redeterminations. As a result, more than 16 million ineligible people are now enrolled in Medicaid, most of whom have other sources of coverage.
In the omni, Congress would permit states to begin eligibility redeterminations starting April 1. Congress is also phasing down the enhanced Medicaid reimbursement over the course of 2023. While Congress is making it harder for states to remove ineligible enrollees with requirements to use multiple mechanisms to contact enrollees, allowing states to remove ineligible enrollees from Medicaid sooner helps those who rely on the program as well as taxpayers. Unfortunately, Congress is putting $7 billion of the savings from the phase-down into a so-called “Medicaid improvement fund,” which is sure to function as a slush fund.
Besides the slush fund, the omni includes two more particularly negative Medicaid policies. First, it would impose a one-year continuous-coverage requirement for many Medicaid enrollees. The biggest effect of this policy is crowding out private-sector coverage and financing with government coverage.
Second, the omni unwisely and substantially raises the share that federal taxpayers pay for Medicaid in Puerto Rico and the other territories. Raising the federal share will make the territories less focused on ensuring that Medicaid spending generates value since a larger portion of the cost will be paid by federal taxpayers. This policy will also increase Medicaid waste, fraud, abuse, and improper spending. Moreover, residents in territories do not pay federal income tax, and the federal Medicaid funds come from federal income-tax revenue. Thus, unlike states, territories already get an unfair benefit through Medicaid because territory residents don’t share in the nation’s federal Medicaid costs.
Medicare
Despite the massive funding problems with Medicare and the need for structural reforms, Congress is continuing status-quo policy-making at the expense of taxpayers and beneficiaries. Most egregious is the delay of statutory pay-as-you-go (“PAYGO”) sequestration until 2025. By law, legislation that increases the deficit incurs automatic PAYGO spending reductions including in Medicare. Congress often circumvents this by exempting major legislation, but notably did not for the American Rescue Plan Act, which was projected to increase deficits by $1.9 trillion. Lawmakers had already pushed this sequester to the end of 2022 and once again took the opportunity to avoid accountability for this new debt.
Congress has frequently overridden statute to increase doctors’ pay, most recently by 3.75 and 3 percent in 2021 and 2022, citing the Covid-19 pandemic. In this omni, lawmakers propose to water down statutory payment reductions across the board from 4.5 to 2 percent in 2023 and to boost 2024 payments by 1.25 percent. This is despite the fact that the pandemic is over and that most specialties are seeing higher compensation. Congress has also decided to extend bonus payments for clinicians participating in advanced alternative-payment models. Medicare currently pays 5 percent annual bonuses to these doctors, but they expire this year. Despite the fact that these models rarely achieve net savings, one of their major objectives, the omni would extend these incentives for another year, albeit at 3.5 percent instead of 5 percent. With these payment changes, Congress is missing an opportunity to propose more permanent structural reforms to physician reimbursement, with numerous additional flaws requiring a congressional fix.
Numerous other providers will receive extended Medicare payment as well, even though Congress has not yet fully determined the costs, value, or long-term strategy for these services. For example, the omni would temporarily extend Covid-era flexibilities for telehealth and hospital care at home, while expanding Medicare coverage for mental-health services. The temporary extension of Covid-19 flexibilities will at least give lawmakers time to vet their benefits and costs in Medicare, including program-integrity concerns and their impact on quality of care. However, rushing through new mental-health benefits closes the door on this sort of deliberative process and doubles down on a fee-for-service delivery model that has already failed for other services.
Every year, it seems that Congress waits until the very last minute, manufacturing a sense of urgency to rush through massive new spending and authorizations. Rather than providing an opportunity to reexamine federal programs and demand structural reforms, this governing by artificial crisis gives legislators cover to bow to various interests. The Senate should reject this version of the omni and commit to badly needed budget and policy reforms.
Drew Keyes is Paragon Health Institute’s senior policy analyst. Joe Albanese is Paragon’s policy analyst. Brian Blase is the president of Paragon.