Wednesday, November 28, 2007

One Heck Of A Budget Mess and Lots of Ugly Consequences--But Watch The Pork

With the Congress set to come back to attempt to break the budget impasse in the few weeks before the holidays, many in this town are ready to see the Congressional Democrats and President Bush agree to disagree and let the budget problems slide for a year under a series of lengthy continuing resolutions (CRs).

The problem with CRs is that they only allow the agencies and programs to continue at past spending levels. Inflation cuts into the value of those past budgets and there aren't any opportunities to modify priorities.

In health care, which is especially hard hit by higher inflation, it would be an especially problematic period:
  • The Medicare physicians are going to get a 10% fee cut on January 1st if the Congress can't pass a budget bill with a fix in it for them. Undoubtedly, a big fee cut would mean lots of cost shifting to the rest of the health care system by the docs as new provider contracts are negotiated. The proposed solution for the docs is to cut private Medicare HMO payments to come up with the money.
  • The State Children's Health Insurance Program (SCHIP) has been operating on a CR since September 30th. But freezing the program at current levels causes some big problems.
  • California will have to decide what to do with as many as 600,000 kids who could lose SCHIP coverage--56,000 on January 1st.
  • Georgia is already making up for federal shortfalls in its SCHIP program. Administrators are reportedly wondering if they should hold off on starting kids on six-week chemo treatment plans if they only have four weeks of coverage left because of the budget shortfall in SCHIP.
  • The National Institutes of Health (NIH) budget hasn't been increased since 2003. This year it was supposed to get a $2 billion increase in its $30 billion budget but that is in limbo as Congress and the President fight the big budget battle.
You will now see a number of new Congressional attempts to move these budget items including the possibility that a modest SCHIP extension, the doc fix, and Medicare HMO cuts will all get lumped into one very hard to vote against or veto bill to save the kids' health insurance coverage.

But here is the biggest reason the Congress just might find a way to come up with the votes to get the budget unstuck: pork.

No spending bills--no pork and Republicans love pork every bit as much as Democrats. Don't forget, the "bridge to nowhere" was purely a Republican item.

The next few weeks will be full of drama, brinksmanship, and deals.

Will we get a budget deal when the day is done?

Watch the pork.
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