H.R. 4851 Senate Amendments: The Continuing Extension Act, 2010

H.R. 4851

The Continuing Extension Act, 2010

Sponsor
Rep. Sander M. Levin

Date
April 15, 2010 (111th Congress, 2nd Session)

Staff Contact
Communications

Floor Situation

The House is scheduled to begin consideration of Senate Amendments to H.R. 4691, the Continuing Extension Act, 2010, on Thursday, April 15, 2010, under a rule. The legislation was introduced on March 16, 2010, by Rep. Sander Levin (D-MI) and referred to five committees, which took no official action. On March 17, 2010, the House passed the legislation by voice vote and the Senate passed the bill, with amendments, on Thursday, April 15, 2010.

Bill Summary

The bill retroactively extends federal unemployment insurance benefits, COBRA health insurance premiums, the Medicare Sustainable Growth Rate (SGR) adjustment and a number of other funding expansions from the Democrats' "stimulus" bill that expired at the beginning of April 2010, for two months, through the end of May 2010.  According to CBO, the legislation would cost $18.1 billion in reduced revenues and increased spending.  Spending in the bill is designated as "emergency" spending in order for the Democrats to evade statutory PAYGO requirements.

Extension of "Stimulus" Unemployment Provisions:  Extends the nationalization of the extended benefit unemployment program through May 2010.  The bill would extend 100 percent federal funding for the U.I. extended benefits program, as well as an additional $25 per week for U.I. recipients.  However, given that the bill would use entirely federal funds to extend unemployment benefits, some Members may echo the concerns of noted economist Martin Feldstein, who previously testified that extended unemployment would "create undesirable incentives for individuals to delay returning to work.  That would lower earnings and total spending." 

The "stimulus" bill, in addition to shifting the financing for extended unemployment compensation benefits to the Treasury (as opposed to the Unemployment Trust Fund), and increasing all unemployment benefits by $25 per week through the end of 2009, effectively nationalized for the first time the Federal/State extended benefit program authorized in permanent law.  That program has since its inception in the 1970s paid extended benefits in high unemployment States using 50 percent State funds.  Extended benefits last up to 20 weeks, meaning the total maximum duration of 100 percent federally funded extended benefits today is a record 73 weeks-up to 53 weeks under the "temporary" program and another 20 weeks under the "permanent" program, which is currently entirely federally funded.  Thus unemployed workers can receive a total of 73 weeks of federal benefits, or 99 weeks (counting 26 weeks of State unemployment benefits) available nationwide. 

According to CBO, this provision will increase spending by $12.9 billion over ten years and reduce revenues by $955 million.

Extension of "Stimulus" COBRA Premium Subsidy:  The bill would also extend eligibilities for the 15 months of COBRA subsidies to employees who lose their jobs through May 2010.  The length of the subsidy eligibility was expanded from nine to 15 months by H.R. 3326 on December 19, 2009.

Provisions of the Consolidated Omnibus Reconciliation Act of 1985 (COBRA) provide for separated employees and their dependents to remain on their previous employer's group policy for 18 months, or up to 36 months in some cases.  Employers are permitted to charge former workers electing COBRA coverage the full cost of their group insurance premiums, plus a 2 percent fee to cover administrative costs.  The "stimulus" (P.L. 111-5) provided a 65 percent premium subsidy to employers to cover the costs of individuals electing COBRA coverage for up to nine months, provided such election came as a result of the individual's involuntary termination from employment during the period from September 1, 2008 to December 31, 2009.  Under the "stimulus", subsidies continue for a maximum of nine months, but terminate once the individual becomes eligible for other employer-based coverage or Medicare.  Subsidies begin to phase out for individuals with adjusted gross incomes over $125,000 and families with incomes over $250,000, phasing out completely at income levels of $145,000 and $290,000, respectively. 

Some Members may view this further extension of health insurance subsidies-again, totally unpaid-for-as part of an attempt to circumvent the President's promise that his health "reform" bill will cost "only" $900 billion, and will not increase the deficit.  If Democrats hope to extend provisions like the COBRA subsidies piecemeal through 2014 or beyond-when the major provisions of their "reform" bills will finally take effect-such efforts would cost several hundred billion dollars-yet the majority has made no attempt to offset the costs of such a federal spending binge.

According to CBO, this provision will increase spending by $227 million over ten years and reduce revenues by $1.8 billion.

Medicare Sustainable Growth Rate:  The bill provides for a one-month adjustment to the Sustainable Growth Rate (SGR) conversion factor for physician payments.  Specifically, the bill provides for a zero percent update for the period through May 2010.  The bill further provides that the adjustments made for this period will be disregarded for the purposes of determining the conversion factor for 2010 and future years, resulting in at least a 21 percent reduction in physician payments beginning on March 31, 2010.

According to CBO, this provision will increase spending by $2.1 billion over ten years

 

Poverty Guidelines:  Extends the expanded Health and Human Services poverty guidelines through April 30, 2010, to ensure that eligibility for certain means-tested benefits will not be reduced because of new poverty guidelines for at least one month. 

According to CBO, this provision will increase spending by $65 million over ten years

Flood Insurance:  Extends the National Flood Insurance Program through April 30, 2010.

Compensation Related to the Lapse in Highway Programs: Provides two days worth of compensation for any federal employees who were furloughed as a result of the expiration of spending from the Highway Trust Fund (HTF) between February 28, 2010, and March 2, 2010. Employees would be compensated "as determined under policies established by the Secretary of Transportation." Under the bill, funds used by the Secretary to provide this compensation would be derived from the HTF.

Satellite Home Viewer Reauthorization:  Includes an extension of current law which permits satellite television providers to retransmit certain network programming to subscribers through May 2010.  This would allow households that subscribe to various satellite television services to continue to view network broadcasts.

According to CBO, this provision will increase spending by $2 million over ten years

SBA Loans Fee Waiver Extension:  Appropriates $80 million for continuation of reduced fees for Small Business Administration (SBA) 7(a) loans and extends their authorization through March 31, 2010.  The "stimulus" bill gave the SBA $375 million to increase its guarantee on 7(a) loans and to reduce or eliminate fees on both its 7(a) loans.  These funds included in the "stimulus" bill have run out.  The 7(a) Loan Program is the SBA's primary program to help start-up and existing small businesses obtain financing when they might not be eligible for business loans through private lending channels.  SBA itself does not make the loans, but rather guarantees a portion of loans made and administered by commercial lending institutions.  Participating lenders agree to structure loans according to SBA's requirements, and apply and receive a guaranty from SBA on a portion of this loan.

Background

The House passed H.R. 4851 on March 17, 2010, by voice vote.  That bill would have extended these provisions-the majority of which expired on March 31, 2010-through April, 2010.   However, the Senate did not act on the bill prior to recessing for the Easter holiday, and several federal benefits and programs authorized in this legislation lapsed.  The Senate passed underlying amended legislation on Thursday, April 15, 2010.

 

Cost

According to a CBO, H.R. 4851 would increase the deficit by $18.14 billion, including $15.3 billion in spending and $2.79 billion in revenue reductions.