Committee on the Budget

Tom Price

BREAKING: Nonpartisan Watchdog Rules Obamacare Reinsurance Scheme Unlawfully Diverting Billions From Taxpayers

2016/09/29

WASHINGTON, D.C. - A group of bicameral Republican health care leaders are pointing to a new legal opinion issued on Obamacare’s controversial reinsurance program. The leaders urged the Comptroller General of the United States this spring to publish a legal opinion on the Centers for Medicare and Medicaid Services’ (CMS) decision to ignore federal law, and a previous CMS regulation that required taxpayers and the Treasury be paid under the Obamacare reinsurance program. To date, CMS has ignored the rule of law to divert billions of federal dollars to insurance companies at the expense of American taxpayers and the Treasury.

“…[W]e conclude that HHS lacks authority to ignore the statute’s directive to deposit amounts from collections under the transitional reinsurance program to the Treasury and instead make deposits in the Treasury only if its collections reach the amounts for reinsurance payments specified in section 1341,” wrote the GAO. “The agency is not authorized to prioritize collections in this manner. The agency must give effect to the extent possible to all of section 1341, and, to do so, is required to collect and deposit amounts for the Treasury, regardless of whether its collections fall short of the amounts specified in statute for reinsurance payments. HHS may not use amounts collected for the Treasury to make reinsurance payments.”

At question is the Transitional Reinsurance Program established in section 1341 of the Affordable Care Act. A nonpartisan analysis by the Congressional Research Service earlier this year confirmed that the Obama administration is acting in conflict with a plain reading of law.

Several lawmakers requested an independent legal opinion, referencing a recent ruling that the administration is illegally spending billions in Cost-Sharing Reduction (CSR) payments as further evidence of the White House’s disregard for the rule of law. On May 12, 2016, the U.S. District Court for the District of Columbia said the Obama administration violated Article 1, Section 8 by paying insurers for the CSR program without a congressional appropriation.

The Obama administration previously affirmed Republicans’ position on both programs, issuing rules (2014/2015), which required a portion of the contributions be deposited into the U.S. Treasury, as well as requested an annual appropriation for the cost-sharing reduction program.

“This is about fairness and respect for the rule of law clearly anchored in the Constitution,” said the lawmakers listed below. “The facts are simple – the Constitution is on our side. This new opinion from the government’s top watchdog confirms that the Obama Administration is not above the law. The Administration needs to put an end to the Great Obamacare Heist immediately.”

The request was submitted to the GAO by:

  • Chairman Tom Price (R-GA), House Budget Committee
  • Chairman Fred Upton (R-MI), House Energy and Commerce Committee
  • Chairman Lamar Alexander (R-TN), Senate Health, Education, Labor, and Pensions Committee
  • Chairman Orrin G. Hatch (R-UT), Senate Finance Committee
  • Chairman Mike Enzi (R-WY), Senate Budget Committee
  • Chairman John Barrasso (R-WY), Senate Republican Policy Committee
  • Chairman Kevin Brady (R-TX), House Ways and Means Committee

 Click HERE to read the GAO’s opinion.

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Good Intentions, A Scandal, and An Economics Free Zone

2016/09/22

WASHINGTON, D.C. – This week, the House Budget Committee held the fourth in a series of hearings focused on the Committee’s Restoring the Trust for All Generations initiative – an effort to raise awareness about the fiscal and policy challenges facing our nation’s health, retirement, and economic security programs. On Wednesday, the topic was Restoring the Trust for Families and Working-Age Americans – specifically how many of these automatic spending programs can have an adverse impact on families and working-age Americans by contributing to less economic opportunity and market distortions in areas like education, health care, and housing.

According to witness testimony, the undue influence and interference from certain government programs are proving that good intentions do not necessarily equal good policy. As Dr. Thomas Lindsay, Director of the Center for Higher Education at the Texas Public Policy Foundation, noted in his testimony on the impact of federal education grants and student-loan programs on the rising cost of tuition across the country:

“As you mentioned earlier, the Federal Reserve Bank has found that federally-subsidized student loans are a big part of the driver of tuition hyperinflation. Every time this body increases Pell Grants by a dollar, universities charge 55 more cents in tuition. Every time this body increases federally-subsidized student loans by a dollar, universities raise tuition 65 cents. So, again, the problem is we have very good intentions, but we need to inject some economic reality into what we are doing.”

So, government subsidies meant to make college more affordable are, in fact, making it increasingly more expensive.

But surely these programs have helped those who truly need assistance even if they have increased the tuition burden on others, right? Not so much…

“Think about the fact that today a smaller percentage of college graduates come from the bottom 25 percent of income than in 1970 when these programs started. So no one here is talking about whether we should invest or not invest in the American people. It’s let’s do it in a way that actually helps. Because when 68 percent of students either don’t graduate or graduate not having obtained the learning that a college degree is meant to signify, that constitutes a scandal.”

A scandal.

Unfortunately, the enormous growth in spending on education costs (a 334% increase over the past 30 years) is but one of the substantial bites that misguided Washington policies have taken out of the wallets and savings of hard-working Americans. The consistent rise in health care costs (a 314% growth in three decades) is a real strain on families all across the country. The culprit? In part, too much government interference in markets. The solution? For starters, some rational thinking. As Dr. Keith Smith, Managing Partner and Co-Founder of the Surgery Center of Oklahoma, explained:

“I also am a firm believer in that rational pricing emerges from competitive activity. The idea that prices can be dictated from on high, it’s just wrong. The prices are either too high or too low. They’re always wrong. If they’re too low, then there’s rationing – either soft or hard rationing results. And if the prices are too high, then you wind up with a bunch of stuff going on that perhaps is unnecessary.”

The failure of government’s “good intentions” rings true as well for Americans who rent, own a home, or are hoping to own. As Edward Pinto, Resident Fellow and Codirector of the International Center on Housing Risk at the American Enterprise Institute, described in his opening statement, a supply and demand imbalance is having a “host of unintended consequences”:

“In most cases these policies increase housing demand but do little or nothing about supply. When supply is increased, it drives up prices; layers of subsidies are used; and a host of unintended consequences results. First and foremost, it yields higher prices and higher rents, particularly for low-income and minority households – the very ones these programs are designed to assist. Today’s subsidy laden, government-centric housing finance system is something I call an ‘economics free zone’. I call it that because it is indifferent to supply and demand. As a result, housing has become less, not more affordable and less, not more accessible.”

An “economics free zone” – not particularly helpful when what’s needed right now is a faster growing economy and more opportunity for Americans.

The House Budget Committee is committed to highlighting these concerns and building a consensus toward real solutions to improve the nation’s health, retirement, and economic security programs so they actually help their intended beneficiaries and stop driving up the costs for everyone else.

To learn more, go to Restore-Budget.House.Gov.

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Chairman Price Opening Statement: Restoring the Trust for Families and Working-Age Americans

2016/09/21

As prepared for delivery

Good morning.

For over a year, the House Budget Committee has been engaged in an initiative called Restoring the Trust for All Generations. Today’s hearing is the fourth in a series of hearings this committee has held to advance this initiative.

Restoring the Trust is an effort to raise awareness among both our colleagues in Congress and, more importantly, the American people we represent – about the serious fiscal and policy challenges facing our nation’s health, retirement, and economic security programs. These are programs that are funded automatically without any annual appropriation or, necessarily, any Congressional oversight. They’re what is known in this town as "mandatory spending". It means that the money continues to be spent, and is increasing, and will continue to increase, until Congress and the president agree to reform these programs. 

The unchecked growth in spending in this area – whether on Medicare, Medicaid, and Social Security or numerous federal housing, education, and safety-net programs – is eating up a larger and larger portion of the federal budget. It is crowding out other government functions, other national priorities, and contributing substantially to the budgetary imbalance that has our national debt over $19 trillion – and climbing.

As we have discussed in this committee previously, in addition to the fiscal challenges, we know that these programs are not necessarily serving their beneficiaries all that well. At the same time – and perhaps less appreciated – is the fact that many of these programs create substantial distortions and foster perverse incentives in the private market in areas like education, health care, and housing. Those distortions drive up the cost of goods and services for all Americans. For many working-age Americans and families, they may have no direct interaction with these automatic spending programs. But these programs and government policies generally are increasing demand for services while simultaneously limiting supply, and results in prices that are outgrowing wages. That hits the middle class particularly hard.

In today’s housing market, affordability is the missing element. The fundamental problem is a supply-demand imbalance that works against families struggling to afford the mortgage or rent as home values appreciate faster than wages and inflation. The average family’s housing costs rose 63.3 percent between 1997 and 2015. According to the U.S. Census Bureau, homeownership rates are at the lowest level in over 50 years ago, and currently equal the same level of 62.9 percent that was achieved in 1965.

In higher education, evidence points to federal student aid distorting demand, and it has been linked to recent rapid increases in tuition. A 2015 study conducted by the Federal Reserve Bank of New York reports a pass-through effect on college tuition from increased Federal student aid. For every additional dollar in subsidized loans, tuition increases by an estimated 65 cents – and for every additional dollar in Pell Grants, tuition increases by 55 cents. More generally, our current education system contributes to higher costs by stifling innovation – innovation that could offer flexible, customized, and more affordable education experiences catered to the lives of working students with families who are seeking to realize their full academic potential.

Washington’s current approach to health care has – under the presumption of knowing what’s best for patients across America – restricted them to health programs that are on unsustainable paths while driving up costs. According to the Kaiser Family Foundation, the average premium in America has increased by 61 percent in the past decade. Similarly, deductibles have increased more than 250 percent, meaning increased out-of-pocket expenses for individuals and families. Thanks to heavy-handed government intervention into the nation’s health care, costs for families continue to rise, without gains in quality and value. Furthermore, competition and innovation are stifled, and providers spend nearly twice as much time completing paperwork as they do caring for patients – lending itself to a paper-centered, rather than a patient-centered health care delivery system.

In short, the status quo is not working. However, positive solutions can be discovered in the private sector and successful government programs. We should work to advance free market policies that will foster competition. In order to have a well-functioning marketplace, it is necessary to allow entrepreneurs to meet the demand of consumers – creating better products for lower prices through innovation – in short, allowing America to work!

To provide their views on these issues of critical importance to so many Americans, we have as our witnesses Edward Pinto, Resident Fellow and Codirector of the International Center on Housing Risk at the American Enterprise Institute; Dr. Keith Smith, Managing Partner and Co-Founder of the Surgery Center of Oklahoma; Dr. Thomas Lindsay, Director of the Center for Higher Education at the Texas Public Policy Foundation; and Dr. William Spriggs, Chief Economist at the AFL-CIO.

Thank you all for being here and for being willing to share your insights and first-hand knowledge about how our nation’s automatic spending programs are impacting the lives and livelihoods of families and working-age Americans.

And with that, I yield to the Ranking Member, Mr. Yarmuth. Read More

Unsustainable, Chaotic, and With No Room for Discretion

2016/09/16

WASHINGTON, D.C. – The House Budget Committee in a hearing Wednesday entitled “Growing Risks to the Budget and the Economy” examined our nation’s current troubling fiscal and economic outlook, what is contributing to a forecast of slow growth and mounting debt, and how policymakers might go about correcting course.

The consensus among the witnesses was unanimous that the current trajectory of deficit spending and higher debt cannot go on forever. As Dr. Jared Bernstein, Senior Fellow at the Center on Budget and Policy Priorities, noted: “It’s an unsustainable trend when you start looking at numbers that are really in the stratosphere in the out years.”

Among the reasons America’s fiscal outlook is unsustainable is due to the unchecked growth in automatic spending on the nation’s health, retirement, and economic security programs – programs that suffer not only from a looming funding crisis but also structural challenges that mean they fail today and will certainly fail in the years to come to deliver on the promises made to beneficiaries. As Dr. Douglas Holtz-Eakin, President of the American Action Forum, testified:

“Our Social Security program is kept ‘solvent’ on the books…because we have promised to cut benefits 25 percent across the board when the trust-fund exhausts in a little under two decades. That is a horrific way to run a pension program. So, if you go through Social Security, Medicare, Medicaid, Affordable Care Act – the large drivers of the spending-increase that is our deficit problem – those programs all could be improved. They’re not delivering at sensible cost the services that we have promised.”

If nothing is done to shore up these programs and if a fiscal crisis is allowed to occur, the results will be “chaotic” according to Dr. John Cochrane, Senior Fellow at the Hoover Institution:

“What certainly will happen is a fairly chaotic cut in benefits. What happens to countries when they run out of their fiscal ability, is people who are counting on Social Security, their cuts come big and heavy and unpredicted…Health care is going to get rationed and really cheap, and people who are counting on Medicare are not going to get it. So, you want to reform those programs predictably ahead of time and not when you run out of the ability to borrow money and suddenly people who are counting on it are thrown out on their own.”

At the end of the day, the failure to get the nation’s fiscal house in order – to let the automatic spending side of the federal budget continue expanding while the discretionary portion is crowded out – is a direct threat to the ability of Congress to be responsive to the needs of the nation. As Dr. Holtz-Eakin pointed out, “there is no room for discretion”:

“If you are locked in to spending the money on interest – because you must honor those obligations – and you are locked into spending on entitlements, there is no room for discretion. And it seems quite wrong in a representative democracy to in 2016 dictate exactly what we are going to be doing in 2026, 2036, and 2046 – even in the absence of a crisis which will also then happen.”

The solution? For starters, raise the long-term rate of economic growth – which is currently projected to grow by roughly two percent over the next decade, substantially lower than the historical average of just over three percent:

“The key issue going forward is what can raise the trend long-term rate of economic growth. And that’s not a matter of stimulus or austerity. That’s a matter of what will enhance productivity; what will enhance the rate of labor force participation; and the kinds of components that go in to GDP growth. Those are issues associated with structural reforms to have better incentives – whether they are in our social safety-net or in our tax code.”


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Chairman Price Opening Statement: Growing Risks to the Budget and the Economy

2016/09/14

As prepared for delivery

Good morning.

The title of this hearing is the “Growing Risks to the Budget and the Economy.” Regardless of ones’ political posture – there are clearly some warning signs before us. In many ways the current budget and the current economy are in fact risks unto each other.

The Congressional Budget Office (CBO) provides all of us with some sobering information – demonstrating that policymakers have ample evidence and information revealing just how severe the risks are now and will become in the not too distant future.

Today, the nation’s total debt tops $19 trillion. At the end of the ten year budget window, over the next decade, CBO projects we will borrow another $8.6 trillion – accumulating a total level of publicly-held debt equivalent to more than 85 percent of our economy. That is twice the average level of the past half century. It is the highest our nation has had since the end of World War II.

Of course, unlike the 1940s, today’s debt is not being driven by a massive, temporary mobilization of military might. In 2016, our debt trajectory is being driven by a chronic imbalance in our nation’s budget, for which there’s no end in sight under current policy and current law.

In fact, today’s growing debt is not so much the result of defeating a threat to America’s national security – as it is the threat itself. The fiscal imbalance we face; the uncertainty that is sown into our economy by a looming fiscal crisis – this all weakens our nation.

And yet, despite all of this, there are many who are saying that because interest rates are so low that we ought to borrow even more money – run up the credit card while credit is relatively cheap.

This is horribly short-sighted thinking. Publicly held debt is over $14 trillion – more than three-fourths the size of our economy. We are already past what economists say is a sustainable debt burden – let alone advisable or fair to leave our kids and grandkids.

The fastest growing component in our budget is not national security spending; it’s not health care; not research and development; not infrastructure to repair roads and bridges; not aid for the nation’s poor. It is interest payments on our nation’s debt. Unless something is done to change course, in 2026 America will pay $712 billion in interest payments alone – just shy of what we are projected to spend on our entire national defense. And interest payments are dollars that can’t be used to pay the rent, send a kid to school, buy a house, buy a car, start or expand a business – all of the things Americans want to do with their money will be harmed by the ever increasing interest payments.

Annual deficits are projected to exceed $1 trillion in that same period of time. These deficits will come at a time when Washington will be taking in higher than average tax revenue. This means that we’ll be taking in more tax money – and going further in the hole – further into debt.  Clearly, government is not being starved of revenue.

That being said, a stronger economy that creates higher revenues is the key to addressing our fiscal crisis. If our economy was growing today at just the historical average – roughly three percent instead of the two percent projected over the next decade – we would be in a better fiscal position than we are right now. According to CBO, if economic growth were just 0.1 percentage points higher per year than currently projected, annual deficits over the next 10 years would be reduced by $327 billion. Just through better economic output, we could reduce future deficits by as much as $3.3 trillion over the next decade if we were growing at our own historical average.

In short, economic growth is a vital ingredient to any coherent strategy to get the nation’s fiscal house in order. Poor economic policies contribute to the poor fiscal health of the nation, and today we are experiencing the worst economic recovery in the modern era.

The macro effects of slow economic growth, however, are only one side of the story. The uncertainty that the country as a whole is experiencing due – in part – to lackluster economic growth is also experienced by millions of individual Americans, families, and entrepreneurs in their own lives and in their own ways. Many Americans are struggling to make ends meet at a time when opportunities are fewer and the cost of basic necessities like health care and education are rising.

While the headline unemployment rate has dropped to under five percent, the “under-employment rate” – that which takes into account those who are working part-time because they cannot find full-time work and those who have given up looking for work – is currently 9.7 percent. That’s higher than where it was prior to the recession. Meanwhile, the rate of participation in America’s labor market – the percent of the population who are able to work – who are working – is at levels not seen since the late 1970s, and the rate of worker productivity has declined for three straight quarters.

At a time when over sixty percent of the country believes the nation is on the wrong track, it is time we adopted a pro-growth policy agenda – and when that is coupled with a sound budgetary strategy, it will jumpstart America’s economic engine and put us on a sustainable fiscal trajectory. House Republicans – led in part by this committee’s efforts on fiscal and economic matters – have been championing bold solutions to achieve those goals.

To further this discussion we are joined today by Dr. John Cochrane, Senior Fellow at the Hoover Institution; Dr. Jared Bernstein, Senior Fellow at the Center on Budget and Policy Priorities; and Dr. Douglas Holtz-Eakin, President of the American Action Forum.

Thank you for taking part in what I hope will be a healthy and enlightening conversation.

And with that, I yield to the Ranking Member, Mr. Ryan.

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Working Paper on Regulatory Budgeting

2016/09/08

The exercise of government in America has become much more a matter of regulation than of legislation. In 2015, Federal agencies issued nearly 30 times as many regulations as laws that were enacted. Thus Congress cedes growing shares of its authority to an unelected fourth branch of government with ever-increasing control over Americans’ lives.

The cost of regulations has been estimated at about $2 trillion a year, and one study has shown that a 10-percent increase in the quantity of Federal regulations is associated with a 0.7-percent increase in prices. The current system of cost-benefit analysis used by the administration is wildly inaccurate and prone to data manipulation. The government’s estimates, compared with the experience of those subject to regulation, paint two different pictures. In addition, regulations have effects on individual and property rights that are not readily quantifiable. Despite these facts, Congress has no systematic means of tracking, and if possible restraining, this expansion of the regulatory state. A regulatory budget may not be a panacea, but it could be an important start toward gaining control of the problem.

Read the full paper here. Read More

Budget Committee Releases Working Paper on Regulatory Budgeting

2016/09/08

WASHINGTON, D.C. – Today, the House Budget Committee released its sixth in a series of working papers focused on the Committee’s effort to overhaul the Congressional Budget Act of 1974 and reform the congressional budget process. The paper follows a hearing the Committee held on July 7th that examined how Congress can better measure, evaluate, and ultimately control the impacts of regulations by adopting a regulatory budget.

The working paper focuses on eight main areas:

  • The Proliferation of Rules and Regulations
  • The Dampening Effect on the Economy
  • History of Regulatory Budgeting
  • Features of a Regulatory Budget
  • Regulatory Pay-As-You-Go
  • Pros and Cons of Regulatory Budgeting
  • What Other Countries Are Doing
  • Beyond Regulatory Budgeting

In its opening, the paper notes that the proliferation of government regulations carries substantial costs both to America’s economy and our system of representative government – without an accurate means of accounting for their impact:

“In 2015, Federal agencies issued nearly 30 times as many regulations as laws that were enacted. Thus Congress cedes growing shares of its authority to an unelected fourth branch of government with ever-increasing control over Americans’ lives. The cost of regulations has been estimated at about $2 trillion a year, and one study has shown that a 10-percent increase in the quantity of Federal regulations is associated with a 0.7-percent increase in prices. The current system of cost-benefit analysis used by the administration is wildly inaccurate and prone to data manipulation. The government’s estimates, compared with the experience of those subject to regulation, paint two different pictures. In addition, regulations have effects on individual and property rights that are not readily quantifiable. Despite these facts, Congress has no systematic means of tracking, and if possible restraining, this expansion of the regulatory state.”

CLICK HERE TO READ THE WORKING PAPER

To learn more about the House Budget Committee’s efforts to reform the congressional budget process, visit budget.house.gov/BudgetProcessReform.

Previous budget process reform working papers:

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Price Op-Ed in Roll Call: Obamacare Agency Escapes Congressional Oversight

2016/09/07

By Tom Price
Chairman of the House Budget Committee
September 7, 2016
Permalink

Our constitutional system was carefully designed to prevent any one branch from seizing too much control over the entire government. Only Congress can write legislation; only the President can execute the laws; only the courts can judge whether the laws are constitutional.

This balance of powers, however, does not maintain itself. It is a dynamic equilibrium requiring each branch of government to protect and fully exercise its rightful authorities. When one branch encroaches on another, that balance is endangered — and so are the freedoms the separation of powers were intended to protect.

Regrettably, that is happening right now in a little-known agency with the seemingly benign responsibility of finding ways to control the government’s health care spending. In the process, this entity has effectively assumed the authority to rewrite current law, unilaterally, for the Medicare and Medicaid programs.

The Center for Medicare and Medicaid Innovation (CMMI) is tasked with developing and testing new delivery and payment models for health care providers under Medicare, Medicaid and the Children’s Health Insurance Program. Under the 2010 health care law, Congress authorized CMMI to test models that have the potential to lower costs or improve outcomes. A test phase, or an experiment, is necessary to determine the impact on both costs and outcomes. As such, patients and providers must consent to be willing participants, the common and accepted practice for clinical research involving human beings.

With CMMI, however, the secretary of Health and Human Services has implemented mandatory “demonstrations” that prevent program beneficiaries or providers from opting out of the experiment. In one case, the secretary has proposed a mandatory model that would include fully three-quarters of the country at the outset. This begs the question of whether this can truly be considered a “demonstration,” or whether it is in effect a change in law and an encroachment on Congress’s constitutional authority.

These mandatory models also cause medical providers to change their practices in ways that directly affect patient care. One proposal, for instance, assumes current payment formulas encourage doctors to prescribe higher-cost drugs for their patients. This alters what is covered in ways that will limit seniors and disabled individuals access to newer, innovative drugs. This is especially problematic for patient populations suffering from complex medical conditions including cancer, rheumatoid arthritis, and those with few treatment regimens available. Moreover, when the government imposes these changes in Medicare or Medicaid, the pattern tends to spread throughout all medical care, affecting all patients, regardless of their level of insurance coverage or none at all.

The broad powers vested in CMMI, and the agency’s interpretation of that authority, have the potential to further degrade Congress’s lawmaking authority by shifting decision-making away from elected officials into the hands of unelected bureaucrats. In addition, CMMI has an automatic appropriation of $10 billion once every 10 years, forever. Consequently, this little agency can spend that money however it chooses — escaping the oversight authority Congress should have through its power of the purse.

Making matters worse is that Congress’s own budgetary scorekeeper, the Congressional Budget Office, has effectively ratified CMMI’s authority. The CBO tells us that any altering of CMMI’s demonstration activities would result in a substantial loss in savings. This conclusion is reached by assuming that CMMI’s ability to produce savings supersede those of Congress. If there is overlap between legislative initiatives and CMMI’s authority, CBO treats legislative proposals as secondary; the agency’s savings assumptions favor CMMI. This makes it virtually impossible for Congress to change policy in this area and have it be seen as ‘right’ from a budgetary standpoint.

Congress established CBO in 1974 precisely to ensure the legislature had its own professional budget analysis operation, independent of the Executive Branch. In this case, CBO’s reasoning — that the executive is more effective at legislating than the Congress — turns that principle on its head. It also jeopardizes the constitutional system itself.

It is important to understand that this is not a petty squabble among political factions in Washington. It is not a matter of technical interpretations of Medicare reimbursement schemes. It is a bipartisan concern that goes to the heart of our constitutional system. The “new payment models” CMMI is devising and imposing on doctors and their patients are not mere computer simulations or science projects in a lab somewhere. They affect real people and their access to care. We are talking about whether or not seniors on Medicare are able to receive the medications or treatment options that their physicians believe are in the best interest of the patient.

Those are the real stakes of this situation — both medical and constitutional — and they should be of concern to every American.

Price, a Georgia Republican, is chairman of the House Budget Committee.

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Chairman Price Opening Statement: Center for Medicare and Medicaid Innovation: Scoring Assumptions and Real-World Implications

2016/09/07

As prepared for delivery

Welcome back and thank you to everyone for joining us this morning.

One of the core responsibilities of Congress is oversight. It’s our job to keep a watchful eye over government departments and agencies to ensure their activities are fairly, efficiently, and effectively executed. In order to competently exercise its oversight authority, Congress has instituted certain instruments and agencies to aid in that endeavor – perhaps none with as large an impact as the Congressional Budget Office (CBO).

CBO is critical to Congress’s oversight and legislative activities. Members rely on the experts at CBO to provide well-reasoned, non-partisan analysis that informs and helps shape Congressional decision-making. So, we appreciate and value the professional work that CBO performs day in and day out.

In fact, it is because of the critical role CBO plays in the oversight and legislative process that we are here today to specifically examine how CBO’s analysis of the Center for Medicare and Medicaid Innovation (CMMI) – and the assumptions within that analysis – is impacting the ability of Congress to perform its legislative and oversight duties.

The Center for Medicare and Medicaid Innovation is a group within the Centers for Medicare and Medicaid Services (CMS) tasked with developing and testing new delivery and payment models for health care providers under Medicare and Medicaid. There have been legitimate questions and concerns raised about CMMI’s new Medicare payment models. Concerns with the adverse impact these experiments might have on the practice of medicine and patient access to critical health care treatments; questions about the agency’s decision to require mandatory – rather than the usual voluntary – participation of health care providers in the models; and generally whether the new models exceed CMMI’s legal authority.

It is important to remember: when we talk about new payment models, we are not just talking about a computer simulation or a science project in a lab somewhere. We are talking about real people and their access to care; we are talking about whether or not seniors on Medicare are able to receive the medications or treatment options that their physicians believe are in the best interest of the patient.

There are real lives that could be impacted – potentially harmed – by these suggested changes, even by the models themselves because CMMI is making participation in the demonstrations mandatory rather than voluntary before the effects of such changes to care, quality, and outcomes are known.

This is why oversight over CMMI’s activities is so important.

The broad powers vested in CMMI and the agency’s interpretation of that authority have the potential to further degrade Congress’s lawmaking authority by shifting decision-making away from elected officials into the hands of unelected officials. CMMI has the authority to design and implement different models and test those models on segments of the population for either an unspecified or limitless period of time. When you add in the fact that CMMI has determined that it can mandate participation in these experiments and run them indefinitely, you have a scenario where the agency has in effect enacted changes to the Medicare and Medicaid programs while circumventing Congress.

This assumption of lawmaking authority by the Executive Branch takes such powers out of the hands of the legislature. No matter which political party controls which branch of government at any given time, such a precedent is unhealthy for our democracy.

Unfortunately, under its current analysis, the Congressional Budget Office tells us that any altering of CMMI’s demonstration activities would result in a substantial loss in savings. CBO appears to come to this conclusion by assuming that CMMI’s abilities to produce savings supersede those of Congress. If there is overlap between legislative initiatives and CMMI’s authority, legislative proposals are secondary and savings assumptions favor CMMI. It is this reasoning – that the Executive is more effective at legislating than the Congress – that is so concerning.

In its first five plus years of operation, CMMI has spent nearly $6.1 billion with no tangible savings yet to show for it. And, yet, CBO tells us that they expect the program to cover those expenses with savings by 2017. While at the same time, in its own Long-Term Budget Outlook, CBO has admitted that it does not know which, if any, of the current demonstration projects CMMI has embarked upon will result in savings.

Admittedly, there will always be a certain level of uncertainty in any estimates or projections. What concerns this committee and others is the certainty with which CBO’s analysis seems to project substantial savings by CMMI in the future. Those yet unrealized supposed savings make it a challenge for policymakers to propose changes to the program; which in turn, makes it challenging for policymakers to exercise our oversight authority.

At the end of the day, our goal is to ensure the integrity of Congress’s oversight authority. Because we value the input of CBO in the legislative process, it is important that we have the opportunity to question and understand the underlying assumptions and methodology that inform the basis of its analysis. Because we believe seniors on Medicare ought to have access to the life-improving and life-saving treatments their doctors recommend, it is important that we ensure Congress is able to exercise its oversight authority.

To discuss these issues, we are joined today by Mark Hadley, Deputy Director of the Congressional Budget Office; Dr. Joseph Antos, the Wilson H. Taylor Scholar at the American Enterprise Institute; Ted Okon, Executive Director of the Community Oncology Alliance; Dr. Mark Madden, an orthopedic surgeon at OrthoVirginia; and Topher Spiro, Vice President for Health Policy at the Center for American Progress.

And with that, I yield to the Ranking Member, Mr. Yarmuth. Read More

Budget Committee Releases Working Paper on Alternative Approaches to the Federal Budget

2016/08/30

WASHINGTON, D.C. – Today, the House Budget Committee released its fifth in a series of working papers focused on the Committee’s effort to overhaul the Congressional Budget Act of 1974 and reform the congressional budget process. The paper follows a hearing the Committee held on July 6th that examined what sort of alternative budget approach or approaches could better serve the goal of fiscal responsibility and a more effective, efficient, and accountable government.

The working paper focuses on four main examples:

·         Performance-Based Budgeting

·         Portfolio Budgeting

·         Capital Budgeting

·         Zero-Based Budgeting

In its opening, the paper notes that the current budget process contains a number of flaws that make it inadequate at serving the American people:

"The Federal budget today is viewed principally on a cash basis that measures priorities mainly by how much Congress spends on them in the present. It does not contain a systematic means of applying measures of program and agency performance to budgetary decisions. It does not comprehensively evaluate the full range of policies employed to achieve national goals. It does not distinguish between spending for immediate consumption and spending with longer-term benefits. Its process begins by assuming the legitimacy of the previous year’s spending levels rather than forcing Congress to justify programs in each budget cycle.”

CLICK HERE TO READ THE WORKING PAPER

To learn more about the House Budget Committee’s efforts to reform the congressional budget process, visit budget.house.gov/BudgetProcessReform.

Previous budget process reform working papers:

·         Reclaiming Constitutional Authority Through the “Power of the Purse” (8/2/2016)

·         The Need to Control Automatic Spending and Unauthorized Programs (8/9/2016)

·         The Need for Fiscal Goals (8/16/2016)

·         Making Budget Enforcement More Effective (8/23/2016)

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