Obama Makes Final Push for Health Care Reform; Endorses Reconciliation

Health insurance certificate with stethoscopeTelling Congress to “finish its work,” President Obama on Wednesday urged both chambers to schedule a vote on final health care overhaul legislation in the coming weeks. While Obama did not outline a specific roadmap for reform, it is widely believed that the plan for going forward involves first having the House of Representatives vote on the Patient Protection and Affordable Care Act (H.R. 3590), the bill the Senate approved in December, and then passing via budget reconciliation a package of changes to that bill reflected in the estimated $950 billion proposal Obama unveiled on February 22.  While Obama did not specifically mention reconciliation, he seemed to sanction this approach, stating that a health care reform bill: “deserves the same kind of up-or-down vote that was cast on welfare reform, the Children's Health Insurance Program, COBRA health coverage for the unemployed and both Bush tax cuts – all of which had to pass Congress with nothing more than a simple majority.” The controversial budget reconciliation process requires a simple majority vote, but is subject to strict limitations about what matters can be included in a reconciliation bill.

Obama further remarked that his proposal “incorporates the best ideas from Democrats and Republicans.” Specifically, the President’s legislative blueprint borrows a number of elements from the Senate-approved bill, including the requirement that most Americans obtain health insurance coverage, the creation of a health insurance exchange, penalties on large employers that fail to provide affordable health insurance, the imposition of an excise tax on high-cost “Cadillac” insurance plans, and the lack of a public insurance option included in the more expansive House-passed Affordable Health Care for America Act (H.R. 3962). Obama’s plan also includes popular elements contained in both bills, such as the ban on preexisting condition exclusions and certain lifetime and annual coverage limits in health insurance plans.

In a letter to Congress, Obama signaled his willingness to consider certain GOP proposals, including allocating $50 million to fund state initiatives designed to reduce medical malpractice costs; allowing certain high-deductible insurance plans to be offered in the health insurance exchange; increasing Medicaid reimbursements to doctors in certain states; and permitting medical professionals to conduct random undercover investigations of health care providers that receive reimbursements from Medicare, Medicaid, and other federal programs.

At this point, it is unclear whether the House has enough votes to pass the Senate bill, and whether the Senate can garner 50 votes to proceed with reconciliation, with Vice-President Biden supplying the tie-breaking vote. Republicans are expected to be united in their opposition, leaving Democratic leaders with little margin for opposition within their own caucus.

Photo credit:  MBPHOTO, INC.

Obama Releases Fiscal Year 2011 Budget Proposal

This morning, President Obama unveiled a $3.8 trillion budget for fiscal year 2011, (pdf) $14 billion of which is allocated to the Department of Labor (DOL). As expected, much of these funds are directed to the DOL’s labor and employment law enforcement efforts. According to a fact sheet, the budget provides $25 million and 100 additional enforcement personnel for the DOL, in conjunction with the Treasury Department, to identify and penalize employers who improperly classify employees as independent contractors. In addition, $1.7 billion – a $67 million increase – will be given to the DOL’s worker protection agencies for enforcement purposes, reflecting a shift in resources towards greater enforcement. The Occupational Safety and Health Administration (OSHA) will be provided $573 million, an increase of $14 million, to be used, among other things, to hire or transfer an additional 60 enforcement members to its staff, and conduct 9 percent more inspections. An additional $7 million will be provided to the Employee Benefits Security Administration (EBSA) to hire more benefits advisors and research staff.

Other stated goals for the DOL’s budget allocation include:

  • The creation of a system of automatic workplace pensions. Under the proposal, employers who do not currently offer a retirement plan will be required to enroll their employees in a direct-deposit IRA account. Employees may opt-out. Small firms of 10 employees or less would be exempt.
  • A doubling of the tax credit for small employers to offer a qualified retirement plan to their workers, from $500 to $1,000 per year, for a maximum of three years.
  • An improvement in the transparency and adequacy of 401(k) retirement savings plans. Specifically, the DOL will undertake regulatory efforts to reduce barriers to annuitization of 401(k) plan assets; increase the transparency of pension fees; improve transparency of target date and other default retirement investments; and reduce conflicts of interest between pension advisers and fiduciaries.
  • The expansion of families’ access to paid leave through a new $50 million fund to help states launch paid-leave programs cover their start-up costs.
  • An expansion of the Saver’s Tax Credit to provide a 50 percent match on the retirement savings of families that earn less than $85,000 (up to $1,000 of savings would be matched).
  • A boost in funding and proposed legislative changes to reduce improper unemployment insurance payments by more than $4 billion and employer tax evasion by $300 million over 10 years.

In addition, the budget funds an extension of Unemployment Insurance benefits, COBRA tax credits, and relief to states and localities to prevent layoffs, and would eliminate the capital gains tax on investments in small businesses. The DOL will hold a Q&A session on the budget on its website.

With respect to immigration initiatives, the budget allocates $137 million to the Department of Homeland Security for enhancements and expansion of immigration related verification programs at the U.S. Citizenship and Immigration Services.

Moreover, the budget provides $18 million – a five percent increase – to the Equal Opportunity Employment Commission (EEOC), and an additional $162 million, an 11 percent increase in funding, for the Department of Justice’s Civil Rights Division to strengthen civil rights enforcement of anti-discrimination laws.

More information on the 2011 budget can be found at the Office of Management and Budget’s website.

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State of the Union Address Emphasizes Job Creation, But Not Organized Labor

President Obama’s State of the Union Address may be more notable for its omissions than its content. Not once in the hour and ten minute speech did Obama mention organized labor, even though a large portion of the Address was dedicated to job creation efforts. Claiming that jobs must be the “number one focus of 2010,” Obama outlined a number of initiatives to advance this aim, none of which directly promoted union membership.

Specifically, Obama proposed using $30 billion repaid funds that financial institutions received through the Troubled Asset Relief Program (TARP) to increase the ability of small businesses to obtain loans. In addition, Obama called for a new small business tax credit for small businesses that hire new workers or raise wages, the elimination of capital gains taxes on small business investment, and tax incentives for businesses to invest in new plants and equipment. Moreover, Obama praised the House of Representatives for passing a jobs bill in December which contained some of these proposals, and encouraged the Senate to do the same. It is uncertain whether the Senate plans to introduced a comprehensive jobs bill, or will consider a series of jobs-related legislation.

As for healthcare overhaul, Obama acknowledged the complexity of this issue, but was adamant that Congress not “walk away” from healthcare reform. The President, however, did not recommend a way for Congress to proceed with this task, such introducing piecemeal health-related legislation or through the budget reconciliation process.

With respect to other employment-related issues, Obama briefly mentioned the need for improving the immigration system in this country, and ensuring that equal pay laws are enforced.

Another main theme of the President’s Address is finding ways to increase the financial stability of the middle class. Earlier this week, the White House proposed the creation of a system of workplace individual retirement accounts (IRAs) that would require all employers to give employees the option of enrolling in a direct-deposit IRA. According to a fact sheet (pdf) provided by the White House, this proposal would require employers that do not currently offer a retirement plan to enroll their employees in a direct-deposit IRA unless the employee opts out. The contributions would be voluntary and matched by the Savers Tax Credit for eligible families. In addition, the Administration would take measures to streamline the process for employers to automatically enroll workers in 401(k) plans. A new tax credit to be proposed would help pay employer administrative costs, while the smallest firms would be exempt.