October 23, 2020

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Washington Begins Horse Trading over Next Phase of COVID-19 Aid

Negotiations in Congress over the next COVID-19 aid plan are expected to start after the July 4 break, and a package is likely to pass before Congress adjourns for the August recess. In total, we expect the bill to include up to $3 trillion in funding based on the House proposal, the HEROES Act. The Senate, House, and Trump administration proposals are starkly different, so the exact contents of the final legislation remain to be seen.  The main political pull is essentially between those who want the aid to be mostly about funding economic recovery and those who would focus on boosting medical care and public health.

Senate Majority Leader Mitch McConnell (R-Kentucky) has said he would like the package to be $1 trillion, far less than the $3.4 trillion in the HEROES Act. McConnell indicated that it will include liability provisions for businesses — potentially including health care providers — and that until the impact of earlier COVID-19 aid packages on the health care system are fully assessed, the new legislation should largely be used to focus on improving the economy.

The House passed its latest COVID-19 bill on May 15, and negotiations with the Senate and the White House have yet to begin. The funding proposed by House Democrats in the HEROES Act is more than three times greater than McConnell’s proposition. It targets investments in state and local governments struggling with budget shortfalls; medical providers disrupted by the pandemic; essential testing and contact tracing; increased funding for the Medicaid program and the Supplemental Nutrition Assistance Program (known as SNAP in most places and CalFresh in California); expanded access to health coverage through special insurance enrollment periods and 100% coverage of COBRA costs for workers who have been furloughed or who have lost their jobs; subsidies for broadband to expand access to telehealth and online services; and pay enhancement for a wide range of essential workers.

Here are the eight areas of investment outlined in the bill:

Focus AreaDetails
State & Local Funding$915 billion Coronavirus Relief Fund — $500 billion to states, $375 billion to localities, $20 billion to territories, and $20 billion to tribes
Heroes Fund$190 billion to the Heroes Fund, which would be administered by the Department of the Treasury and provide extra pay to essential workers
Provider Fund$100 billion in Provider Relief Fund grants for hospital and health care providers to be reimbursed for health care–related expenses or lost revenue directly attributable to the public health emergency; lowers the interest rate to 1% for loans that providers have accepted through the CMS Accelerated and Advance Payment Programs; reduces the per-claim recoupment amount to a maximum of 25%; extends the period during which providers do not have to repay payments
SNAP Increases$10 billion to support anticipated increases in SNAP participation and increases related to flexibilities provided by the Families First Coronavirus Response Act; temporarily raises maximum benefit by 15%
Testing$75 billion for testing, contact tracing, and other activities
MedicaidIncreases the FMAP payments to state Medicaid programs by 14% through June 30, 2021; increases Medicaid disproportionate share hospital (DSH) payments by 2.5%; increases federal payments for the Medicaid home and community-based services benefit by 10%
InsuranceProvides 100% COBRA subsidies through January 2021 for those who are laid off or furloughed; requires a special enrollment period for eligible people to enroll in Medicare Parts A and B, as well as a two-month special enrollment for uninsured people to enroll in coverage offered through the exchange
Broadband$2 billion for a temporary expansion of the FCC’s Rural Health Care Program to partially subsidize its health care providers’ broadband service

The White House position on the size of the aid plan splits the difference between the House and Senate. White House Trade Advisor Peter Navarro says Trump is looking for at least $2 trillion in the next package and like McConnell wants it to focus largely on the economy. The president would like it to include a payroll tax cut and emphasize strengthening the manufacturing base by trying to bring  manufacturing jobs back to the US and targeting aid for companies that produce prescription drugs, masks, and ventilators. The White House also has signaled interest in including funding for state and local governments, as well as long-discussed actions to protect consumers from surprise medical billing. The administration is also eyeing broader infrastructure goals such as the broadband funding included in the HEROES Act.

When all is said and done, it’s likely that this aid package will include funding for state and local governments. The HEROES Act includes $915 billion in relief, and House Speaker Nancy Pelosi (D-California) said state and local funding will be part of any final product. McConnell initially asserted states should file for bankruptcy before receiving more funding but retreated from that stance in the face of heavy criticism. He later indicated that he will support some of this funding if provisions to limit corporate liability are included. There is bipartisan support in the Senate for state and local funding as demonstrated by the $500 billion State and Municipal Assistance for Recovery and Transition (SMART) Act (S. 3752), which would establish the Coronavirus Local Community Stabilization Fund to support state and local governments.

There is widespread interest in making certain that telehealth flexibilities are made permanent. Efforts to maintain many of the telehealth waivers issued as part of the pandemic response are picking up bicameral, bipartisan support. These efforts could be part of this next COVID-19 package but are more likely to be considered later. Active discussion and negotiations related to telehealth are expected to continue through the summer and fall.

We expect this next COVID-19 legislative package will be passed and signed into law by early August. It is likely to include between $2 trillion and $3 trillion, aimed largely at boosting the economy, while making significant investments in state and local governments, direct payments to individuals, unemployment insurance, health care providers, and essential staff. Precisely what balance is struck among the competing interests of the Democrats controlling the House, the Republicans in charge of the Senate, and the Trump administration will begin to come into focus after the Fourth of July weekend.

The post Washington Begins Horse Trading over Next Phase of COVID-19 Aid appeared first on California Health Care Foundation.