Federal Legislative Update - March 26, 2010

The U.S. House of Representatives did not meet today , and will return to session on Tuesday , April 13, following the two-week district work period. The U.S. Senate met to continue consideration of legislation to extend expiring unemployment benefits, with no roll call votes. Once the Senate adjourns, the chamber will reconvene after the break on Monday, April 12.

Yesterday, Congress finished work on legislation to overhaul the nation's health care and student financial aid systems, when the House voted final approval of the budget reconciliation bill (H.R. 4872). The vote was 220-207, largely along party lines.

The final House vote capped a two-bill process worked out earlier this month by the White House and Democratic Congressional leaders. Rather than forge a single bill from the House- and Senate-passed versions of the measure in a House-Senate conference—which would have been subject to a Republican filibuster in the Senate—the House on March 21 passed the Senate health care bill (H.R. 3590) by a vote of 219-212 and sent it to President Obama, who has signed it. The House also approved a package of "corrections" under the budget reconciliation process (H.R. 4872) by a vote of 220-211. The reconciliation bill required just a majority vote to pass in the Senate, not the 60 votes needed to avoid a filibuster, and it was approved on March 25 by a vote of 56-43. The reconciliation bill also contained significant reforms to the nation's student loan system, with significant benefits for the Pell Grant program.

A point of order in the Senate struck two minor Pell Grant provisions from the bill, forcing the Senate to send the measure back to the House for a final vote, which also took place March 25. One of the Pell Grant provisions struck from the reconciliation bill would have eliminated obsolete language, but the other was a "hold harmless" provision to prevent reductions in Pell Grants if the program's annual appropriations fell. CQToday reports that Democrats are confident they can modify the hold harmless provision in subsequent legislation.

Health Care Provisions in Reconciliation . Two issues being watched by higher education national associations that were addressed in the reconciliation bill included cuts in disproportionate share (DSH) payments to hospitals for uncompensated care under Medicare and Medicaid, and the impact of increased Medicaid eligibility and costs on state funding for higher education.

For DSH payments, the reconciliation measure pared the amount of the Medicare cut from $24.4 billion to $21.4 billion and the Medicaid cut from $18.5 billion to $14.1 billion. However, both reductions would begin in 2014 instead of the original start date of 2015.

CQToday reports that the reconciliation bill also eased the states' additional Medicaid burden, specifying that the federal government will cover the entire cost of Medicaid coverage for the newly eligible from 2014-2017. In 2018, federal matching funds for all states will cover 95 percent of the costs, falling to 94 percent in 2018, 93 percent in 2019, and 90 percent in 2020 and thereafter.

Issues not addressed in reconciliation were the application of individual health insurance market reforms to group-like student health insurance plans, problems associated with a False Claims provision in the Senate bill that could leave universities exposed to excessive whistleblower lawsuits, and increasing the number of graduate medical education slots.

Higher Education Provisions in Reconciliation . The student aid portion of the budget reconciliation measure would end government subsidies for private lenders and funnel new loans into the direct federal loan program. Because so many colleges and universities switched to direct lending after the House passed its student aid reform bill last year ( H.R. 3221 ), the expected 10-year savings from the change dropped from $87 billion to $61 billion. This forced Democrats to cut back on their spending plans for the savings.

The measure provides $36 billion of the 10-year savings to the Pell Grant program to allow the maximum award to increase each year by inflation starting in 2013, and to reduce this year's funding shortfall by $13.5 billion, or about two-thirds. Another $2.6 billion will be allocated to Historically Black, Hispanic-serving, and Tribal colleges and universities, and $2 billion will go to community college and career-training grants. Also, $1.5 billion will be used to expand the student loan income-based repayment program, capping new borrowers' payments at 10 percent of their net monthly incomes after adjustment for basic living costs, rather than the current 15 percent. In addition, $750 million will be allocated over five years to the existing College Access Challenge Grant Program. The bill also allocates $10.3 billion for deficit reduction and $9.1 billion to help cover health care costs in the package.

Left out of the pared-down package were a new Perkins Loan program, early childhood education and school modernization, and an extension of the cut in the student loan interest rate beyond 2012.

The President and Chancellors of the UW System wrote to Wisconsin Members of the House and Senate urging them to approve the higher education provisions contained int he budget reconciliation bill. The letter can be found at: http://www.uwsa.edu/govrel/fedrel/2010/Kohl_re_SAFRA_3-10.pdf

If you have questions about this update or the Office of Federal Relations can be of assistance to you or your campus, please contact Kris Andrews by phone at 608-263-3362 or by email at kandrews@uwsa.edu.

(AAU and the UW System Office of Federal Relations contributed to this report.)