Federal Funding Bill Relaxes Medicare Loan Repayment Terms, Delays DSH Cuts

Federal funding bill relaxes Medicare loan repayment terms, delays DSH cuts

Source: Modern Healthcare, by Rachel Cohrs

House Democrats’ bill to extend funding for the federal government through mid-December included a provision that would relax repayment terms for COVID-19 Medicare loans.

CMS Administrator Seema Verma confirmed on Friday that the agency is delaying recoupment on the Medicare loans as lawmakers haggled over legislation to avoid a government shutdown weeks before an election. The bill would also extend funding for several Medicare and Medicaid policies including delaying cuts to disproportionate-share hospital payments until Dec. 11.

Hospitals have implored Congress to forgive or relax repayment terms for $100 billion in COVID-19 relief loans that Medicare gave out in the spring. CMS was supposed to start recouping the funds by cutting off providers’ Medicare fee-for-service reimbursement starting in August, but has not yet begun doing so.

Foley & Lardner Partner Judith Waltz, who is a former assistant regional counsel at HHS, said congressional action soon would be the most efficient path to resolving the issue, as it would likely be difficult for CMS to refund provider payments if they start recouping funds and Congress relaxes the repayment terms afterward.

“If this doesn’t pass, I’m not sure what CMS’ next move would be. They can’t just leave this indefinitely,” Waltz said.
The Federation of American Hospitals, which has been a key stakeholder pushing for revisions to the Medicare loan program said it supports the changes in the new spending bill.

“The ongoing pressures of the current crisis required a revision of the repayment terms,” FAH President and CEO Chip Kahn said.

The American Medical Association also praised the move, as physician practices also were able to apply for the program.

“Upon passage of the Continuing Resolution, patients should know that their physician is more likely to weather the pandemic’s economic challenges. Congress recognized the danger, and rightfully modified the program so physicians can keep seeing patients,” AMA President Dr. Susan Bailey said.

House Democrats’ bill would give providers one year after the Medicare Accelerated and Advance Payment Program loan was issued before recoupment would begin, an extension from 120 days under current law. The recoupment rate would also be lowered from its current100% level to 25% for the first 11 months of repayment, and 50% for the six months afterward. Hospitals would have 29 months after payments to begin to pay back the funds in full before interest would begin to accrue. The interest rate would be lowered from the current rate of 9.6% to 4%.

The accommodations should be sufficient to allay concerns for most healthcare providers concerned about repayment, Waltz said, although she acknowledged some practices may still close.

The legislation also creates a new deadline for funding for several healthcare policies, including delaying cuts to Medicaid disproportionate-share hospital payments and extending funds for programs such as the Money Follows the Person demonstration, diabetes programs and community behavioral health clinics. The policies are currently set to expire on Nov. 30.

The new deadline creates a potential vehicle for a last-ditch effort to ban surprise medical bills post-election as senior GOP lawmakers who have advocated for reform face retirement.

Medicare Part B premium increases would also be limited in 2021.

Republicans, however, were rankled that farm aid money they wanted was left out of the legislation and Senate Majority Leader Mitch McConnell (R-Ky.) said the bill “shamefully leaves out key relief and support that American farmers need.”

Federal government funding expires on Sept. 30. The Senate is also set to soon begin a tense battle over the Supreme Court nomination that President Donald Trump is expected to announce as soon as late this week.

Verma: CMS Will Mull Which COVID-19 Flexibilities May Stick Around Post-Pandemic

Verma: CMS will mull which COVID-19 flexibilities may stick around post- pandemic | FierceHealthcare

Source: Fierce Healthcare, by Paige Minemyer

The Trump administration has rolled out a slew of policies aimed at offering greater flexibility to payers and providers amid COVID-19. But what changes are likely to stick around long-term?

Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma said the agency will comb back through its policymaking under the pandemic and consider which, if any, of the changes will stick around once the country emerges from that situation.

The administration has heard plenty of positive feedback from payers and providers around the adjustments, particularly around easing access to telehealth, Verma said Monday during a fireside chat at Fierce Healthcare’s Virtual Series on Medicare Advantage.

“I think the reviews have been that the plans have really appreciated the flexibility, especially around telehealth and being able to have those midyear benefit changes,” Verma said.

While she didn’t offer a definitive list of where the administration intends to land on some of the flexibilities offered under COVID-19, she said that updates to ease reporting requirements for the Medicare Advantage star ratings are unlikely to stay in place long-term.

Verma also addressed changes the agency has made to calculations for the star ratings, which will now include patient experience feedback and data such as their access to generic drugs and biosimilar products.

The goal, Verma said, is to arm Medicare beneficiaries with as many data as they need to make informed choices about their care and about whether traditional Medicare or Medicare Advantage is the right route for them.

Providing them with additional plan-level specifics about supplemental benefits, provider networks and other key considerations is what drove the agency’s recent revamp of its Medicare Plan Finder, which was overhauled last summer ahead of open enrollment for the 2020 plan year.

“I would say we want to build more transparency into the system,” she said.

Verma also said that the administration is expecting a strong open enrollment period for Medicare Advantage this year, bolstered by CMS’ efforts to increase competition and expand benefit choices for beneficiaries.

She touted the fact that rates in the program have gone down over the past several years even as the agency has opened up new flexibilities for insurers to offer additional benefits.

“[Medicare Advantage] really represents market based principles, where plans are competing on the basis of cost and quality for Medicare beneficiaries,” Verma said.

Trump Outpatient Drug Plan May Depend On Upending Buy-And-Bill System

Trump outpatient drug plan may depend on upending buy-and-bill system

Source: Modern Healthcare, by Rachel Cohrs

The Trump administration could move forward with a policy that ties Medicare payments for outpatient drugs to foreign prices by upending the buy-and-bill payment system, according to the administration’s draft plan.

President Donald Trump on Sunday signed an executive order calling for the HHS secretary to implement a rulemaking plan to tie Medicare outpatient drug payment to international prices. If the administration chooses to move forward with the regulatory process in an expedited manner before the November election, providers could be faced with implementation challenges.

The administration’s draft plan for a Center for Medicare and Medicaid Innovation demonstration, which was released in October 2018, would set Medicare Part B reimbursement based in part on drug prices paid in other countries. But the draft policy would only work if entities step up to fill a new middleman role to take on the financial risk of buying Part B drugs from manufacturers and selling them to providers. Provider participation in the demonstration as drafted would be mandatory, and cover 50% of Medicare Part B spending.

Sunday’s executive order said the White House plans to shift to a more aggressive most-favored-nation policy where Medicare would pay the lowest price offered in countries with comparable economies, and it could also change its plan to revolutionize the buy-and-bill system in a final rule.

The Obama administration tried to implement a similar plan to introduce middlemen into Medicare Part B, but the Competitive Acquisition Program failed. The Trump administration’s advance notice of proposed rulemaking left many questions unanswered about how incentives would be different for potential vendors, which could include group purchasing organizations, distributors, wholesalers, specialty pharmacies, manufacturers and individual or groups of physicians and hospitals.

Two unanswered questions about the vendor model would be how participating providers would be chosen and why vendors would take on the financial risk of participation, said Rachel Sachs, associate professor of law at Washington University in St. Louis.

Sachs said a new system would likely take time to implement. “The model relies for implementation on recruiting these private vendors and having them set up the necessary kinds of business arrangements they would need to implement this proposal,” Sachs said.

If the administration were moving at top speed, it could try to release a final rule on outpatient drug reimbursement before the 2020 election. Drugmakers have indicated they may sue to stop implementation, which could slow down the process.

Dr. Peter Bach, the director of Memorial Sloan Kettering’s Center for Health Policy and Outcomes, said a vendor program has better odds of working in a demonstration like the Trump administration’s draft plan because the financial stakes are much higher in Medicare Part B than they were in the mid-2000s, and the draft demonstration would make provider participation mandatory. The administration’s draft plan also appears to be limited to a few high-cost drugs, which could make it easier to implement.

Adam Finkelstein, counsel at Manatt Health and former health insurance specialist at CMMI, said the administration is not legally required to issue a proposed rule before a final rule on its Part B policy. The speed of the regulatory process likely depends on how the Trump campaign intends to use the policy for political messaging considerations ahead of the election. The more quickly the adminstration moves ahead, Finkelstein said, it leaves the administration more vulnerable to legal challenges.

“They have a couple of pathways, and not all are guaranteed to work,” Finkelstein said.

Additionally, the Congressional Review Act requires a 60-day delay in the effective date for major rules, though that requirement can be waived in cases of the public interest, Finkelstein said.

The draft plan also proposes changing provider reimbursement for outpatient drugs from the current system that pays providers a percentage of the drug’s Average Sales Price to a flat fee. CMS said in the draft plan that the goal for the new payments would be to hold providers harmless to current revenue “to the greatest extent possible.” However, it’s possible that such a policy could affect various providers differently.

There are also practical considerations that could make a quick turnaround challenging, as providers already have a stock of the drugs on hand, Bach said. Jillanne Schulte Wall, American Society of Health-System Pharmacists senior director of health and regulatory policy, also voiced concern about the liability for hospitals if they don’t own the drugs they are providing, and compliance with drug supply chain documentation requirements.

If HHS decides to cut the vendor system from a final rule, it could leave hospitals to absorb the reduction in reimbursement.

“There is some wiggle room for a reduction in reimbursement, but that would (be) calamitous. It wouldn’t go forward,” Bach said.

A proposed rule on the administration’s outpatient drug policy has been under review at the White House budget office since June 2019. Trump’s executive order also called for tying Medicare Part D payments to foreign prices, but is unclear exactly how the administration could move forward with that policy.

Trump Administration Backing Off Medicaid Rule That States Warned Would Lead To Cuts

Trump administration backing off Medicaid rule that states warned would lead  to cuts | TheHill

Source: The Hill, by Jessie Hellmann

The Trump administration will not move forward with a proposed Medicaid rule that states, hospitals, insurers, patient advocates and members of both political parties warned could lead to massive cuts to the federal health care program for the poor.

“The proposed Medicaid Fiscal Accountability Rule (MFAR) was designed to increase transparency in Medicaid financing and ensure that taxpayer resources support the health care needs of our beneficiaries,” Centers for Medicare & Medicaid Services Administrator Seema Verma said in a statement Monday.

“We’ve listened closely to concerns that have been raised by our state and provider partners about potential unintended consequences of the proposed rule, which require further study,” she added.

Verma said the rule is being withdrawn from the agency’s regulatory agenda, but it’s not clear if it will be added to future agendas.

The rule was intended to overhaul the complex payment arrangements states use to raise money for their Medicaid programs — funding that is then matched by the federal government.

The administration argues some states use questionable methods of raising funds so they can leverage more money from Washington. One approach used by states consists of taxing providers that stand to benefit from more Medicaid funds flowing into the state.

But governors and state Medicaid directors argue those long-standing arrangements are both legal and necessary as states look for ways to keep up with escalating health care costs.

Dozens of states wrote public comments to Verma, urging her to withdraw the proposal, including conservative states that are typically supportive of her work.

If finalized, the rule “would have forced states to face larger Medicaid shortfalls and to make bigger cuts harming beneficiaries and providers,” tweeted Edwin Park, a research professor at Georgetown University.

CMS Unveils Redesigned Medicare Provider Comparison Website For Consumers

CMS Launches 'Streamlined Redesign' of Medicare Compare Tools |  HealthLeaders MediaSource: Modern Healthcare, by Maria Castellucci

CMS launched a remodeled website Thursday that consolidates its eight online consumer tools to one platform.

The redesigned site is an attempt by CMS to give users a more streamlined experience using its platform, called Compare tools.

CMS has published information online about healthcare providers and care settings for Medicare beneficiaries and their caregivers for more than 15 years. One of the elements for the hospital version to convey quality, the star ratings, has come under fire for producing inconsistent results and CMS recently proposed changes to the methodology as a result.

The eight different interfaces representing each care setting was confusing and cumbersome for users, according to CMS Administrator Seema Verma during a press call Wednesday. “The information will now be displayed in a modern streamlined design to make it as helpful as possible to users,” Verma said.

The remodeled site, available on Medicare.gov, can now access users’ location and a drop-down menu allows the consumer to select what type of provider they are looking for. Options are hospitals, nursing homes, home health, dialysis centers, long-term care hospitals, inpatient rehabilitation, physicians and hospice groups. A user can compare up to three providers using information about costs, location and quality data. The site is also compatible for use on smartphone and tablets.

CMS is seeking feedback from users about the upgraded platform. There is an online survey available on Medicare.gov for users. CMS will also seek feedback from provider stakeholders who treat Medicare beneficiaries.

CBO Finds COVID-19 Puts Medicare Trust Fund Insolvency Just 4 Years Away

The Facts on Medicare Spending and Financing | KFF

Source: Healthcare Dive, by Rebecca Pifer

Dive Brief:

  • * The Congressional Budget Office now expects the Hospital Insurance Trust Fund, which finances Medicare Part A, to become insolvent by 2024, two years earlier than previously forecast due to the effects of COVID-19.
  • * Without Congressional action, CBO estimates Medicare spending will have to be cut by 17% — about $1,000 per beneficiary — to keep the program operational for future generations.
  • * Watchdogs and deficit hawks have tried to sound the alarm on Medicare’s increasingly precarious financial situation for years, but legislators have yet to take any meaningful policy action.

Dive Insight:

The sharp economic contraction spurred by the pandemic has caused the country’s financial outlook to deteriorate substantially, and Medicare’s ongoing trust fund depletion is only accelerating in the context of COVID-19. The pandemic, and its public health and economic effects, have shaved two years off the expected lifespan of the hospital insurance fund.

CBO’s updated budget outlook released Wednesday is the first to include the expected effects of the coronavirus pandemic. CBO now expects the overall budget deficit to reach a record $3.3 trillion  — 16% of GDP and more than triple the shortfall recorded in 2019 — in the 2020 fiscal year, and total $13 trillion over the next decade.

All major trust funds for programs like Medicare, Social Security and highway construction will run out of reserves in the next 11 years.

Medicare is particularly at risk. The hospital trust fund already spends more than it collects annually, and would have been insolvent long ago if it wasn’t for surpluses left over from past years. Last year, the Medicare Part A fund ran a deficit of $5.8 billion, and that excess of spending over revenue is expected to continue until it finally runs dry.

Medicare, which covers roughly 62 million Americans, is facing demographic shifts like an aging population increasing stress on the program, and ongoing growth in federal healthcare costs per beneficiary.

Medicare outlays are expected to rise 12% this year to $721 billion, CBO projects, mostly due to advance loans in the program to help struggling providers, based on historic claims. However, as the federal government recoups the loans, they should equal out in 2021. Medicare spending is expected to rise from 3.2% of the GDP in 2021, to 4.3% in 2030.

Yet payroll taxes, which primarily fund Medicare’s hospital insurance fund and Social Security, are only expected to increase by 6% this year.

Congress has kicked the can on the issue. Bipartisan efforts to lower spending in the early 2010s proved toothless. However, an annual report to Congress from the Medicare Board of Trustees in April triggered a Medicare funding warning, which requires the president to propose legislation fixing the issue to Congress in 2021.

The looming insolvency date — 2024 — should light a fire under lawmakers, experts said at a meeting of Medicare congressional advisory group MedPAC on Thursday.

“The government hasn’t taken bold steps to curb these trends,” Susan Thompson, a MedPAC commissioner and SVP of integration and optimization at health system UnityPoint, said. “We are at a crisis stage if we want to ensure Medicare is in place for future generations.”

It’s not a popular political move, but Congress could increase the payroll tax from 2.9% to 3.7%, or the program will have to figure out how to decrease Part A spending by 17%, MedPAC recommended. Additionally, Medicare companies can focus on preventing upstream costs, move toward value-based payment arrangements and look to shave down unnecessary care, and the high cost of drugs.

Medicare’s other trust fund, the Supplementary Medical Insurance Trust Fund, which covers Medicare Part B and Part D, is on more solid financial footing, and is expected to remain whole over the next decade, per the Medicare Board of Trustees’ April report. Premiums and revenue in Parts B and D are reset each year to cover expected costs.

CBO also found Medicaid spending is rising rapidly as enrollment rises in the safety net insurance amid economic deterioration. The group estimates spending will total $466 billion this year, a 14% increase over 2019 outlays. However, Medicaid as a percentage of the GDP is expected to remain relatively stable over the next decade (about 2% each year).

Trump Wants Broader Role For Telehealth Services In Medicare

Trump wants broader role for telehealth services in MedicareSource: Associated Press, by Ricardo Alonso-Zaldivar

The Trump administration is taking steps to give telehealth a broader role under Medicare, with an executive order that serves as a call for Congress to make doctor visits via personal technology a permanent fixture of the program.

The order President Donald Trump signed on Monday applies to one segment of Medicare recipients — people living in rural communities. But administration officials said it’s intended as a signal to Congress that Trump is ready to back significant legislation that would permanently open up telehealth as an option for all people with Medicare.

His administration is “taking action to make sure telehealth is here to stay,” Trump said.

Monday’s executive order will also set in motion an experiment under which hospitals in rural communities could receive a more predictable stream of Medicare payments in exchange for delivering better performance on certain measures of quality.

The steps are modest — far short of the health plan Trump promised when he was elected but has not been able to deliver. Still, Trump is trying to send a signal to voters in rural areas, where long road trips for medical care are common, that he has not lost sight of their interests.

The telehealth measure directs the departments of Agriculture and Health and Human Services, as well as the Federal Communications Commission, to work together to build up the infrastructure to support telehealth in rural communities.

And it aims to permanently expand the kinds of services that can be provided via telehealth. Officials said examples include emergency room visits, nurse consultations, and speech and occupational therapy.

Medicare has greatly expanded its coverage of telehealth across the country as part of its emergency plan to confront the coronavirus pandemic. But that expansion will end in most places once the public health emergency is over.

The administration has regulatory authority to permanently expand some services in rural areas, but Congress must sign off on a broader program that would make telehealth a regular option for people living in cities and suburbs. There’s bipartisan support for that, but it’s unclear anything can happen before the November election.

Medicare statistics show telehealth has been popular. Officials expanded payment for such services as a way to keep seniors safe at home, avoiding the risk of catching the virus by venturing out for a medical appointment. In the last week of April, 1.7 million Medicare recipients relied on telehealth. Before the pandemic the number was only in the thousands.

In a statement, Medicare Administrator Seema Verma predicted telehealth will become the modern equivalent of the house call.

“In an earlier age, doctors commonly made house calls,” she said. “Given how effectively and efficiently the health care system has adapted to the advent of telehealth, it’s become increasingly clear that it is poised to resurrect that tradition in modern form.”

Telehealth Can Be Life-Saving Amid COVID-19, Yet As Virus Rages, Insurance Companies Look To Scale Back

Despite COVID-19 increase, insurance companies to pull back telehealthSource: USA Today, Jayne O’Donnell and Ken Alltucker

Cynthia Peeters’ stomach started hurting in mid-February as COVID-19 began dominating the news.

By April, the pain was overwhelming, but she was too anxious about the virus to go to the doctor. Her gastroenterologist did a cellphone video visit with her and suggested a diet change. When it got worse last month, Dr. Christopher Ramos did another video call and told Peeters to come in for a colonoscopy.

The diagnosis: Colon cancer, caught just in time.

“If telehealth was not available, I fear that we would have gotten to her diagnosis too late, and the cancer would have spread,” said Dr. James Weber, CEO of Texas Digestive Disease Consultants, where Ramos works. “Telehealth access most certainly allowed us to take care of this patient and likely save her life.”

After federal regulators said Medicare would cover such phone and video telehealth visits starting March 1, major insurers followed as COVID-19 started to shut down much of the U.S.

Weber was happy to be reimbursed as the chain was losing money because patients were too scared to show up for screenings — and that was when his state was still spared from most of the virus’ wrath.

Now, as Texas shuts back down amid soaring COVID-19 cases, Weber and doctors across the now-hardest-hit states face insurers that are starting to back away from the widely embraced approach to doctor appointments. They are scaling back telehealth to pre-COVID levels, which were limited, resuming out-of-pocket payments and using time consuming prior authorizations which can deter doctors.

In early May, Blue Cross Blue Shield of Texas set the expiration date for telehealth expansion at May 31. It has moved the date three times since then, including twice in the last two weeks to an August 31 expiration date.

Most other insurers plan to reduce coverage of the visits in September even though Medicare and Medicaid is expected to cover them far more generously through the end of the year. Some of the expanded telehealth coverage was planned until the end of the “public health emergency,” which is ill defined with no end in sight, said Weber.

He seldom used telehealth before COVID-19 because of all the restrictions.

Other insurers have also set and moved deadlines for when they will stop covering these remote visits and started charging co-payments and cost sharing again for many, Nearly all say they are continually reevaluating their coverage. Further complicating matters for doctors and patients are employer health plans that are exempt from the telehealth coverage expansion.

In Arizona, COVID-19 is now surging and hospital ICU units are nearly full, both with patients who need life-sustaining breathing treatment and non-COVID cases. Until some recent last-minute changes, insurers there were starting to drop telehealth coverage.

Dr. Paul Berggreen, a gastroenterologist who is president of Arizona Digestive Health, said his office staff must constantly check insurers’ websites to see current policies. He said policies on payment rates and co-payment waivers for telehealth seem to change week to week.

The information is vital because patients might refuse telehealth and instead request an office visit if they are not covered at comparable levels.

A 2017 study found the average cost of a telemedicine visit was $79, far less than $146 for a doctor’s office visit. However, the study may not reflect existing charges with doctors often billing the same rates for virtual and in-office visits. The amount a consumer pays out of pocket varies based on plan details such as co-pays, deductibles and cost-sharing requirements.

Most Furloughed Workers Still Covered by Employer-Sponsored Plan

Most Furloughed Workers Still Covered by Employer-Sponsored Plan

Source: Health Payer Intelligence, by Kelsey Waddill

Overall, nationwide healthcare coverage levels have remained steady because many furloughed workers are still receiving healthcare coverage through an employer-sponsored plan, Commonwealth Fund researchers found.

The Commonwealth Fund researchers conducted a survey on employment and healthcare coverage from May to June 2020. The survey encompassed in 2,271 phone interviews.

“The large share of respondents who said they or a spouse or partner were still getting coverage through a furloughed job accounted for the relative stability of insurance coverage in the findings,” the researchers explained. “Whether those on furlough regain their jobs, or lose them permanently, will determine the longer-term effect of the pandemic on employer-based coverage.”

About one in five of the adults who participated in the survey responded that either they or a spouse or partner had been furloughed or lost their position due to coronavirus.

More than half of those who experienced job disruption due to coronavirus had been furloughed.

Over half of those who were furloughed (53 percent) retained their employer-sponsored health plan coverage.

Two in five adults had received healthcare coverage from their or their partner’s lost job. Some furloughed and laid off employees still have access to a different employer-sponsored health plan through a spouse or partner.

About three in ten respondents who did not have insurance through the affected job were uninsured. The data also indicated that most of these respondents were already uninsured before the coronavirus outbreak. Four factors influenced this:

  • * Eligibility based on immigration status
  • * Gaps in the nation’s healthcare coverage due to lack of Medicaid expansion
  • * High prices on the Affordable Care Act market
  • * Low consumer education on healthcare coverage options

Others whose job loss did not affect their health insurance were largely enrolled in Medicaid, Medicare, or the individual health insurance market (36 percent).

These findings corroborate Urban Institute research published in late April 2020 which found that income, immigration, and uninsurance prior to the pandemic all played a role in preventing the currently uninsured from obtaining coverage.

According to the Commonwealth Fund researchers, for many adults (59 percent), job loss or a furlough made no impact on their healthcare coverage because the job was not their source of healthcare coverage.

The current job and healthcare climate emphasized the potential turbulence that can result from having healthcare tied to employment, the researchers found.

“When health coverage is not connected to a job, coverage, and access to care can be more stable over time,” they argued. “And given the impact of rising employer plan premiums on many with low and moderate incomes, the availability of federal subsidies through marketplace plans may make such plans a more affordable option for many.”

The researchers offered both short-term and long-term solutions to insurance gaps. In the short-term, they suggested:

  • * Improving marketing around subsidized Affordable Care Act market plans or Medicaid eligibility
  • * Streamlining enrollment requirements

For more long-term solutions, the researchers urged the federal government to:

  • * Design a subsidized insurance option that would be available to the low-income uninsured populations in states that have not engaged in Medicaid expansion
  • * Improve affordability of subsidized options for higher-income enrollees on the Affordable Care Act market

For those who become unemployed, unemployment compensation can become a barrier to Medicaid eligibility in Medicaid expansion states, Kaiser Family Foundation research recently illuminated.

While Medicaid coverage is still higher in these states, workers who receive unemployment compensation and stimulus money can find themselves ineligible for healthcare coverage assistance because both are counted as income.

“Marketplace subsidies fill in a portion of the gap created by those 15 states’ refusal to expand their Medicaid programs, but until financial assistance is extended to those with lower incomes in those states, many of their residents will be left in highly vulnerable situations when medical needs arise,” the Kaiser Family Foundation researchers emphasized.

Trump Team Prepares Rescue Package of at Least $800 Billion

Image result for Trump Team Prepares Rescue Package of at Least $800 Billion images

Source: Politico, by Nancy Cook and Ben White

The White House aims to deploy at least $800 billion in aid in the coming weeks to prop up the U.S. economy, as retailers, restaurants, sporting events and other businesses shut down and Americans slow their spending while staying home to guard against the coronavirus pandemic.

Among the administration’s targets this week: providing relief in the form of tax deferments, loans or even direct payments to airlines, the hospitality industry and small-to-medium businesses crippled by plunging demand. Officials know they need to release the contours of their plan quickly — potentially as soon as Tuesday — as turmoil accelerates in financial markets, said a person familiar with the White House’s plans.

Treasury Secretary Steven Mnuchin and Director of the National Economic Council Larry Kudlow have specifically cited aid for U.S. airlines, as travelers cancel trips or avoid new bookings and public health experts advise older Americans to avoid flying entirely.

“We don’t see the airlines failing, but if they get into a cash crunch, we’re going to try to help them,” Kudlow told reporters Monday at the White House. He said the airlines had been in touch seeking aid, “lots of them,” and that “we’re in touch about their balance sheets and their cash flow.”

Hotel CEOs are planning to visit the White House on Tuesday to meet with Vice President Mike Pence, as the hospitality industry also struggles from a serious downturn.

The Treasury Department and National Economic Council met several times over the weekend to develop a list of options for the administration’s next phase of fiscal stimulus and held several conversations with President Donald Trump, said one senior administration official.

So far, officials have discussed allowing industries such as airlines to defer tax payments or temporarily keep some of the taxes they collect from consumers. Airlines are seeking even greater assistance — nearly $60 billion worth — as they cancel flights and park plans due to collapsing demand for travel.

The hotel industry has suggested options to help with their cash crunch including loans from the Small Business Administration, deferring tax liabilities, a temporary payroll tax cut or a tax credit to retain employees. Other suggestions have included offering loan guarantees, loan forbearance or the cancellation of debts through executive action or regulatory changes, said a Republican in close contact with the administration.

Within the past week, as business plunged across the nation, the internal discussion among top economic officials has moved toward providing industries with cash and not just tax relief — even if no one in the White House wants to call it a bailout.

Kudlow said he preferred to call it more of a “short-term liquidity issue.”

The goal is to help industries deal with the cash-flow crises they’ll likely face in the coming weeks, even if the administration sees no evidence of systemic risk.

“They haven’t settled on any one thing at this point,” said Stephen Moore, a conservative economist and outside adviser to the president. “We proposed a four-step plan and the best idea is to suspend the payroll tax for the rest of the year. That’s something that would help everyone. It’s clean, and it doesn’t pick winners and losers.”

Industries across the board are starting to latch onto the idea of suspending the payroll tax for employers for the rest of the year. The largest business lobbying group, the U.S. Chamber of Commerce, included the idea in a letter it sent to Congress on Monday, and Trump has said he’d like the payroll tax either cut or suspended through the end of the year.

Leaders from sectors including airlines, hotels and casinos have been warning officials behind closed doors about concerns they’ll have to start laying off thousands of employees if the shutdown throughout America continues — including in politically sensitive states such as Ohio and Pennsylvania.

Half of the $800 billion in aid, under the latest White House estimates, would come from aid to workers and small businesses, tax deferrals and other moves already underway including deferring student-loan interest, buying oil and additional provisions of a relief bill already moving through Congress. The other half would come from a payroll-tax holiday through the end of the year — a move that would likely cost much more than $400 billion.

The administration is also exploring with the Federal Reserve how it can deploy the central bank’s emergency powers to lend to nonfinancial firms, though the central bank’s authorities were curtailed in the political backlash to the 2008 bailout of insurer American International Group.

The White House and economic officials are desperate to stave off a potential recession, since the economy has been one of the hallmark achievements of Trump’s first term and a key message for his reelection.

The former head of the White House Council of Economic Advisers, Kevin Hassett, said in an interview that the March jobs report out early next month might show losses of more than 1 million. “It really could be the worst jobs report we’ve ever seen in our history.” He said he did calculations over the weekend with conservative economist Larry Lindsey showing that the economy could contract by a severe 5 percent in the second quarter, though a swift containment of the virus could lead to a bounce-back in the third quarter.

“There is a dispute between the House and the Senate and the president about what to do,” Hassett said. “But imagine if it’s Friday when the jobs report comes out and it’s worse than we’ve ever seen. Then you’d see Congress act with urgency. The question is if they act with urgency ahead of the terrible numbers.”

Hassett, who remains in contact with the White House, says he is not in favor of direct industry bailouts but is arguing for the payroll tax suspension at least for a quarter of the year. “You can do it quickly on the employer side and we need employers not to fire people,” he said. “And on the employee side, it could have a macro-economic effect. You could even offset the 5 percent economic decline with the payroll tax cut. And we don’t have to have a recession if the virus fades and the third quarter booms.”

In addition to hearing from lobbyists and industry leaders directly, the White House is hearing from informal economic advisers such as Moore with their proposals.

Moore said he sent a plan to Kudlow for items to include in the next stimulus proposal that’s expected to emerge from the White House and Treasury Department in the coming days. Moore authored a proposal along with publishing magnate Steve Forbes and supply-side economics guru Art Laffer, a close Kudlow ally.

The group suggested financing the payroll tax cut by issuing 50- and 100-year Treasury bonds at 1 percent interest. They also suggested avoiding any direct cash bailouts to hard-hit industries like airlines or hotels.

“Every business is materially affected by this. Who is going to make these decisions about who gets aid and who doesn’t?” Moore said. The final piece of the plan would be for the Fed to open lending facilities for low-interest loans to any business that has collateral to avoid cash crunches that could force companies into fire sales of assets to raise cash to replace revenue lost to the crisis.

“We aren’t sure which of these Larry and [Treasury Secretary Steven] Mnuchin like, but Trump listens to us,” Moore said. “He seeks out our advice. We are urging him not to do things that are bad policy that he would not do otherwise.”

A former senior Treasury official still in contact with senior members of the department said Mnuchin is aware that many Republicans will have problems with direct bailout payments to individual industries, but that he may propose them anyway for airlines, cruise lines and the entertainment industry more broadly.

“The problem is the Wall Street [Troubled Asset Relief Program] vote still haunts those halls,” this former official said of the 2008 vote to bail out big banks. “It’s going to be like pulling teeth to get Republicans to vote for that. I think the White House is also open to refundable tax credits. And then you have the challenge of, ‘How do you help people exempt from the payroll tax?’’’

The person added that a plan could not wait until the end of the week. “It has to happen right away. Like, right now. Otherwise businesses are just going to start closing and laying people off right away.”

Last Updated 09/23/2020

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