Senate Budget Chair Knocks Down Possible GOP Debt-Ceiling Proposal

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Senate Budget Committee Chairman Patty Murray (D-WA) and House Budget Committee Chairman Paul Ryan (R-WI) hold a press conference to announce a bipartisan budget deal, the Bipartisan Budget Act of 2013, at the U.S. Capitol on December 10, 2013 in Washington, DC.
National Journal
Sarah Mimms
Feb. 4, 2014, 8:15 a.m.

House Re­pub­lic­ans met Tues­day morn­ing to dis­cuss their op­tions on the debt-ceil­ing in­crease, and already Sen­ate Demo­crats are in­dic­at­ing their op­pos­i­tion to at least one of the GOP’s top pref­er­ences.

Sev­er­al Re­pub­lic­an mem­bers are push­ing a plan that would re­peal the “risk-cor­ridor” pro­vi­sions in­cluded in the Af­ford­able Care Act along­side an in­crease in the debt ceil­ing.

As our own Billy House re­por­ted, lead­er­ship is con­sid­er­ing a pro­ced­ur­al move whereby the House will com­bine the in­sur­ance-bail­out re­peal — or some oth­er op­tion such as ap­prov­ing the Key­stone XL pipeline — with a debt-lim­it in­crease un­der one rule. That would al­low mem­bers to vote in fa­vor of a clean debt-ceil­ing in­crease without hav­ing to sup­port the GOP riders. But they would have to vote on them. And as of Tues­day morn­ing, Re­pub­lic­ans were hope­ful that they could garner Demo­crat­ic sup­port for those meas­ures.

But not long after House Re­pub­lic­ans met to dis­cuss their op­tions, the Con­gres­sion­al Budget Of­fice re­leased a re­port not­ing that the in­sur­ance bail­outs will ac­tu­ally re­duce the de­fi­cit by $8 bil­lion between fisc­al 2015 and fisc­al 2017.

That’s giv­ing Sen­ate Demo­crats, who have long ad­voc­ated for a clean debt-ceil­ing in­crease some hope that they’ll get their way.

“Today’s CBO re­port shows that Re­pub­lic­ans’ most re­cent debt-lim­it ransom idea would not only cause premi­ums to skyrock­et for Amer­ic­an fam­il­ies, it would also add bil­lions to the de­fi­cit,” Sen­ate Budget Chair­wo­man Patty Mur­ray said in a state­ment. “Re­pub­lic­ans are clearly flail­ing over the debt lim­it, but we are not go­ing to let them hi­jack the eco­nomy over bogus de­mands that are tar­geted more at set­tling in­tern­al polit­ic­al dis­putes than ac­tu­ally mov­ing our eco­nomy for­ward re­spons­ibly.” Mur­ray has taken the lead for Demo­crats in the debt-ceil­ing fight.

A House lead­er­ship aide said the CBO re­port won’t im­pact the debt-ceil­ing de­bate, be­cause “our mem­bers, un­like CBO, be­lieve [the risk cor­ridors] will be ab­used.”

At is­sue is a series of pro­grams dubbed by Re­pub­lic­ans the Obama­care “in­sur­ance bail­outs.” Spe­cific­ally, House Re­pub­lic­ans are tar­get­ing a pro­vi­sion in the Af­ford­able Care Act, called risk cor­ridors, through which the fed­er­al gov­ern­ment will par­tially re­im­burse in­sur­ance com­pan­ies for in­di­vidu­als whose policies end up cost­ing the in­surers more than they paid in premi­ums by more than 3 per­cent. Typ­ic­ally, in­sur­ance com­pan­ies rely on past data to en­sure that they are char­ging ap­pro­pri­ate premi­ums for their cus­tom­ers, but be­cause the health care law is so new, the fed­er­al gov­ern­ment is provid­ing them a little wiggle room.

However, in­sur­ance com­pan­ies whose premi­ums sig­ni­fic­antly ex­ceed the costs in­curred by their sub­scribers will have to pay some of that money back to the fed­er­al gov­ern­ment. That’s where the CBO es­tim­ate kicks in. Based on res­ults with­in Medi­care Part D, which also in­cludes a risk cor­ridor pro­gram, the CBO be­lieves that in­sur­ance com­pan­ies will pay the fed­er­al gov­ern­ment more than the gov­ern­ment pays them, res­ult­ing in $8 bil­lion in net sav­ings.

But House Re­pub­lic­ans aren’t buy­ing it. Es­sen­tially, they ar­gue that in­sur­ance com­pan­ies will in­ten­tion­ally charge their cus­tom­ers the low­est pos­sible premi­ums in the hopes that most cus­tom­ers won’t cost them much money. For those few that do, the lo­gic goes, they’ll get some of that money back from the fed­er­al gov­ern­ment.

Asked wheth­er in­sur­ance com­pan­ies were likely to en­gage in that type of activ­ity, the lead­er­ship aide said mock­ingly: “Heav­en for­fend!”

The risk cor­ridor pro­gram is tem­por­ary and will last for just three years un­der the Af­ford­able Care Act, be­gin­ning this year.

The risk cor­ridors have been a com­mon tar­get for Re­pub­lic­ans since the health care law passed in 2010. And it was one of the favored pro­grams tar­geted by mem­bers of the House ma­jor­ity at their re­treat last week dur­ing their dis­cus­sion of po­ten­tial kick-backs in ex­change for in­creas­ing the debt ceil­ing. The party has dubbed the pro­gram an “in­sur­ance bail­out,” a po­ten­tial pop­u­lar ar­gu­ment in their case against the Af­ford­able Care Act dur­ing the 2014 midterm elec­tions.

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