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Health Law Spending: What's Mandatory and What's Not?

By John Reichard, CQ HealthBeat Editor

December 22, 2010 -- With Republicans arriving in force on Capitol Hill next month, sharp scrutiny of spending under the health law will surely follow—with a GOP eye toward blocking whatever can be blocked.

So what spending is mandatory and what is discretionary under the law? To the extent spending is discretionary, Republicans will have much more power to block it, given their large majority in the House and their big gains in the Senate.

At first glance, the health law (PL 111-148, PL 111-152) appears to require huge sums of discretionary spending if the overhaul is to be implemented in full. At second glance, not so much—but still enough to be a big headache for the Obama administration.

Earlier this year, the Congressional Budget Office (CBO) estimated potential discretionary spending under the health law would be a minimum of $115 billion over 10 years. "Discretionary" means that the money will have to be approved by Congress as part of the annual appropriations process, while "mandatory" means the spending is automatic.

Then-House Minority Leader John A. Boehner, R-Ohio, said the $115 billion estimate for discretionary spending costs "provides ample cause for alarm" and would nearly wipe out "the purported deficit reduction in the law."

But much of that $115 billion is for existing programs and reflects current spending levels. Among those programs are the Indian Health Service, the National Health Service Corps and community health centers.

CBO estimated that spending for existing programs, including those three, would account for at least $86 billion of the $115 billion in discretionary funding. Presumably Republicans would be less likely to go after that money.

But that still leaves a pretty big chunk of change. Prominent among the remaining discretionary spending needs under the law is money for the Department of Health and Human Services and the Internal Revenue Service to implement the measure.

If the agencies don't get it, implementation could be delayed.

CBO noted earlier this year that "the administrative and other costs for federal agencies to implement the act's provisions will be funded through the appropriations process; sufficient discretionary funding will be essential to implement this legislation in the time frame called for."

CBO said the IRS will need $5 billion to $10 billion over 10 years to implement "the eligibility determination, documentation and verification processes for premium and cost-sharing credits."

HHS will need at least that much to make changes under the law to Medicare, Medicaid, the Children's Health Insurance Program and the private insurance market, CBO added.

A former GOP congressional aide noted that Democrats will be trying to get discretionary funding for those agencies in March after a stopgap spending measure has just run out and Congress is beginning to turn its attention to debating a budget resolution.

Discussions of another bill to continue funding of the government, including implementation money for HHS and IRS, "will be closer and closer to the budget debate, which is going to be so framed by the debt limit," the former aide commented. "The electorate is so engaged about the size of the debt right now. I think it's one of many things that will be a difficult negotiation" for Democrats, the aide said.

White House officials wouldn't comment specifically on the difficulty of getting implementation money for HHS and the IRS. "We look forward to working with Congress to get the funding necessary to implement the programs and initiatives critical to the American people," said Kenneth Baer, communications director at the White House Office of Management and Budget.

The Congressional Research Service (CRS) has issued reports detailing both the discretionary and mandatory spending provisions of the health law.

A number of discretionary items seek "to address concerns about the current size, specialty mix, and geographic distribution of the health care workforce," the Sept. 2 CRS report on discretionary funding noted.

The administration says more doctors will be needed to meet the health care needs of the newly insured. But Republicans may block the expansion of treatment capacity if they block the discretionary funding required.

The report lists other discretionary items such as improvements in measuring and reporting quality of care; disseminating innovative strategies for improving health care; improving the coordination of care for people with chronic illnesses; and combining primary care and mental health care services so they are located in the same treatment centers. They also include programs to prevent elder abuse; expand trauma services; better coordinate emergency services; and test alternatives to the current medical malpractice litigation system.

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