Tag: congress

Can Congress Get to “Yes” on Replacing the Affordable Care Act?

Senate Majority Leader Mitch McConnell recently gave a candid assessment of the chances of getting an Affordable Care Act (ACA) replacement bill through the Senate, saying “I don’t know how we get to 50 (votes) at the moment.” That succinctly captures the political dilemma. There has long been broad bipartisan agreement that the nation’s health care system was in need of repair. Something had to be done to contain rapidly rising health care costs, increase the quality of medical outcomes, and to expand coverage. But there was little or no bipartisan agreement on how to do it. Indeed, no major health care initiative since Medicare was enacted in 1965 has enjoyed true bipartisan support.

The most recent effort to overhaul the health care system was no exception. The ACA passed in March 2010 with no Republican votes. That wholly partisan effort, in turn, set off a determined, seven-year-long effort by Republicans to repeal the law. The most recent step on this tortuous journey occurred on May 4, 2017 when the House passed the American Health Care Act (AHCA) by a vote of 217-213. In this case, no Democrats voted for the bill. Twenty Republicans also voted no and the bill passed with just one GOP vote more than the 216 needed to pass.

As we explain below, the ACA and AHCA are “apples and oranges” in their approaches to reforming the healthcare system. Because each proceeds from different philosophical premises, this post briefly examines their key components and primary goals without opining on the merits. Our primary focus is on the political and policy challenges faced by Senate Republicans in getting a bill passed (which remains highly uncertain) and whether such a bill will differ greatly from the House product. In our view, to achieve the GOP’s publicly stated policy objectives, and faced with the constraints imposed by the budget reconciliation rules (explained below), Senate Republicans will be forced to address essentially the same questions as their colleagues in the House—and their solutions likely will differ from those of the House mostly in degree.

What the AHCA Does

In the AHCA, House Republicans singled out a few ACA provisions they had publicly campaigned against—most of which are contained in Title I of the law. These include the mandate that individuals purchase coverage; the narrow, 3:1 modified community-rating corridor that Republicans asserted made coverage prohibitively expensive for younger individuals; and the requirement that plans sold in the individual and small-group market include a comprehensive set of covered medical and related services known as “essential health benefits” (EHBs) The AHCA also would make major changes to Medicaid that go well beyond rolling back the program expansion authorized by the ACA.

The AHCA’s primary purpose is to reduce premium costs and reduce the federal government’s role in health care by giving more authority and flexibility to the states. The ACA’s primary goal, in contrast, was to expand insurance coverage in the individual markets—and it did that, although not as much as had been predicted. Another ACA goal was to make coverage more affordable, at least for low- and moderate-income individuals—and it did that too. But the ACA did little to lower medical costs, and from the available evidence had only a marginal effect on healthcare outcomes. Neither does the AHCA address those issues. It instead focuses mainly on reducing federal expenditures, shifting costs to the states, and constraining the growth of Medicaid. The recently issued report by the Congressional Budget Office and the staff of the Joint Committee on Taxation indicates that the AHCA would achieve significant success in this regard, estimating that the bill would reduce the cumulative federal deficit over the 2017-2026 period by $119 billion.

The GOP Challenge

With their slim 52-48 majority, Republican lawmakers don’t have the votes to repeal the ACA outright. That would require 60 votes to overcome a filibuster. Instead, they must rely on a special budget strategy called “reconciliation.” Created by the Congressional Budget Act of 1974, reconciliation allows certain bills that directly impact federal spending to be passed by a simple majority. For example, reconciliation rules would allow repeal of the ACA’s individual and employer mandates by a simple 51-vote majority because those mandates directly affect revenue; but reconciliation could not be used to repeal the employer reporting rules because those provisions do not directly affect spending. These restrictions severely limit which provisions of the ACA Republicans in the Senate (and by extension the House) can replace without Democratic support. We discuss those provisions below.

The individual mandate

The ACA included an “individual mandate” that requires most U.S. citizens to buy health insurance. The purpose was to ensure broad participation in the individual markets so that there would be enough healthy individuals in the risk pool to subsidize the cost of covering those who are less healthy. Most agree that the ACA penalty for not maintaining coverage was insufficient to induce enough healthy people into the pool. The result has been steep underwriting losses which have prompted major carriers to exit the public exchanges. The AHCA would eliminate the penalty retroactively, to the beginning of 2016. In its place, the bill would impose a “continuous coverage” requirement to induce people to buy coverage and stay covered rather than buying it only when they need it, which drives up costs in the exchanges. Health carriers could assess a 30 percent penalty on individuals who have a gap in coverage of more than 63 days in the prior 12 months. The Health Insurance Portability and Accountability Act (HIPAA) has provided a similar rule for employer-provided group coverage since 1996.

Community rating

Under community rating, premiums can vary by age, among other things. In the case of age rating, actuarial principles dictate that the premiums paid by the oldest subscribers should be about five times what younger subscribers pay. To mitigate the impact on older citizens, the ACA limited the rating range to 3:1. The AHCA allows a ratio of up to 5:1 which actuaries say more closely aligns premiums with the costs associated with age. AHCA proponents assert that the maximum 3:1 ratio dictated by the ACA unfairly penalizes younger, healthier individuals, discouraging them from participating in the individual markets and contributing to the underwriting losses in the ACA exchanges. They also assert that individuals 65 and older are eligible for Medicare and that the workers affected by the 5:1 ratio would be primarily those 54 to 65 years old—generally the highest earning years.

Premium tax credits

The AHCA scraps the ACA’s cost-sharing subsidies, and replaces its premium tax credits. Beginning in 2020, the AHCA would offer credits for U.S. citizens and qualified aliens enrolled in qualified health plans who are not eligible for other sources of coverage. The credit amounts are based on age and adjusted by a formula that takes income into account. Credits would be capped according to a maximum dollar amount and family size. In general, the AHCA subsidies are less generous than those provided by the ACA. According to the CBO report, repeal of the ACA’s tax credits saves some $665 billion while the cost of the AHCA’s tax credits is $375 billion—a net savings of $290 billion.

Medicaid

Medicaid is a health insurance program with shared federal/state authority and financing. Historically, coverage generally was limited to low-income families with children, the elderly, and people with disabilities. The ACA offers states generous federal funding designed to encourage expansion of their programs to cover all Americans under age 65 whose family income is effectively at or below 138 percent percent of federal poverty guidelines ($16,394 for an individual in 2016). Currently, 31 states plus the District of Columbia have expanded their programs.

The AHCA would change the current system of federal funding of Medicaid by placing per capita caps on federal payments to states. Under that approach, each state’s Medicaid spending, beginning in 2020, would be limited based on enrollee categories (i.e., children, disabled, etc.). States that exceed the limits would get less money the following year. Alternatively, states could opt to receive federal block grants (i.e., predetermined fixed amounts) to cover their Medicaid-eligible populations.

The Medicaid changes account for the single largest item of budgetary savings under the AHCA—some $843 billion over 10 years according to the CBO. The savings are important to achieving other GOP objectives such as tax reform, but many of the 16 GOP governors who expanded Medicaid have expressed concerns about the scope and timing of the changes and the impact on their citizens.

States’ ability to opt out

In an effort to persuade House conservatives to support the AHCA, Rep. Tom MacArthur (R-NJ) offered an amendment that would allow states to seek waivers of certain AHCA provisions. The idea was to devolve to those states flexibility to modify their coverage rules to best meet the needs of their constituencies. Under the amendment, states that are granted waivers may:

  • Adopt age-rated premium ratios higher than 5:1 for older individuals buying coverage in the individual and small group markets;

  • Define their own, less generous, “essential health benefits” (EHBs) for plans purchased in the individual and small-group markets instead of the 10 EHBs mandated by the ACA (and which the AHCA otherwise would leave in place); and/or

  • Bypass the 30 percent penalty for individuals who do not maintain continuous health coverage, and instead apply medical underwriting to the pricing of plans in such cases; but states seeking such waivers must have a high-risk pool or participate in the Federal “Invisible Risk Sharing Program” (explained below).

High-risk pools

High-risk pools are state programs that provide funding to cover the health care costs of individuals with catastrophic or pre-existing medical conditions and who are unable to purchase affordable coverage in the individual market. The AHCA embraces state high-risk pools as a way to contain the cost of medical premiums for healthy individuals. It does this by creating two risk pools: one for healthy individuals or those with continuous coverage, and the other for those with high-cost or pre-existing conditions. The idea is to lower premiums for healthy people while at the same time providing coverage for those with serious health conditions using a separate funding mechanism.

To fund coverage for high-risk individuals, the AHCA provides a total of $138 billion over 10 years through various mechanisms as follows:

  • A State Stability Fund in the amounts of $15 billion in 2018 and 2019, and $10 billion each year thereafter through 2026;

  • An additional $15 billion in 2020 that states could use for maternity coverage and newborn and prevention, treatment, or recovery support services for mental or substance use disorders;

  • An additional $8 billion for the period 2018-2023 to states with a “MacArthur waiver” (previously discussed); and

  • A Federal Invisible Risk Sharing Program to help with high-cost medical claims of certain individuals who buy coverage in the individual market.

The MacArthur waivers are not without controversy. The two biggest issues are the potentially large cost increases to older citizens and whether individuals with pre-existing health conditions will be adequately protected. Another question is how many states actually will seek waivers and assume the financial (and political) responsibility for protecting older and sicker workers if the federal dollars under the AHCA prove insufficient. The CBO makes an educated guess as to how many people might be affected by states getting waivers, but they are guesses nonetheless.

Ways to get to Yes

The CBO report estimates that from 2017 to 2026, the AHCA would reduce direct spending by $1.111 trillion and revenues by $0.992 trillion (resulting in a net deficit reduction of $119 billion—and that 23 million fewer people would have health coverage (CBO does not count as health coverage limited benefit plans, including so-called “mini-med” plans and fixed-dollar indemnity plans). These numbers are a direct consequence of the AHCA’s stated goals—to reduce the role of the federal government in regulating and financing health care, specifically in the individual market, Medicaid, and the uninsured.

Senate Republicans broadly share those goals, but they differ on how to achieve them, as did many of their House colleagues. To further mitigate the impact on individuals, the Senate could adjust the AHCA’s spending and revenue levels, as well as the timing of certain provisions—for example, they could push back the phase-out of the ACA’s Medicaid expansion provisions from 2020 to a later date. Similarly, the AHCA’s per-capita caps and block grant provisions could be adjusted to provide more money to the states. The trade-off would be higher spending levels than the House bill, but this could be offset by modifying the AHCA’s tax repeal provisions. For example, the ACA’s so-called “Cadillac” tax on high-cost employer plans, which the House bill delayed until 2026, could be allowed to go into effect earlier, thus generating more revenue. To the same effect, the Senate could push back repeal of the ACA’s Medicare payroll tax on high income individuals. Another step might be to provide additional subsidies for those aged 50 to 64 to mitigate any adverse effect of the increase in the premium age-rating ratio proposed by the House.

We are under no illusions that the policy differences among Senate Republicans can be reconciled—and if they can, that the House and Senate can reach agreement when they go to conference. All we know now is that the GOP is stuck with its seven-year public commitment to creating a better system with still no clear path forward. Democrats may be enjoying the Republicans’ predicament, but neither party is likely to be viewed favorably if the current system continues to falter and ultimately fails. If that happens, the price of our polarized political environment could be steep for both sides.

The sheer magnitude of the dollars at stake should compel policymakers to find a breakthrough. The Centers for Medicare and Medicaid Services reports that national spending on health care grew 5.8 percent to $3.2 trillion in 2015, accounting for 17.8 percent of GDP. Medicare spending alone was $646.2 billion, 20 percent of the total. Medicaid another $545.1 billion, or 17 percent. Thus, the most urgent practical question may not be whose theory of government is more correct, but whether the current rate of health care spending is sustainable. We can’t think of a better answer than economist Herbert Stein’s wry observation that, “if something cannot go on forever, it will stop.”

This post was written by Alden J. Bianchi andEdward A. Lenz of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Key Tax Changes in the American Health Care Act

The American Health Care Act (“AHCA”), passed by the House of Representatives on May 4, 2017, repeals many of the taxes added by the Affordable Care Act (“ACA”) and makes changes to other tax rules.  Some of the notable changes proposed to be made to the Internal Revenue Code are:

            1. The individual mandate to maintain health insurance and the employer mandate to offer health insurance remain in the Code, but the taxes are “zeroed out” effective retroactively to 2016.

            2. The following taxes, fees, credits and limitations are repealed as of the year shown below:

·         The net investment income tax (NIIT) (2017)

·         The 0.9% additional Medicare tax (2023)

·         The small employer health insurance credit (2020)

·         The $2500 limitation on contributions to a health flexible spending account (FSA) (2017)

·         The annual fee on branded prescription drug sales (2017)

·         The medical device excise tax (2017)

·         The annual fee on health insurance providers (2017)

·         The elimination of a deduction for expenses allocable to the Medicare Part D subsidy (2017)

·         The 10% tanning salon tax (June 30, 2017)

            3.         The “Cadillac” tax on high cost health plans is delayed until 2026.

            4.         Individuals may be reimbursed for over-the-counter medications under a health savings account (HSA), health FSA or a health reimbursement arrangement (HRA) (2017).

            5.         The penalty tax on withdrawals from an HSA not used for a qualified medical expense is reduced from 20% to 10% (2017).

6.         The bill would replace the current ACA premium tax credit with a new refundable, advanceable tax credit effective January 1, 2020.  The credit could be applied toward the cost of any eligible health insurance coverage, whether purchased on or off the Exchange.  The credit is age-based as follows:

Age

Annual Credit

Under 30

$2,000

30 – 40

$2,500

40 – 50

$3,000

50 – 60

$3,500

60 and over

$4,000

The maximum credit for a family is $14,000. The credit is adjusted each year by CPI + 1%.

The credit is phased out depending on the individual’s modified adjusted gross income (MAGI) for the year.  It begins phasing out for an individual with income of $75,000 ($150,000 for joint filers) by $100 for every $1,000 in income above those thresholds.  The MAGI dollar limitations are also indexed for inflation beginning in 2021.              To be eligible to claim the credit, the individual must be covered by “eligible health insurance,” not be eligible for “other specified coverage” (including employer coverage or a government sponsored health program) and be a U.S. citizen or a qualified alien.

7.         The bill would make the following changes to health savings accounts, effective in 2018:

§  The maximum contribution to an HSA would be increased to the out-of-pocket maximum (in 2017, $6,550 for self-only and $13,100 for family coverage).  Under current law, HSA contributions are limited to $3,400 for self-only and $6,750 for family coverage.
§  Both spouses could make a “catch-up” contribution to the same HSA.  Under current law, each spouse must have his or her own HSA.
§  If an HSA is established within 60 days after coverage under a high deductible plan begins, the individual could be reimbursed for medical expenses incurred within that 60-day period.  Under current law, an individual cannot be reimbursed for any expense incurred before the HSA is established.

The bill now moves to the Senate where significant changes are expected.

This post was written by Cynthia A. Moore of  Dickinson Wright PLLC.

Congress Poised to Extend EB-5 Regional Center Program Until September 30 Without Changes

EB-5 Regional Center Congress is poised to extend the EB-5 regional center program through September 30, 2017, without any changes. Here is how we got to this point:

On April 28, 2017, the U.S. Congress passed a one-week stopgap funding bill to prevent a government shutdown and the expiration of the EB-5 regional center program. The continuing resolution keeps the U.S. federal government open through May 5, 2017, and U.S. Citizenship and Immigration Services continues to accept Form I-526 petitions based on investments through EB-5 regional centers through that date.

Behind the scenes, members of Congress and their staffs are negotiating an EB-5 reform package to include in the larger funding bill. The key issues concern: (1) raising the minimum investment amount from the current $500,000; (2) revising the definition of what constitutes a “targeted employment area” to allow certain investments at the minimum investment level; (3) establishing visa “set-asides” for investments in certain rural and truly distressed urban areas; and (4) establishing effective dates for the changes.

Congress is close on all these issues. Senator John Cornyn (R-Texas) is circulating one discussion draft; Senators Chuck Grassley (R-Iowa) and Patrick Leahy (D-Vermont) have circulated a similar discussion draft. Neither draft has been officially introduced; thus, they are not public.

It appears unlikely that Congress will be able to finalize an EB-5 reform package in time to include in the larger funding bill. On Sunday night, April 30, congressional leaders announced that they have finalized discussions on the key big-ticket items in the government funding bill, including more money for defense spending and border security. The funding bill is technically called an omnibus appropriations bill. The bill, H.R. 244, is available here. Section 542 of the bill includes a clean extension of the EB-5 program until September 30.

The House of Representatives is expected to vote on H.R. 244 on Wednesday. The bill will then proceed to the Senate with time to meet the deadline for approval by midnight Friday.

Given that the omnibus appropriations bill has already been introduced, it is hard to see how an EB-5 reform package could be included as an amendment to H.R. 244. It is more likely that Congress will extend the EB-5 regional center program without changes until September 30, as the bill already provides. During that time congressional negotiators will try to agree on final changes to the EB-5 program. Stay tuned.

© Copyright 2013 – 2017 Miller Mayer LLP. All Rights Reserved.

Congressional Budget Office Releases Report on American Health Care Act

Trumpcare American Health Care ActThe Congressional Budget Office (CBO) released its cost estimate of the American Health Care Act (AHCA) as reported by the Committees on Ways and Means and Energy and Commerce. CBO estimates that AHCA would reduce federal deficits by $337 billion over ten years. The total consists of $323 billion in on-budget savings and $13 billion in off-budget savings. The outlays would be reduced by $1.2 trillion over the same period, and revenues would be reduced by $883 billion.

CBO and the Joint Committee on Taxation estimate that 14 million more people would be uninsured under the AHCA in 2018. CBO further projects that “following additional changes to subsidies for insurance purchased in the nongroup market and to the Medicaid program, the increase in the number of uninsured people relative to the number under current law would rise to 21 million in 2020 and then to 24 million in 2026.” By 2026, CBO estimates 52 million people would be uninsured, as compared with 28 million who would lack insurance that year under current law.

CBO and JCT estimate that average health insurance premiums in the individual market would be 15 percent to 20 percent higher than under the ACA. This is because the individual mandate penalties would be eliminated, leading to fewer healthy people signing up for insurance.

JCT and CBO estimate that the AHCA would result in private sector mandates totaling $156 million in 2017, adjusted annually for inflation. Finally, CBO is uncertain about part of its estimates as it cannot determine “the ways in which federal agencies, states, insurers, employers, individuals, doctors, hospitals, and other affected parties would respond to the changes made by the legislation…”

Next Steps

In accordance with the Congressional Budget and Impoundment Control Act of 1974, the House Budget Committee is scheduled to meet this week to report the reconciliation bill. The Committee’s role is simply to package the two bills from the Energy and Commerce and Ways and Means Committees.

Following the Budget Committee’s action, the House Rules Committee will meet to develop a rule, which would govern floor debate for the American Health Care Act. It is possible the Rules Committee may fold bills reported by the Education and the Workforce Committee into the reconciliation package. The House Majority Leadership plans to take the AHCA to the floor next week.

In the Senate, Majority Leader Mitch McConnell [R-KY] plans to skip the committee process and take up the House-passed bill. As this legislation works its way through the Congress, we will provide further client alerts as necessary.

ARTICLE BY Julius W. Hobson, Jr. of Polsinelli PC
© Polsinelli PC, Polsinelli LLP in California

Congress Boots “Blacklisting” Regulation and Sends it to President’s Desk

Congress Capitol blacklistingOn March 6, 2017, on a narrow straight party line vote of 49–48, the U.S. Senate passed a Congressional Review Act (CRA) Joint Resolution of Disapproval, which moots Executive Order (EO) 13673, “Fair Pay and Safe Workplaces“—also referred to as government contractor “blacklisting”— and which revoked its implementing regulations and Labor Department guidance. The U.S. House of Representatives passed the joint resolution, H.J. Res. 37 on February 2, 2017. The next step is to send the Joint Resolution of Disapproval to the president for signature.

If signed by the president, the CRA Joint Resolution of Disapproval prohibits the future re-issuance of a federal regulation in the same or substantially similar form without authorization of Congress.

President Obama signed EO 13673 on July 31, 2014, and implementing regulations were issued in final on August 24, 2016. The EO and its implementing regulations would require federal contractors and subcontractors to notify federal contracting officers of violations and “administrative merits determinations” of 14 federal labor and employment laws, and their state equivalents, including wage and hour, discrimination, union organizing, and collective bargaining, and workplace safety and health laws.

Key Takeaways

The resolution of disapproval does not repeal the executive order; it only disapproves of the Federal Acquisition Regulation (published at 81 Fed. Reg. 58562) to implement the EO, which the U.S. Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) finalized on August 25, 2016. Nevertheless, the joint resolution has the effect of essentially repealing the EO or rendering it moot. President Trump is expected to revoke the EO in a separate action

In addition, the resolution will prohibit the paycheck transparency provision of the EO from being implemented. (A district court temporarily enjoined the other provision of the EO; the joint resolution also renders this injunction moot.)

This resolution of disapproval should relieve government contractors of having to implement the provisions requiring them to disclose labor law violations and revamp their payroll systems to meet the requirements of the EO’s paycheck transparency provisions. Not only would we expect the president to sign the resolution, but we also anticipate, at some point, that Executive Order 13673 will be rescinded and that the Labor Department will withdraw its guidance.

ARTICLE BY Harold P. Coxson & Alfred B. Robinson, Jr. of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

© 2017, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

Congress Begins to Evaluate Infrastructure Needs, Senate EPW to Hold Hearing this Week

Congress Capitol InfrastructureThe Trump Administration has provided few specifics on its trillion-dollar infrastructure proposal, and it has become increasingly clear that Congress will not act on a broad infrastructure bill in the first 100 days of the new administration. Recently, House Speaker Paul Ryan (R-WI) said the funding levels of any infrastructure proposal are unknown, and won’t be determined until Congress considers infrastructure funding in the greater context of the upcoming budget process this spring. To date, there is no consensus, even among Republicans, on how such infrastructure spending will be paid for.

However, Congress has begun to consider what issues and investments they will prioritize in an infrastructure bill by holding hearings in both the House and Senate. As we noted last week, the Senate Environment and Public Works (EPW) Committee will hold a hearing on “Oversight: Modernizing Our Nation’s Infrastructure” on Wednesday, February 8. The Senate EPW hearing follows last week’s kick-off hearing by the House Transportation and Infrastructure Committee on “Building a 21st Century Infrastructure for America.”

Recently, Senate Democrats have released their own $1 trillion infrastructure proposal. Their plan, “A Blueprint to Rebuild America’s Infrastructure,” would invest $1 trillion in infrastructure projects over ten years and create 15 million new jobs. The plan calls for enormous increases in Federal grant spending for a wide range of transportation and infrastructure projects, including schools, VA hospitals, and broadband service. For transportation, the plan pledges $210 billion on roads and bridges; $110 billion on water and sewer systems; $180 billion on rail and bus systems; $200 billion for a Vital Infrastructure Program (VIP) for mega-projects; $65 billion for ports, airports, and waterways; and $10 billion for new innovative financing tools such as an infrastructure bank.

Sen. Deb Fischer (R-NE) also recently introduced an infrastructure funding proposal, which would divert a total of $21.4 billion in revenues from Customs and Border Patrol fees to the Highway Trust Fund over FYs 2020-2024. Members of the House, including Rep. John Delaney (D-MD), are also advocating for their own infrastructure proposals.

This Week’s Hearings:

  • On Tuesday, February 7, the House Oversight and Government Reform Committee has scheduled a hearing titled “Accomplishing Postal Reform in the 115th Congress – H.R. 756, The Postal Service Reform Act of 2017.” The witnesses will be announced.

  • On Wednesday, February 8, the Senate Commerce, Science, and Transportation Committee has scheduled a hearing titled “A Look Ahead: Inspector General Recommendations for Improving Federal Agencies.” The witnesses will be:

    • The Honorable Peggy E. Gustafson, Inspector General, U.S. Department of Commerce;

    • The Honorable John Roth, Inspector General, U.S. Department of Homeland Security;

    • The Honorable Calvin L. Scovel III, Inspector General, U.S. Department of Transportation; and

    • Allison C. Lerner, Inspector General, National Science Foundation.

  • On Wednesday, February 8, the Senate Environment and Public Works Committee has scheduled a hearing titled “Oversight: Modernizing our Nation’s Infrastructure.” The witnesses will be:

    • William “Bill” T. Panos, Director, Wyoming Department of Transportation

    • Michael McNulty, General Manager, Putnam Public Service District, West Virginia

    • Cindy R. Bobbitt, Commissioner, Grant County, Oklahoma

    • Anthony P. Pratt, Administrator, President

    • Delaware Department of Natural Resources & Environmental Control, American Shore & Beach Preservation Association

    • Shailen P. Bhatt, Executive Director, Colorado Department of Transportation

ARTICLE BY Timothy W. Drake & Patricia Doersch of Squire Patton Boggs (US) LLP

© Copyright 2017 Squire Patton Boggs (US) LLP

Congress Set to Embark on Ambitious Tax Reform Package in First 100 Days of Trump Administration Fundamental Tax Reform

Congress, Capitol, Congressional Tax ReformThe 2016 elections have laid the foundation for the most significant Congressional tax reform effort since the enactment of the Tax Reform Act of 1986. In the past several years, the leadership of the Congressional tax-writing committees (i.e., the House Ways and Means Committee and the Senate Finance Committee) have produced the blueprint for tax reform. More recently, President-elect Trump offered his own tax reform package and pledged to work with the Congress to enact tax reform this year. Against this backdrop, we anticipate that the House Ways and Means Committee will move a comprehensive tax reform bill during the first 100 days of the Trump administration. The Senate Finance Committee will likely move at a slower pace, but its leadership is equally committed to tax reform this year.

While the final version of the tax reform legislation is still under development, it may include the following elements:

  1. a compressed rate structure for individuals with a top rate of 33 percent on ordinary income, a 50 percent deduction for investment income, and a corresponding reduction in the availability of various personal credits, deductions, and exclusions

  2. a top corporate rate of 20 percent (although Trump has called for a rate as low as 15 percent) together with a similar reduction of various business tax preferences and credits

  3. a general elimination of depreciation in favor of immediate expensing for depreciable business assets

  4. a repeal of the estate tax and replacement with, for example, a capital gains tax on death, and

  5. a transition to a territorial international tax system under which foreign profits of American companies would generally not be subject to U.S. tax, together with a deemed repatriation provision for previously accumulated earnings

As a result, this legislation will likely impact virtually every taxpayer in the United States.

ARTICLE BY Jesse (Jay) Adams, William (Bill) Backstrom, Andre Burvant, John F. Fletcher, Matthew A. Mantle & Justin Stone of Jones Walker LLP

© 2017 Jones Walker LLP

Congress Strengthens Whistleblower Protections for Employees of Government Contractors and Grantees

On December 5, 2016, Congress enacted S. 795, which permanently extends legal protections to employees of federal contractors, subcontractors, grantees, and others employed by entities that receive federal funds who report waste, fraud, or abuse involving federal funds. It would also extend these protections to personal services contractors working on both defense and civilian grant programs.

NDAA Whistleblower Protection

Fraud Whistleblower Protections​The National Defense Authorization Act for Fiscal Year 2013 (NDAA) established a four-year pilot program that prohibits employees of a “contractor, subcontractor, or grantee” from being retaliated against for blowing the whistle on:

  • gross mismanagement of a Federal contract or grant;

  • a gross waste of Federal funds;

  • an abuse of authority  relating to a Federal contract or grant; or

  • a substantial and specific danger to public health or safety, or a violation of law, rule, or regulation related to a Federal contract.

To be protected, the disclosure must be made to a Member of Congress or Congressional committee, an Inspector General, the GAO, a federal employee responsible for contract or grant oversight or management at the relevant agency, an authorized official of DOJ or other law enforcement agency, a court or grand jury or a management official or other employee of the contractor or subcontractor who has the responsibility to investigate, discover, or address misconduct.

The burden of proof and causation standard in NDAA whistleblower cases are very favorable to whistleblowers. The complainant prevails merely by demonstrating that the protected disclosure was a contributing factor in the personnel action, which can be met by showing knowledge and temporal proximity. Remedies include reinstatement, back pay, uncapped compensatory damages (emotional distress damages) and attorney fees and costs.

Unlike the four-year program for civilian contracts, the rights of whistleblowers working on Federal defense contracts are not time-limited.  S. 795 makes this critical whistleblower protection for employees working on civilian contracts permanent.

Purpose of NDAA Whistleblower Protection Law

The December 5, 2016 floor statements of Rep. Chaffetz and Rep. Cummings underscore how courageous whistleblowers play a critical role in combatting waste, fraud and abuse and why they must be protected against retaliation:

Mr. CHAFFETZ:  Mr. Speaker, I rise today in support of this bill, S. 795, a bill to enhance whistleblower protection for contractor and grantee employees. It is a bill with good bipartisan support in both Chambers of Congress. I really do applaud and thank, in particular, the gentleman from Maryland (Mr. CUMMINGS), the ranking member on our committee, who has helped champion this and point this out and lead our efforts in the House on this. In the House, the Committee on Oversight and Government Reform considered an identical bill, the Whistleblower Protections for Contractors Act, introduced by Ranking Member CUMMINGS and myself, and the committee reported this legislation by unanimous consent. In the Senate, it has been Senators MCCASKILL and RON JOHNSON who have worked arm in arm on this and are also very supportive of it. Today we bring up the Senate version of this bill to expedite its approval to get this bill to the President’s desk.

As you know, Mr. Speaker, whistleblowers are invaluable to the oversight work of Congress. We rely on people who are on the front lines seeing things as they truly are to provide information and blow the whistle when they see something going awry. They are one of our best sources of information about waste, fraud, and abuse within the Federal Government.

As an institution, we should try to do everything we can to encourage them to come and speak with us, and when they do, to make sure that they have the proper and adequate protections. That is exactly what this bill does, by recognizing that not all whistleblowers are Federal employees. We have robust Federal recognition and whistleblower protection for Federal employees, and we believe that contractors and others should have that as well.

It makes permanent a successful pilot program that extended whistleblower protections to civilian contractor and grantee employees. It also ensures whistleblower protections are extended to subgrantees and personal services contractors for both defense and civilian contractors. It is important because the Federal Government spends half a trillion dollars a year on grants and contracts. Think about that; half a trillion dollars is going out the door. There is always somebody doing something stupid somewhere; so to have this protection for a whistleblower as a contractor, for instance, just seems wise and prudent.

In overseeing how these funds are spent, the best source for rooting out waste is from grantees, subgrantees, contractors, and subcontractors. One loophole this bill closes is that personal services contractors were not protected in the past. These contractors can be just as valuable in identifying the waste and fraud we are committed to preventing in the first place. It only makes sense to offer those personal services contractors the same protections we give other contractors.

With this bill, we are sending a strong message to both whistleblowers and their employers. We are serious about stopping waste, fraud, and abuse, and we are serious about protecting those who bring that information forward. Every dollar of wasted funds comes from the pocket of the same hardworking men and women who elected us to Congress. It is their money. It is not our money. It is not the Federal Government’s money. It is the taxpayers’ money.

As we work to protect these taxpayer dollars, we also have a duty and responsibility to protect these whistleblowers. They are the best allies we have. S. 795 accomplishes that goal. An identical bill was passed out of our committee. I would appreciate the support of our colleagues to further this. Again, I thank Mr. CUMMINGS for his good work and passion on this. Mr. Speaker, I reserve the balance of my time.

Mr. CUMMINGS. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise in strong support of S. 795. I introduced the House companion of this legislation, the Whistleblower Protections for Contractors Act. We are taking up the Senate measure today to make sure this bill can be signed by the President before the end of this Congress.

I want to thank Senator MCCASKILL for all of her hard work and Senator JOHNSON for all that he did to make this bill come to this point.

I would also like to give special thanks to Chairman CHAFFETZ for being an original cosponsor and helping bring this bill to the floor. Our committee has always stood hand in hand with regard to protecting whistleblowers, and we have made it abundantly clear that we will do everything in our power to protect them from any type of retaliation or any type of harm.

Whistleblowers are the front line of defense against waste, fraud, and abuse. Employees who work on Federal contracts and grants see firsthand when taxpayer money is being wasted. They risk their careers to challenge abuses of power and mismanagement of government resources. They must be protected against retaliation when they blow the whistle on wrongdoing.

Just the other day, we had a witness come before our committee, and it was clear that she was very, very concerned about retaliation to the point of almost being shaken. You could actually see it. When we see these folks, we realize and we are reminded of the fact that they bring a very important resource to us as the Committee on Oversight and Government Reform, and that is they bring us information, information that allows us to be able to address problems that we wouldn’t even know about if it were not for them.

I thank Chairman CHAFFETZ and our entire committee for taking the attitude of protecting whistleblowers to the greatest extent we possibly can.

This bill would ensure that more employees are protected by giving subgrantees and personal services contractors the same whistleblower protections currently given to contractors, grant recipients, and subcontractors. This bill also would make protections for civilian contractors and grantees permanent. These are protections that contractors and grantees of the Department of Defense already enjoy.

I urge every Member of Congress to stand up for whistleblowers, to stand up for good government, and to pass this legislation. Mr. Speaker, I urge all Members to vote in favor of this very important and meaningful legislation.

ARTICLE BY Jason Zuckerman of Zuckerman Law
© 2016 Zuckerman Law

House Energy and Commerce Committee Holds Hearing on Security of Internet of Things

Internet of ThingsThe growing scale of cybersecurity concerns is prompting action from government leadership on the federal level. Before the Thanksgiving recess, the House’s Committee on Energy and Commerce got in on the act when two of its subcommittees–the Communications and Technology Subcommittee, chaired by Rep. Greg Walden (R-OR), and the Commerce, Manufacturing, and Trade Subcommittee, chaired by Rep. Michael C. Burgess, M.D. (R-TX)–held a joint hearing to investigate and consider the role of Internet-enabled devices (collectively referred to as the “Internet of Things,” or “IoT”) in high-profile online attacks. 

What the experts are saying.

The hearing was motivated by the revelation that cybersecurity is no longer just about protecting  laptops or securing digital data. IoT insecurity puts human safety at risk, as everything from home appliances to automobiles and medical technology are becoming connected to the Internet. Representatives from both committees pressed expert witnesses Mr. Dale Drew of Level 3 Communications, Dr. Kevin Fu of Virta Labs and the University of Michigan, and Mr. Bruce Schneier of the Harvard Kennedy School of Government for examples of legislation that could target the cybersecurity concerns related to the Internet of Things.

These experts shared conflicting opinions about whether it is in fact possible for the government to establish one set of security standards that covers all Internet-connected devices, as these devices do many different things and are powered by many different types of technology. Mr. Schneier reminded the subcommittees that “[your smartphone] is not a phone; it’s a computer that makes phone calls.” The same applies to a long list of devices including WiFi-connected baby monitors, thermostats, refrigerators, DVR players, GPS systems, children’s toys, and of course, electronic voting booths. In his testimony, Mr. Drew explained that “bad actors are increasingly attracted to IoT devices since they can use those devices without being detected for long periods of time, they know most devices will not be monitored or updated, and they know there are no endpoint protection capabilities on IoT devices to remove threats.” Nevertheless, they agreed that a collaborative and, above all, proactive approach by both the government and manufacturers of these devices will be essential.

Fortunately, we already have a potential starting point. The National Institute of Standards and Technology recently issued a comprehensive set of guidelines and best practices for securing IoT devices and systems throughout their entire life cycle. But simply establishing these best practices on paper will not be enough. Dr. Fu reiterated the most important takeaway from the hearing: that proper security measures for IoT devices must be “built in, not bolted on.” Protective measures like encryption must be incorporated into the fundamental design of a device, not tacked on as an afterthought. They also must secure a device from its creation, through its life with a consumer, and after “retirement” since old but active devices are still vulnerable to hijacking by botnets like the one used in last month’s massive distributed denial of service (“DDoS”) attack on global Internet routing company Dyn.

Looking ahead to the future.

Currently, there are few market incentives to spend time and money producing more secure encrypted devices.  There are likewise no significant legal or economic penalties for selling devices to consumers that are insecure. In short, consumers are focused on buying sleek and affordable new products rather than on the networks that connect them. However, if massive DDoS attacks continue the same way that data breaches have in recent years, the priorities of consumers and manufacturers alike are bound to evolve.

Will a greater focus on security slow down the rate of technological innovation? Despite some concerns, Dr. Fu and Mr Schneier reassured the subcommittees that efforts to improve cybersecurity will spur innovation in the tech industry, not hold it back. As consumers and manufacturers become more aware of the implications of poorly secured devices, incorporating features like end-to-end encryption will be understood not as necessary obstacles, but as valuable solutions to very real and costly problems.

ARTICLE BY Cynthia J. Larose, Michael B. Katz & Joanne Dynak of Mintz Levin
©1994-2016 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Congress Returns for Lame Duck Session as President-Elect Trump Prepares New Administration

Capitol, Congress, Lame Duck, President-Elect TrumpA New Administration and a New Congress: What to Expect

On Tuesday, November 8, the American public elected Donald J. Trump as the 45th President of the United States and elected one-third of the 100 Senators and all of the House Members who will make up the 115th Congress. As a result of the elections, President-Elect Trump will have the opportunity to work with a Republican Senate and a Republican House to address the challenges facing the country.

In his victory speech, President-Elect Trump said:

Now it’s time for America to bind the wounds of division; [we] have to get together. To all Republicans and Democrats and Independents across this nation, I say it is time for us to come together as one united people. It’s time. I pledge to every citizen of our land that I will be president for all Americans, and this is so important to me.

In the aftermath of the most bruising and bizarre presidential election in modern history, will anything get done in Washington DC? Given the stark divisions between the Republican and Democratic parties and the message voters sent to policymakers inside the Capital Beltway, can policymakers overcome their differences to address the pent up demand to resolve major issues that have been multiplying for the better part of a decade?

Senate Legislative Activity

The Senate will convene on Monday, November 14, in pro forma session. On Tuesday, November 15, the Senate will convene at 4:00pm. Following any Leader remarks, the Senate will be in a period of morning business, with Senators permitted to speak therein for up to 10 minutes each until 5:00pm. At 5:00pm, the Senate will proceed to the consideration of H.R.4511, Gold Star Families Voices Act. There be 30 minutes of debate followed by a vote on passage of the bill.

House Legislative Activity

On Monday, November 14, the House will meet at 2:00pm for legislative business, with votes postponed until 6:30pm. The following legislation will be considered under suspense on of the rules:

  • H.R. 1192 – National Clinical Care Commission Act;

  • H.R. 1209 – Improving Access to Maternity Care Act;

  • H.R. 2713 – Title VIII Nursing Workforce Reauthorization Act of 2016;

  • H.R. 4365 – Protecting Patient Access to Emergency Medications Act of 2016, as amended;

  • H.R. 985 – Concrete Masonry Products Research, Education, and Promotion Act of 2015, as amended;

  • H.R. 4665 – Outdoor Recreation Jobs and Economic Impact Act of 2016, as amended;

  • H.R. 2566 – Improving Rural Call Quality and Reliability Act of 2016; and

  • H.R. 2669 – Anti-Spoofing Act of 2016

On Tuesday, November 15, the House will meet at 12:00pm for legislative business. The following legislation will be considered under suspension of the rules:

  • H.R. 5732 – Caesar Syria Civilian Protection Act of 2016, as amended;

  • H.R. ___ – Iran Sanctions Extension Act;

  • H.R. 5332 – Women, Peace, and Security Act of 2016, as amended; and

  • H.Res. 780 – Urging respect for the constitution of the Democratic Republic of the Congo in the democratic transition of power in 2016, as amended

On Wednesday, November 16, the House will meet at 10:00am for morning hour and at 12:00pm for legislative business. On Thursday, November 17, the House will meet at 9:00am for legislative business, with last votes expected by 3:00pm. The House will consider:

  • H.R. 5711 – To prohibit the Secretary of the Treasury from authorizing certain transactions by a U.S. financial institution in connection with the export or re-export of a commercial passenger aircraft to the Islamic Republic of Iran, Rules Committee Print (Subject to a Rule); and

  • H.R. 5982 – Midnight Rules Relief Act of 2016 (Subject to a Rule)

On Friday, November 18, no votes are expected in the House.

ARTICLE BY Brandon C. Roman of Squire Patton Boggs (US) LLP

© Copyright 2016 Squire Patton Boggs (US) LLP