Washington Insider-- Thursday

Senate Sets up Battle Over Medicaid

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Booker Offers Legislation to Slow Plant Line Speeds

Sen. Cory Booker, D-N.J., filed a bill on Tuesday that would suspend all current and future line-speed waivers for meatpacking plants during the COVID-19 pandemic, in line with a companion House bill from Rep. Marcia Fudge, D-Ohio, and others. The legislation would cover both meat and poultry processing.

“The situation has only worsened since the USDA has approved nearly 20 requests from meatpacking plants to exceed regulatory limits on line speeds despite the risks posed to workers, consumers, and animal welfare,” Booker said.

But the idea of slowing line speeds is being met with pushback from the U.S. meat industry. Smithfield Foods CEO Ken Sullivan said that slowing them by 50% “means euthanizing half of our nation's livestock, the collapse of farm prices (law of supply and demand), burying food in the ground, food insecurity and higher food prices for everyone including, most importantly, those that can least afford it.”

Iowa Lawmakers' Ethanol Focus Continues

Sen. Joni Ernst, R-Iowa, is keeping up pressure on EPA over biofuels, this time shifting her attention to the issue of E15 and expanding the availability of the fuel after EPA changed its rules to allow for year-round sales of the higher ethanol blend.

In a letter to EPA Administrator Andrew Wheeler, Ernst pointed out that the infrastructure issues for E15 are not necessarily valid, noting that all steel fuel tanks and fiberglass tanks put in service since 1990 are approved for up to 100% ethanol.

“Given the lifespan of underground tanks, almost every underground fuel tank should be able to handle E15 and higher blends of ethanol,” Ernst stated.

Meanwhile, Sen. Chuck Grassley, R-Iowa, said aid for the U.S. biofuel sector may come down to decisions made by USDA Secretary Sonny Perdue.

"We're in a position of depending on the Secretary of Agriculture if this $20 billion goes to him, getting some of it for ethanol," Grassley said on Tuesday, following a question from DTN.

The package provides $20 billion to USDA Secretary Sonny Perdue to help agricultural producers, growers and processors. The latter is being cited by some as covering ethanol producers.


Washington Insider: Senate Sets up Battle Over Medicaid

The Hill is reporting this week that the Senate didn't include a funding increase for Medicaid in its new COVID-19 response bill, ignoring pleas from both Democratic and Republican governors. This “tees up a contentious fight with the House over spending on the health care program for the poor,” The Hill said.

Governors facing massive budget shortfalls caused by the economic downturn have warned they will have to cut Medicaid and other programs if they don't get more help from Congress--but those warnings did not sway Senate Republicans who have resisted what they say would be “bailouts” of state and local governments.

“At the end of the day, it's got to be in there,” said Matt Salo, executive director of the National Association of Medicaid Directors.

“We're in this perfect storm of hurt, he said. Since states have to balance their budgets, the only way out of this is aggressive, concerted, federal, congressional action.”

Medicaid -- which is jointly paid for by states and the federal government -- covers about 70 million people. However, “enrollment is expected to increase as people lose their jobs and become newly eligible for the program.”

States are also facing increased costs from paying for COVID-19 treatment and services for beneficiaries. At the same time, tax revenue is falling, leaving massive budget holes that states are required to fill.

During recessions, governors and state legislatures tend to cut costly programs like Medicaid, which consumes about 20 percent of state budgets.

To avoid cuts, groups like the National Association of Medical Directors and the National Governors Association want Congress to temporarily increase the share of Medicaid costs paid by the federal government, to help cover increased enrollment costs and to free up state money for other areas like education.

A COVID-19 response bill recently passed by the House would increase the share of Medicaid costs paid by the federal government but it has not been considered by the Senate. Now House and Senate negotiators will have to hammer out a compromise in a final package that Congress hopes to pass in the coming weeks.

“There is increasing recognition that something needs to get done,” Salo said. “I feel confident that we will get there,” he added.

A spokesperson for House Speaker Nancy Pelosi, D-Calif., said: “This is obviously a critical program, which is why it was in the HEROES Act.” However, Senate Republicans and the administration have a complicated history with the Medicaid program and have spent the last few years trying to reduce spending and decrease enrollment among childless adults.

One disagreement between Republicans and Democrats is over a requirement passed in a previous COVID-19 response bill that prohibits states receiving increased Medicaid funding from cutting benefits or restricting eligibility. Republicans think the requirement is too restrictive to states and want to change it in the next response bill.

Congress passed a COVID-19 response bill in March that increases the federal government's share of Medicaid costs but governors say more help is needed. “The COVID-19 pandemic is drastically shrinking state and local revenue with most states experiencing a budget shortfall ranging between 5 and 20 percent,” the NGA and other groups wrote in a letter to congressional leaders earlier this month.

“Even states with a lower shortfall will be challenged to provide adequate healthcare services to their residents. This leaves state and local leaders with tough choices to balance their budgets while responding to a pandemic.”

For example, Colorado has already cut funding to its Medicaid dental program and cut payments to some providers by 1 percent, The Hill notes. Medicaid rates are already typically lower than rates paid by Medicare and private insurance. Other states, such as Florida and Tennessee, have put off planned improvements to the Medicaid program, like increases in provider rates and extra services for pregnant women, the report said.

Federal law prohibits states receiving increased Medicaid funding from cutting required benefits, increasing premiums or restricting eligibility—restrictions Congress put in place to protect beneficiaries from losing coverage during the pandemic. That means in order to find savings, states turn to cutting provider rates, which some experts say could be disastrous, especially for those that primarily see Medicaid patients.

Those providers are already struggling to maintain social distancing as they see more patients and as more people are staying at home and avoiding nonemergency care.

“Medicaid provider payment cuts will compound financial damage from the pandemic, raising the risk that pediatricians, behavioral health providers and safety net clinics close their doors,” said Aviva Aron-Dine, vice president for health policy for the Center on Budget and Policy Priorities.

So, we will see. The politics of federal assistance for anti-virus programs appear to be growing tougher as additional programs are considered—and, as needs for assistance grow. These battles for federal assistance are increasingly large and extended and should be watched closely as the season proceeds, Washington Insider believes.

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