Association Health Plans (AHPs): On March 15, The Senate Committee on Health, Education, Labor, and Pensions, voted to approve S. 1955 11-9.[1] The bill is a compromise piece of legislation that would allow the formation of association health plans under certain circumstances. The plans would be fully insured (rather than self-insured), required to meet benefit mandates passed in 45 states, and regulated at the state level rather than by the federal Department of Labor. The full Senate has yet to take action on this bill.

Over the past several years, the House of Representatives has passed legislation that would allow the formation of AHPs. The Senate has not taken action on the House AHP legislation. It remains to be seen if this compromise piece of legislation will pass the full Senate.

The Budget: In February, the President sent his proposed budget for fiscal year 2007 to Congress. The proposal seeks cuts to entitlement programs of approximately $65 billion over five years. The President’s budget slows spending on the Medicare program by $36 billion over five years and reduces spending for the Medicaid program an additional $12 billion over five years.

Currently, Congress is working to create a budget resolution for fiscal year 2007. The budget resolution is a non-binding budget blueprint with instructions to committees on spending targets. Considering the divisive fight last year over budget reconciliation and the tight roll call votes that passed the Deficit Reduction Act of 2006 (House 216-214, Senate 51-50), Congressional support for the President’s budget has been lukewarm.

Implementation of Medicare Part D: Since the start of the Medicare prescription drug program, Medicare Part D, in January of 2006, the implementation of the program has been a politically divisive issue. The Bush administration has hailed the program as a success citing increased enrollment and improved access to prescription drugs for seniors. On the other hand, the Democrats have attacked the program on a number of grounds, including that it is too complex and too complicated for seniors, and that it has been implemented ineffectively. The implementation of Medicare Part D will continue to occupy political discourse as the 2006 mid-term Congressional elections approach.

During the implementation of Medicare Part D, more than 40 states took emergency legislative action to ensure drug access for those eligible for both Medicare and Medicaid (the dual eligibles). Many states are seeking reimbursement for those costs. In a letter dated February 2, 2006, CMS stated that it will reimburse states for costs associated with the transition of dual-eligible and low-income subsidy recipients including claims for drugs dispensed from January 1, 2006 until February 15, 2006.[2] States will be required to meet certain terms and conditions.[3]

As reported in SCI’s State of the States, several states are exploring the prospects of a constitutional challenge to the state contribution to Medicare Part D, also known as the clawback. Five states (Texas, Kentucky, Maine, Missouri, and New Jersey) have requested permission from the Supreme Court to file suit against the Department of Health and Human Services. Ten other state Attorneys General have a filed a supporting brief. The Supreme Court has yet to decide if it will hear the case.