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Summary

The House and Senate approved the conference report (H.Rept. 109-62) on H.Con.Res. 95, the Concurrent Resolution on the FY2006 Budget, on April 28 and April 29, 2005, respectively. The Senate Committee on Finance was instructed to meet a budget reconciliation target of $10 billion in direct spending savings over a five-year period, FY2006-FY2010. On October 25, 2005, the Senate Finance Committee reported its reconciliation proposal to the Senate Budget Committee, which subsequently incorporated the proposal into S. 1932, The Deficit Reduction Omnibus Reconciliation Act of 2005. In the House, the Committee on Energy and Commerce had budget reconciliation instructions that specified a mandatory savings target of $14.734 billion between FY2006 and FY2010. The Committee mark-up took place on October 27, 2005. Like a number of Senate committees, the Senate Committee on Finance achieves its reconciliation instruction budget mark through recommended program changes that result in direct spending increases as well as decreases. The Committee proposal focused on changes to Medicaid, the State Children's Health Insurance program (SCHIP), and Medicare. Based on Congressional Budget Office (CBO) estimates, the largest Medicaid savings amounts are the result of changes in the reimbursement of outpatient prescription drugs. The Senate proposal would change some asset transfer rules for Medicaid-eligible individuals applying for long-term care services also resulting in estimated program savings. Additional Medicaid savings are estimated to occur as a result of changes to the program designed to combat fraud, waste, and abuse. Increases in Medicaid spending would largely result from temporary federal medical assistance percentage (FMAP) increases targeted to help Medicaid recipients from selected Louisiana parishes and counties in Alabama and Mississippi devastated by Hurricane Katrina, and also from the limiting of any FY2006-FY2007 FMAP decrease to Alaska. The proposal includes a number of Medicaid demonstration projects and some benefit and eligibility expansions. The proposal would alter the method for redistribution of SCHIP funds to the states. Medicare savings would result from changes in Medicare's Part C (Medicare Advantage) and the establishment of variations in provider payments that reflect quality differences (value-based purchasing, or "pay for performance"). The proposal would also provide for a 1% Medicare payment update for physicians in 2006. The House Energy and Commerce Committee limited its major proposals to changes in the Medicaid program. The House Committee achieves its largest savings with cost-sharing and benefit changes. The recommendations also foresee savings in changes in prescription drug reimbursement and asset transfer rules. Increased spending provisions are focused on long-term care services, the establishment of health opportunity account demonstrations, and Hurricane Katrina health program relief. This report will be updated to reflect legislative activity.

Related Legislation:
• S.1932
• S.95

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