Budget progresses in Mo amid school funding feud

The Senate continued its work on its version of the state’s budget this week.  It has been Senate tradition that while the budget bills are amended and re-worked in the appropriations committee to reflect Senate priorities, they are generally not amended on the Senate Floor.  However, this tradition was broken this week when Senate Education Chairman Gary Romine (R-Farmington) offered a series of amendments on the Senate Floor to fully fund the K-12 school funding formula, which were adopted. Because Missouri has a balanced budget amendment, this means that when the House and Senate meet to work out the differences between the two versions, they will have to find roughly $45 million in savings from elsewhere.

Additionally the Senate acted to move forward with the expansion of Medicaid managed care.  Medicaid recipients in the I70 corridor have been in the managed care system for roughly 20 years.  In 2014, the general assembly moved to include 100% of the state’s Medicaid population in the managed care system.  The expansion is supposed to be fully funded in the 2018 fiscal year budget.  This funding expansion had become the point of much contention in the Senate.  However, Senate Appropriation’s chairman Dan Brown (R-Rolla) was able to fight off an attempt by Senator Rob Schaaf to remove the funding for the expansion.

Update on Senate Functions

As a recap, last week Senator Rob Schaaf (R-St. Joseph) had been using his power as a Senator to slow down several pieces of legislation in anticipation of a fight over the expansion of managed care and ethics reform.  The Senate abruptly adjourned for the week when Senator Caleb Rowden (R-Columbia) began inquiring of Schaaf about his relationship with a contract lobbyist.

After a tumultuous weekend in which a non-profit organization associated with Governor Greitens’ campaign attacked Schaaf online and on the radio, Senator Schaaf gave a lengthy speech on the Senate floor in which he announced he would be moving out of the home of the lobbyist.  Schaaf also declared he would be holding up all Governor Greitens’ priority legislation until ethics reform, including a disclosure requirement for donors to 501c4 organizations.  Later, Senator Schaaf told the Missouri Times he would not filibuster the budget and would instead focus all his attention on ethics reform.

House Sends Tort Reform to Governor Greitens

On Wednesday the House gave final approve to another tort reform measure.  This measure would make significant changes to time limited demands and reservation of rights.  This is one of several tort reform measures House and Senate Republican leadership hope to send to Governor Greitens before session ends on May 12.

Senate Passes Education Savings Account Legislation

The Senate sent Senator Andrew Koenig’s (R-Manchester) bill to the House.  The bill would allow children who have special needs, have been in foster care or who have a parent who is a member of the military to access education savings accounts. He legislation contains a provision that would clear up some confusion around the state law that allows children in unaccredited districts to transfer to accredited districts in the same or adjoining counties.

House Sends Project Labor Agreement Reform to Governor Greitens

On Thursday the Missouri House gave final approval to legislation that would cause cities and counties in Missouri to lose state funding if they require non-union contractors to pay workers union dues for public projects.  The legislation was a priority of republican leadership in both chambers and Governor Greitens.

Governor Greitens Signs Bill to Create Statewide Ride-sharing Legislation

On Monday roughly 100 people gathered at Saint Charles Community College to watch Governor Eric Greitens sign legislation that allows companies like Lyft and Uber to operate statewide in Missouri. Governor Greitens declared passing this legislation a priority because it loosens unnecessary regulations and will create thousands of jobs across the state.

Greitens Appoints New Supreme Court Judge

Gov. Eric Greitens has selected Judge Brent Powell to fill late Judge Richard Teitelman’s spot on the Missouri Supreme Court.

The Governor’s Commission on Simple Fair and Low Taxes Seeks Input

The Governor’s commission that was appointed to, among other things, study and make recommendations regarding the state’s tax credit program is now officially asking for information from practitioners regarding tax credits you may be receiving.  The opportunity to submit information is in question 1 in this link.

FCC moves to nix Obama-era net neutrality rules

Today the Federal Communications Commission (“FCC”) issued a draft notice of proposed rulemaking (“NPRM”) to reverse the FCC’s 2015 Open Internet order that reclassified broadband Internet access service as a telecommunications service for the first time under Title II of the Communications Act of 1934. Originally adopted on February 26, 2015, the FCC then based its authority on a hybrid section 706 of the Telecommunications Act and Title II approach, calling it a “Title II tailored for the 21st century.”

Previewing the release of the draft NPRM in a speech on Wednesday, April 26th, FCC Chairman Ajit Pai criticized that approach, saying that the FCC under then Democrat Chairman Tom Wheeler, “on a party line vote, decided to impose a set of heavy-handed regulations upon the Internet” and “to slap an old regulatory framework called ‘Title II’ – originally designed in the 1930s for the Ma Bell telephone monopoly – upon thousands of Internet service providers, big and small.”

A fact sheet entitled “Restoring Internet Freedom” that accompanied the draft NPRM explained that the notice would: “Propose to reinstate the information service classification of broadband Internet access service and return to the light-touch regulatory framework first established on a bipartisan basis during the Clinton Administration; propose to reinstate the determination that mobile broadband Internet access service is not a commercial mobile service and in conjunction revisit the elements of the Title II Order that modified or reinterpreted key terms in section 332 of the Communications Act and our implementing rules; propose to return authority to the Federal Trade Commission to police the privacy practices of Internet service providers; propose to eliminate the vague Internet conduct standard; seek comment on whether to keep, modify, or eliminate the bright-line rules set forth in the Title II Order; propose to re-evaluate the Commission’s enforcement regime to analyze whether ex ante regulatory intervention in the market is necessary; and propose to conduct a cost-benefit analysis as part of this proceeding.”

The announcement of plan to include the NPRM on the FCC’s upcoming May 18th open meeting agenda sparked the expected support and opposition. United States Senate Majority Leader Mitch McConnell (R-KY) issued a statement commending Chairman Pai “for taking bold action today to turn back this portion of the Obama Administration’s eight-year regulatory assault on all aspects of our economy.” Representing the views of the other side of the aisle, Senate Minority Leader Chuck Schumer (D-NY) tweeted the warning that “neither the American [people] nor Democrats will tolerate the FCC conspiring [with] industry insiders to roll back critical consumer protections.” Other Republican and Democrat Members issued similar statements in line with the views of their Leaders, highlighting the usual partisan tensions surrounding this issue.

If adopted on May 18th, the NPRM will start a three month formal comment process, with initial comments due on July 17, 2017 and reply comments due on August 17, 2017.

Treasury Secretary nominee Steven Mnuchin: a brief profile

On Wednesday, November 30, President-elect Trump announced, and Steven Mnuchin confirmed to CNBC and various media outlets, that Mr. Mnuchin will be President-elect Trump’s nominee to be the Treasury Secretary, a development that is being very well-received by Wall Street and the business community who view Mnuchin as a free market advocate with a strong business background and deep-seated knowledge of the financial markets.

In contrast, Mr. Mnuchin’s expected nomination has been criticized by several key Democratic Senators and Representatives, including Senator Elizabeth Warren (MA) and Congresswoman Maxine Waters (D-CA), along with certain community advocacy organizations opposed to predatory lending and to home foreclosures, who call him a “Wall Street insider” who got rich off the foreclosure crisis and they promise a vigorous effort in opposition to his nomination. They also argue that Mnuchin’s selection contrasts sharply with, and calls into question the sincerity of, Mr. Trump’s attacks on the financial industry during the campaign.

Previewing the fight to come, in a statement late on November 29, Senator Warren said: “Steve Mnuchin is the Forrest Gump of the financial crisis — he managed to participate in all the worst practices on Wall Street.” Similarly, Senator Ron Wyden (OR), the Finance Committee Ranking Member, stated: “Given Mr. Mnuchin’s history of profiting off the victims of predatory lending, I look forward to asking him how his Treasury Department would work for Americans who are still waiting for the economic recovery to show up in their communities.”

Mnuchin, a hedge fund investor who served as the Trump campaign’s Finance Chairman, worked for 17 years at Goldman Sachs where he became a partner and eventually the firm’s Chief Information Officer (CIO). Subsequently, he led a group of investors who purchased and reorganized the failed mortgage lender IndyMac that later became One West Bank, which in turn was sold to CIT Group in 2015. Mr. Mnuchin serves on the CIT Group board and is the Chairman and CEO of Dune Capital Management, a private investment firm. He worked for two years for the well-known investor George Soros and also, for a number of years, had a career as a successful movie executive producer and financier of such blockbuster films as “The Devil Wears Prada,” the “X-Men” franchise and “Avatar”.

While Mnuchin’s career path and achievements have been somewhat diverse, Mr. Mnuchin has never served in government and his business experience is exclusively within the private sector. In his private capacity, he has not frequently commented publicly on financial services issues, taxes or the overall economy. As a result, he does not have the sort of comprehensive record that one would customarily find from a Treasury Secretary nominee with government experience and his views on many of the public policy issues that will confront him after his anticipated confirmation by the Senate are not yet known or, in other cases, not yet fully articulated. Nonetheless, Mnuchin’s few publicly available comments, including those he made in interviews today with CNBC and Fox Business Network, are instructive.

While Mr. Mnuchin’s comments generally have been quite guarded, perhaps simply reflecting the caution of a person who has yet even to be formally nominated, it is noteworthy that, in several instances, Mnuchin’s remarks have been far less sweeping and categorical than those of President-elect Trump. For example, in a July CNBC interview, Mnuchin said that the Dodd-Frank Act “needs to be looked at”; in an August 2016 Bloomberg profile, he said that the Act had “good and bad aspects”; and today, in a CNBC interview, he said that Dodd-Frank is “way too complicated” and that the Trump administration wants to” strip back parts… that prevent banks from lending” — positions that fall well short of President-elect Trump’s campaign promises to dismantle Dodd-Frank. Several commentators are suggesting that this means President-elect Trump will look to Financial Services Committee Chairman Jeb Hensarling of Texas, who had been one of the finalists to become Treasury Secretary, and the Republican Congress, to take the lead on financial services reform with the administration taking more of a supportive position.

Similarly, in his CNBC interview this morning, Mr. Mnuchin said that no decision has been made to label China a currency manipulator, despite President-elect Trump’s repeated campaign promises to do so, a step that has not been taken against any country since 1994 when China was last named a currency manipulator.

At the same time, however, Mr. Mnuchin did make important news with several of his statements today. He declared the economy to be the incoming administration’s number one priority and said that getting back to three to four percent economic growth is “very sustainable”. Responding to a question about how to get companies to repatriate their earnings to the United States, Mnuchin promised early tax reform including what he called the “most significant middle income tax cut since Reagan” and indicated that lowering corporate taxes would “make US companies the most competitive in the world, making sure we repatriate trillions of dollars back to the United States.”

Finally, in an unexpected statement this morning on Fox Business Network that offered fresh hope to those investors who own shares in Fannie Mae and Freddie Mac but receive no return on that investment because of the so-called “net worth sweep” agreement between the Treasury Department and the Federal Housing Finance Agency as conservator for the GSEs (FHFA) that requires Fannie and Freddie to funnel the net proceeds from their operations to the federal government, and promising to “get it done reasonably fast”, Mr. Mnuchin said:

“We’ve got to get Fannie and Freddie out of government ownership. It makes no sense that these are owned by the government and have been controlled by the government for as long as they have. In many cases this displaces private lending in the mortgage markets and we need these entities that will be safe. So let me just be clear, we’ll make sure that when they’re restructured they’ll be safer and they don’t get taken over again but we got to get them out of government control.”

Mr. Mnuchin’s November 30th comments prompted Fannie Mae’s common shares to spike upward almost 46% today from $3.08 to $4.49 per share.

Healthy Indiana's Verma named to CMS

On Tuesday, November 29, President-elect Trump nominated Seema Verma, the president, CEO and founder of a health care policy consulting firm, to be the Administrator of the Centers for Medicare and Medicaid Services (CMS). Verma has over 20 years of policy experience and has worked extensively in reforming state Medicaid programs. Under Indiana Republican Governor Mitch Daniels, she was the architect of, and in 2007 helped launch, a Medicaid reform package—Healthy Indiana Plan (HIP)—that has been touted as the first consumer-directed Medicaid program in the country. More recently, she led the work on then-Indiana Governor Pence’s Medicaid waiver plan, dubbed HIP 2.0.

HIP 2.0 received federal waivers to include provisions requiring that Medicaid recipients make small monthly contributions into health savings accounts, then purchase their own insurance with state assistance. Beneficiaries who miss payments can experience periods of lockout. Other waivers that Verma introduced included provisions requiring recipients to work or actively look for work.

In a Health Affairs blog post this summer, Verma stated that “HIP has been successful in meeting its policy objectives, but it also continues to demonstrate the potential for consumer-driven health care as an alternative to the traditional Medicaid model. While HIP has never touted itself as some sort of national silver bullet, it continues to serve as an example for states having similar interest in realigning Medicaid with the broader objective of individual empowerment.”

In addition to her work in Indiana, Verma through her consulting firm developed Medicaid proposals for Iowa, Ohio and Kentucky and played a role in the development of Tennessee’s coverage proposal. Aside from her work in the Medicaid area, Gov. Daniels also picked Verma to help the state prepare for and implement the Affordable Care Act.

Verma is known for being innovative, persuasive and detailed-oriented, and for her depth of her knowledge and experience regarding the ACA’s insurance and exchange provisions and Medicaid reform.

Trump's Treasury pick sets sights on Dodd-Frank

Donald Trump’s choice to lead the Treasury Department said Wednesday that major changes are in store for the Dodd-Frank financial regulation law.

Steve Mnuchin, a Goldman Sachs executive who the president-elect tapped this week as his pick for Treasury secretary, said in a interview that the incoming administration hopes to gut the bill’s lending provisions that he said had harmed small- and mid-sized businesses.

“The number one problem with Dodd-Frank is it’s way too complicated and it cuts back lending, so we want to strip back parts of Dodd-Frank that prevent banks from lending and that will be the number one priority on the regulatory side,” Mnuchin said Tuesday on CNBC. “The number one priority is going to be making sure that banks lend.”

The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in 2010 in the most significant overhaul of financial regulation in the United States since the Great Depression, consolidated regulatory agencies and created new oversight councils to “evaluate systemic risk.”

Conservative critics have complained that the new regulations, including the Consumer Financial Protection Bureau, have stifled economic growth and unfairly burdened financial institutions, though Mnuchin didn’t specifically address those aspects of the law. Instead, he said the new Trump Treasury team would work to loosen the rules that have restricted lending to small businesses.

“We’ve been in the business of regional banking and we understand what it is to make loans,” he said. “That’s the engine of growth to small- and medium-sized businesses.”

Trump taps Price to lead HHS

On Tuesday, November 29, President-elect Trump announced the nomination of Republican Representative Tom Price of Georgia to be Secretary of Health and Human Services (HHS). Price is an orthopedic surgeon who has represented the northern suburbs of Atlanta since 2005. Before coming to Washington, he was a state senator in Georgia for four terms and, in 2002, was the majority leader of the state Senate. Price worked for almost two decades in private practice as an orthopedic surgeon, including as an Assistant Professor and Medical Director of the Orthopedic Clinic at Grady Memorial Hospital in Atlanta.

Price has often said the reason he entered politics was because, as a doctor, he saw that the politicians who were making the decisions and laws that impacted on patient care didn’t have medical backgrounds. Therefore it is no surprise that since coming to Congress in 2005, he has put his medical expertise to good use, spending considerable time and energy mastering the intricacies of health policy. As a member of the Ways and Means Committee, which has jurisdiction over the Medicare program, and as chairman of the Budget Committee, Price has put forward bill after bill which, viewed collective, give us a good understanding of his perspective on health policy and what HHS might look like under his leadership.

In analyzing the healthcare legislation to which Price has signed his name during his time in Congress, common themes emerge: increase patient choice, reduce federal interference in the practice of medicine, empower states and individuals in their health decisions, and increase market forces in government health programs. The legislation he has introduced has spanned a range of health policy issues, including: repealing and replacing the Affordable Care Act (ACA), modifying the durable medical equipment (DME) competitive bidding process, reforming the State Children’s Health Insurance Program (SCHIP), establishing performance-based quality measures for use in medical malpractice litigation, allowing patients and physicians to privately contract for healthcare services, returning the regulation of health insurance back to the states, and delaying the negative impact of meaningful use standards for health information technology (HIT).

Earlier this year, Price led two letters to CMS regarding the Center for Medicare and Medicaid Innovation (CMMI). One asked CMS to “stop [CMMI from] experimenting with Americans’ health and cease all mandatory demos and to ensure that future models comply with current law.” The second asked CMS to withdraw the Part B Drug Payment Model proposed rule.

The last bill that Price introduced was in September of this year. It would delay the current CMS demonstration project that established a prior authorization review process for home health services.

While Price is a conservative member of the House, he has, throughout his political career, continuously worked across the aisle to put forward innovative policy proposals and solutions. One example is a 2006 health bill he co-authored with then-Rep. Tammy Baldwin, a Democrat from Wisconsin’s 2nd congressional district, entitled “Health Care Partnership Through Creative Federalism Act.” This bill set up a federal commission to which states or groups of states could submit innovative plans to reduce the number of uninsured in their state or group of states. The commission would then select a number of the proposals to submit to Congress, where they would be given expedited consideration and could not be amended. When promoting this legislation, Price often said that its goal was to allow states to be incubators of innovation; to give them the freedom to choose the plan that is best for their residents. Whether states would choose free market reforms or single-payer policies would be up to them.

Price served on the Ways and Means Committee with Speaker Ryan and succeeded him as chairman of the Budget Committee after Ryan was elected Speaker of the House in late 2015. Their association led Price to embrace many of the entitlement reforms first introduced by Ryan, including allowing Medicare Advantage plans to vary their benefit designs, creating a “Medicare exchange” where seniors could choose between private insurance plans competing alongside traditional Medicare, publicly reporting performance metrics for traditional fee-for-service Medicare and Medicare Advantage, and reforming Medicaid to allow states to choose either a per capita allotment or block grants.

Since the announcement, critics have focused on the fact that Price doesn’t have any experience running anything near the size and scope of HHS, which has 11 agencies, nearly 80,000 employees and a budget of over $1 trillion. However, there are few members of Congress who have more passion for health policy and have spent more time on the details of the ACA and Medicare policy. And if confirmed, Price will be the first physician to run the department since 1993.

Trump's Obamacare squad

Georgia Congressman Tom Price, the author of one of the most thorough Republican proposals to repeal and replace the Affordable Care Act, is President-elect Donald Trump’s choice to lead the Department of Health and Human Services, the transition announced Tuesday morning.

Price, an orthopedic surgeon, will assume his new role already with a blueprint to supplant the controversial health care law: his own “Empowering Patients First Act,” which provides for age-based tax credits, sets a limit on tax exclusion of employer-sponsored coverage, and creates individual and small employer membership association and association health plans to allow for interstate insurance markets.

As Vox writes, Price is “the HHS secretary you’d pick if you were serious about dismantling” the ACA.

At the same time, the transition announced that Trump had chosen Seema Verma, a health policy consultant who designed Indiana’s Obamacare Medicaid expansion program under President-elect Mike Pence, to serve as Administrator of the Centers for Medicare and Medicaid Services.

Through her firm SVC Inc., Verma has advised a slate of other GOP governors in conservative workarounds to Medicaid expansion, including employment requirements and health savings accounts.

We’ve examined previously in this space the procedural and political hurdles to repealing and replacing the Affordable Care Act, but Tuesday’s nominations mark the clearest indication yet of the president-elect’s enduring commitment to undo his predecessor’s signal achievement.