All But Five Republicans Vote to Screw the Poor

The Center on Budget and Policy Priorities has assessed the effects the budget will have on low-and middle-income families and individuals. As many economists have pointed out, this budget does nothing to decrease the deficit. It merely pays for tax cuts for the wealthy.

Every Senate Democrat voted against these cuts; all but five Republicans voted for them: Susan M. Collins and Olympia J. Snowe of Maine, Gordon Smith of Oregon, Mike DeWine of Ohio and Lincoln D. Chafee of Rhode Island.

*Cuts in the conference agreement include: $16 billion over 10 years in increased Medicaid co-payments and premiums and benefit reductions; new federal mandates in the welfare area that would lead to a loss of an estimated 255,000 child care slots for low-income working families not receiving cash welfare assistance; and nearly $8 billion in lost child support collections over the next 10 years.

*Child Support Enforcement: The CBO estimates show that the conference report includes a $1.5 billion cut in federal funding for child support enforcement efforts over the next five years and a $4.9 billion cut over the next ten years. This is funding that states use to track down absent parents, establish legally enforceable child support orders, and collect and distribute child support owed to families. CBO has estimated that this loss in federal child support funding will result in $2.9 billion in child support going uncollected over the next five years and $8.4 billion going uncollected over the next ten years. These cuts are smaller than those in the House bill but will nevertheless take billions of dollars out of the pockets of mothers and children who are owed child support.

*Child Care: The conference report includes $1 billion in additional funding for child care, which is $7.4 billion less than CBO estimates to be the cost to states of meeting the new work requirements, and more than $11 billion less than what states will need both to meet the new work requirements and to ensure that their current child care programs for low-income working families that are not on TANF do not have to be scaled back as a result of the impact of inflation on child care costs. This means that the conference agreement effectively includes no new funding for states either to help meet the intensified work requirements that will be imposed upon them or to provide child care for children whose parents are now required to participate in work programs.

To come up with the funds to meet the new work requirements and provide child care for the children of mothers placed in these expanded work programs, many states will have little alternative but to scale back child care slots for working poor families not on welfare, and shift those slots to TANF families instead. As a result of the under-funding of child care in the conference agreement, we estimate that in 2010, some 255,000 fewer children in low-income working families not on TANF will receive child care assistance than received such assistance in 2004.

*Foster Care: The bill includes $343 million in net cuts in funding for the foster care program, including two cuts that will make it harder for some states to provide federally funded foster care benefits to certain relatives (often grandparents) who are raising children because their parents are unable to do so. This represents a cost-shift to these states, which will still need to provide assistance to these families to ensure that the children continue to be cared for. In some states, it also will represent a cut in the level of aid provided to these families.

*SSI: Under the conference agreement, poor individuals with disabilities who have waited months for the Social Security Administration to review and approve their applications for SSI (a common occurrence in SSI), and who consequently are owed more than three months of back benefits, would have to receive these benefits in installments that could stretch out over the course of a year. The first installment would include no more than three months of back benefits. By contrast, under current law, most such disabled individuals receive their back benefits in a single lump sum payment. Individuals owed more than 12 months' worth of benefits receive benefits in installments, but the first installment is equal to 12 months of benefits.

*No increase in drug manufacturer rebates. The Senate bill avoided harmful co-payment and premium increases and benefit reductions in part because it achieved much of its Medicaid savings by restraining the amounts that Medicaid pays for prescription drugs. To ensure that Medicaid gets the best prescription drug prices, the Senate bill increased the minimum rebates that drug manufacturers are required to pay the Medicaid program for drugs dispensed to Medicaid beneficiaries. The Senate bill also applied the rebates to drugs provided to Medicaid beneficiaries through managed care plans. The Senate drug rebate provisions produced Medicaid savings of $3.9 billion over five years and $10.5 billion over ten years, which helped the Senate reach its savings target without harming low-income beneficiaries.

In a victory for the powerful pharmaceutical industry, the conference agreement fails to include the Senate’s significant rebate provisions. The conference agreement includes only two minor provisions related to drug rebates already included in both the House-passed and Senate-passed bills; these provisions generate savings of only $220 million over five years and $720 million over ten years, or 2 percent of the gross Medicaid savings in the conference agreement.

*No elimination of the Medicare stabilization fund. The conference report also protects Medicare managed care plans. It drops a Senate provision that would have eliminated a wasteful $10 billion fund to encourage participation in Medicare by regional Preferred Provider Organizations (PPOs). The Medicare Payment Advisory Commission (MedPAC) — the official, independent advisory body to Congress on Medicare payment policy — recommended last summer in a nearly unanimous vote that this fund be eliminated because it is unnecessary and unwarranted and provides an unfair competitive advantage to PPOs over traditional Medicare fee-for-service and other managed care plans, such as Medicare HMOs. Nevertheless, the conference agreement leaves this fund fully intact, forgoing $5.4 billion in savings over five years (and twice that over ten years) contained in the Senate bill. The removal of this Senate provision likely was done at the behest of the managed care industry and the Administration, which threatened to veto the budget bill if the Senate provision was included in the final conference agreement.