After nearly a three-week hiatus, House Speaker Nancy Pelosi (D-CA) and White House Chief of Staff Mark Meadows have resumed negotiations on a coronavirus relief package. The initial talks are inching along as Speaker Pelosi has rejected the Meadows offer on Friday of $1.3 trillion – an increase of $300 billion from the White House and Senate Republicans initial $1 trillion plan but far below the $2.2 trillion offer from Pelosi earlier this month.
In the meantime, House Democrats are rumored to be considering the introduction of a scaled-back version of the $3.4 trillion HEROES Act totaling $2 trillion (HEROES 2.0) and reflecting some of the earlier discussions with the White House. The expiration date of some provisions – likely the $600 weekly federal unemployment benefit; the 14 percentage point increase to the Medicaid federal medical assistance percentage (FMAP), currently at 6.2 percent; and COBRA subsidies – could be moved up to November 1 from December 31, 2020 to help lower the overall price tag of the package.
The HEROES 2.0 bill would demonstrate the Democrats’ willingness to “meet in the middle,” an appeal House Speaker Nancy Pelosi (D-CA) tried to make to Republicans a few weeks ago to jumpstart stalled negotiations. However, Senate Majority Leader Mitch McConnell (R-KY) has chided Democrats for “barely even pretending to negotiate,” calling Speaker Pelosi’s tactic “throwing spaghetti at the wall to see what sticks.”
Even if Democrats and Republicans inch closer on the overall price tag, they remain far apart on key policy issues.
- Testing – Democrats are pushing for an additional $75 billion to support testing, contact tracing, surveillance, containment, and mitigation. In contrast, Republicans would only provide an additional $16 billion for these public health activities.
- Provider Relief Fund – Democrats want to replenish the Provider Relief Fund with an additional $100 billion, while Republicans are proposing only $25 billion in additional funding.
- State and local aid – Democrats want to replenish the Coronavirus Relief Fund (CRF) with $500 billion for states and $375 billion for local governments. The Republicans’ plan does not provide new funding for state and local governments but allows existing CRF payments to cover lost revenue related to the COVID-19 pandemic. Their plan, however, stipulates that governments could only use their remaining CRF payments for lost revenue after they certify that at least 25 percent of their CRF allocation was distributed to downstream governments. Plus, governments could only use up to 25 percent of their allocation to cover lost revenue. The National Governors Association (NGA) continues to push for an additional $500 billion. Democrats would allow existing and new CRF payments to cover lost revenue related to the pandemic.
- Schools – Democrats are also calling for $300 billion for school funding, nearly triple the amount requested by Republicans. Much of the $105 billion that Republicans would provide to schools is contingent upon schools reopening physically.
Tomorrow, Treasury Secretary Steven Mnuchin will testify before the House Select Subcommittee on the Coronavirus Crisis on the Trump administration’s response to the nation’s economic crisis. While the unemployment rate dropped to 10.2 percent in July from 11.1 percent in June, it is still 6.7 percentage points above the unemployment rate in February (before the COVID-19 outbreak officially became a pandemic), according to the latest jobs report. As noted above, a main point of contention between Democrats and Republicans has been whether to provide states and localities with additional federal aid via the CRF. Treasury Secretary may attempt to make the case that states and localities have not completely spent appropriated funds, according to the revised interim report. Expenditures range from zero to 100 percent.
Looking farther ahead, the Medicare Payment Advisory Commission (MedPAC) resumes activity on Thursday and Friday of this week in a series of virtual sessions. While certain sessions will cover more standard Medicare issues – e.g., the skilled nursing facility value-based purchasing program – others unsurprisingly will have Commissioners weighing in on important COVID-19-related matters. For example, the Commission will discuss the high-profile issue of expanding telehealth in Medicare, as well as the broad issue of vaccine coverage as it pertains to COVID-19 and beyond.