H.R. 4851 (111^th): Continuing Extension Act of 2010

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Library of Congress Summary

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.

House Republican Conference Summary

The summary below was written by the House Republican Conference, which is the caucus of Republicans in the House of Representatives.

This summary can be found at http://www.gop.gov/bill/111/2/hr4851.

Background

On February 25, 2010, the House passed H.R. 4691, the Temporary Extension Act of 2010, by voice vote. The bill extended a number of funding expansions and programs set to expire on February 28, 2010, including expanded federal unemployment benefits, the COBRA health insurance premium subsidy, the adjustment to the Sustainable Growth Rate (SGR) conversion factor for physician payments, and a one-month extension of authority to finance surface transportation programs from the HTF. The bill was then brought to the Senate, where a hold was placed on the bill by Senator Jim Bunning (R-KY) because none of its provisions were offset, and thus violated the spirit (if not the letter) of the Democrats' own PAYGO rules which had recently become statutory law. On Tuesday, March 2, 2010, after Senate Democrats allowed consideration of a number of amendments, Senator Bunning released his hold on the bill and it passed the Senate by a vote of 78-19. The President signed the bill shortly thereafter. The hold resulted in a two-day lapse in programs authorized and funded by the measure, and resulted in the temporary layoff of some employees. In addition to extending a number of expiring programs, this legislation would provide compensation to employees furloughed for two days as a result of the lapse.

Summary

The bill would extend a number of funding expansions from the Democrats' "stimulus" bill and several other provisions for about one month. Under current law, the majority of these programs are set to expire on March 31, 2010. While a CBO score for the bill was unavailable as of press time, a score for a similar bill (H.R. 4691) which provided an extension for many of the same programs for the month of March, 2010, was estimated to provided $10.26 billion in funding and revenue reductions. Funding in the bill is designated as "emergency" spending, and thus would not be subject to the Democrats' statutory PAYGO requirements.

Extension of "Stimulus" Unemployment Provisions:  Extends the nationalization of the extended benefit unemployment program through May 5, 2010. The bill would extend 100 percent federal funding for the U.I. extended benefits program, as well as an additional $25 per week for U.I. recipients. However, given that the bill would use entirely federal funds to extend unemployment benefits, some Members may echo the concerns of noted economist Martin Feldstein, who previously testified that extended unemployment would "create undesirable incentives for individuals to delay returning to work. That would lower earnings and total spending." According to CBO, a similar extension for the month of March, 2010, resulted in a cost $6.8 billion in direct spending and a loss of $1.1 billion in lost revenue.

During economic downturns, Congress has acted to extend unemployment benefits beyond the statutory requirement of 26 weeks. Last year's wartime supplemental (P.L. 110-252) provided a new program of extended unemployment compensation benefits for up to 13 weeks (39 weeks total). Legislation signed by President Bush in November 2008 (P.L. 110-449) extended the period of extended unemployment compensation from 13 to 20 weeks (46 weeks total), with an additional 13 weeks (59 weeks total) available in high unemployment States. Legislation passed by Congress in October (P.L. 111-92) extended unemployment benefits for 14 weeks for all individuals (73 weeks total), with an additional six week extension (79 weeks total) for individuals in States with total unemployment rates above 8.5 percent.

The "stimulus" bill, in addition to shifting the financing for extended unemployment compensation benefits to the Treasury (as opposed to the Unemployment Trust Fund), and increasing all unemployment benefits by $25 per week through the end of 2009, effectively nationalized for the first time the Federal/State extended benefit program authorized in permanent law. That program has since its inception in the 1970s paid extended benefits in high unemployment States using 50 percent State funds. Extended benefits last up to 20 weeks, meaning the total maximum duration of 100 percent federally funded extended benefits today is a record 73 weeks-up to 53 weeks under the "temporary" program and another 20 weeks under the "permanent" program, which is currently entirely federally funded. Thus unemployed workers can receive a total of 73 weeks of federal benefits, or 99 weeks (counting 26 weeks of State unemployment benefits) available nationwide.

Extension of "Stimulus" COBRA Premium Subsidy:   The bill would also extend eligibilities for the 15 months of COBRA subsidies to employees who lose their jobs before May 1, 2010. The length of the subsidy eligibility was expanded from nine to 15 months by H.R. 3326 on December 19, 2009. CBO estimated that a similar provision extending benefits for the month of March increased direct spending by $94 million and reduce revenue by $991 million.

Provisions of the Consolidated Omnibus Reconciliation Act of 1985 (COBRA) provide for separated employees and their dependents to remain on their previous employer's group policy for 18 months, or up to 36 months in some cases. Employers are permitted to charge former workers electing COBRA coverage the full cost of their group insurance premiums, plus a 2 percent fee to cover administrative costs. The "stimulus" (P.L. 111-5) provided a 65 percent premium subsidy to employers to cover the costs of individuals electing COBRA coverage for up to nine months, provided such election came as a result of the individual's involuntary termination from employment during the period from September 1, 2008 to December 31, 2009. Under the "stimulus", subsidies continue for a maximum of nine months, but terminate once the individual becomes eligible for other employer-based coverage or Medicare. Subsidies begin to phase out for individuals with adjusted gross incomes over $125,000 and families with incomes over $250,000, phasing out completely at income levels of $145,000 and $290,000, respectively.

Some Members may view this further extension of health insurance subsidies-again, totally unpaid-for-as part of an attempt to circumvent the President's promise that his health "reform" bill will cost "only" $900 billion, and will not increase the deficit. If Democrats hope to extend provisions like the COBRA subsidies piecemeal through 2014 or beyond-when the major provisions of their "reform" bills will finally take effect-such efforts would cost several hundred billion dollars-yet the majority has made no attempt to offset the costs of such a federal spending binge.

Medicare Sustainable Growth Rate:  The bill provides for a one-month adjustment to the Sustainable Growth Rate (SGR) conversion factor for physician payments. Specifically, the bill provides for a zero percent update for the period from January 1, 2010 through May 1, 2010. The bill further provides that the adjustments made for this period will be disregarded for the purposes of determining the conversion factor for 2010 and future years, resulting in at least a 21 percent reduction in physician payments beginning on March 31, 2010. According to CBO, a similar provision for the month of March, 2010, cost $1 billion.

Medicare Therapy Caps:  The bill retroactively extends allowances for certain Medicare Part B recipients to exceed their yearly $1,860 cap for outpatient physical and speech language therapy services through April 30, 2010. According to CBO, a similar provision for the month on March increased direct spending by $37 million.

Poverty Guidelines:  Extends the expanded Health and Human Services poverty guidelines through April 30, 2010, to ensure that eligibility for certain means-tested benefits will not be reduced because of new poverty guidelines for at least one month. According to CBO, the same provision for the month of March cost $20 million.

Flood Insurance: Extends the National Flood Insurance Program through April 30, 2010.

Satellite Home Viewer Reauthorization: Includes a one month extension (through April 30, 2010) of current law which permits satellite television providers to retransmit certain network programming to subscribers. This would allow households that subscribe to various satellite television services to continue to view network broadcasts. According to CBO, this provision cost $2 million and increase revenues by $2 million in the month of March.

Compensation Related to the Lapse in Highway Programs: Provides two days worth of compensation for any federal employees who were furloughed as a result of the expiration of spending from the Highway Trust Fund (HTF) between February 28, 2010, and March 2, 2010. Employees would be compensated "as determined under policies established by the Secretary of Transportation." Under the bill, funds used by the Secretary to provide this compensation would be derived from the HTF.

SBA Loans Fee Waiver Extension: Includes $60 million for continuation of reduced fees for Small Business Administration (SBA) 7(a) loans and extends their authorization through March 31, 2010. The "stimulus" bill gave the SBA $375 million to increase its guarantee on 7(a) loans and to reduce or eliminate fees on both its 7(a) loans. These funds included in the "stimulus" bill have run out. The 7(a) Loan Program is the SBA's primary program to help start-up and existing small businesses obtain financing when they might not be eligible for business loans through private lending channels. SBA itself does not make the loans, but rather guarantees a portion of loans made and administered by commercial lending institutions. Participating lenders agree to structure loans according to SBA's requirements, and apply and receive a guaranty from SBA on a portion of this loan. According to CBO, this provision would cost $60 million.

Cost

A CBO cost estimate for H.R. 4851 was not available at press time. According to a CBO estimate for a similar bill (H.R. 4691) which extended many of the same programs for one month, the legislation would cost $8.14 billion and reduce revenue by $2.1 billion over ten years.

House Democratic Caucus Summary

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