Use of the Annual Appropriations Process to Block Implementation of the Affordable Care Act (FY2011-FY2017)
Released: 2017-05-11T00:00:00

Introduction

Congress is deeply divided over implementation of the Affordable Care Act (ACA), which President Obama signed into law in March 2010. Since the ACA's enactment, lawmakers opposed to specific provisions in the ACA or the entire law have repeatedly debated its implementation and considered bills to repeal, defund, delay, or otherwise amend the law.

Most of this legislative activity has taken place in the House, which reverted to Republican control in 2011. Over the past six years, the Republican-led House has passed numerous ACA-related bills, including legislation that would repeal the entire law. There has been less debate in the Senate, which remained under Democratic control through 2014. Most of the ACA legislation passed by the House during that period was not taken up by the Senate. However, a few bills to amend specific elements of the ACA that attracted sufficiently broad and bipartisan support were approved by both the House and the Senate and signed into law.

Repealing core provisions of the ACA and replacing them with new law is a legislative priority for the Republican-controlled 115 th Congress.

In addition to their attempts to repeal or amend the ACA through authorizing legislation, lawmakers have used the annual appropriations process in an effort to eliminate funding for the ACA's implementation and address other concerns they have with the law. ACA-related provisions have been included in enacted appropriations acts each year since the ACA became law. In October 2013, disagreement between the House and Senate over the inclusion of ACA language in a temporary spending bill for the new fiscal year (i.e., FY2014) resulted in a partial shutdown of government operations that lasted 16 days.

This report summarizes the ACA-related language added to annual appropriations legislation by congressional appropriators since the ACA was signed into law. The information is presented in Table 1 . While a detailed examination of the ACA itself is beyond the scope of this report, a brief overview of the ACA's core provisions and its impact on federal spending is provided as context for the material in the table. This report is updated as necessary to reflect key developments in the annual appropriations process.

A companion report, CRS Report R43289, Legislative Actions in the 112th, 113th, and 114th Congresses to Repeal, Defund, or Delay the Affordable Care Act , summarizes the authorizing legislation to amend the ACA that was enacted during the last three Congresses. It also reviews all the ACA legislation taken up and passed by the House during that period.

A Brief Overview of the ACA

The ACA made significant changes to the way U.S. health care is financed, organized, and delivered. Its primary goal is to increase access to affordable health care for the medically uninsured and underinsured. To that end, the law included a complex set of interconnected provisions that address the private health insurance market.

First, the ACA requires health insurers to comply with a set of federal standards ("market reforms") to ensure that individuals may purchase, keep, and renew coverage that provides a minimum level of benefits and consumer protections, with some limits on costs. Second, the law establishes competitive health insurance exchanges (also known as marketplaces) through which individuals and small employers are able to compare and enroll in qualified health plans.

Exchanges operate in every state and the District of Columbia. They are administered by states or by the federal government, or through a partnership between the state and federal governments. Qualified individuals who enroll in exchange plans may receive financial assistance if they meet income and certain other requirements. Refundable tax credits are available to individuals and families with incomes between 100% and 400% of the federal poverty level (FPL) to help pay the insurance premium. The premium tax credits are available upon enrollment so that eligible individuals and families can choose to receive the subsidy immediately rather than wait until they file taxes the following year. In addition, certain individuals and families receiving the tax credit may be eligible for cost-sharing subsidies to reduce their out-of-pocket costs (e.g., deductibles, copays) when receiving health services. Small employers with fewer than 25 full-time equivalent employees (FTEs) may also use the exchanges to purchase insurance coverage for their employees and may qualify for a tax credit to help cover the cost of providing that coverage.

In June 2015, the U.S. Supreme Court in King v. Burwell ruled that the premium tax credits are available to all qualified individuals who enroll in exchange plans and meet the necessary income and other requirements, regardless of whether the exchange is administered by the state or the federal government.

Third, the ACA's "individual mandate" requires most U.S. citizens and legal residents to obtain coverage. Those who remain uninsured may have to pay a penalty unless they qualify for an exemption. The individual mandate is intended to encourage healthy individuals to participate in the insurance market and not wait until they get sick to buy coverage. Finally, the law requires larger employers with 50 or more FTEs to offer health coverage that meets affordability and adequacy standards for their full-time employees and those workers' dependents. Employers who do not comply with these requirements may be subject to a tax if one or more of their employees purchase coverage through an exchange and receive a subsidy. The purpose of the ACA's employer requirements is to encourage larger firms to maintain affordable and adequate coverage for their employees.

The ACA coupled its private insurance provisions with the requirement that states expand their Medicaid programs to cover all nonelderly individuals with incomes up to 138% FPL. Those with higher incomes, up to 400% FPL, may be eligible to get subsidized coverage through an exchange. In June 2012, the U.S. Supreme Court in NFIB v. Sebelius found the Medicaid expansion to be unconstitutionally coercive and prohibited the federal government from enforcing it. The Court's decision made Medicaid expansion optional for states.

In addition to expanding access to insurance coverage, the ACA contains hundreds of other provisions that address health care access, costs, and quality. They include new programs to test alternative ways of delivering and paying for health care. The law also includes new taxes and fees as well as adjustments to Medicare payments to hospitals and other health care providers. These provisions are designed to offset the federal spending on exchange subsidies and Medicaid expansion.

ACA's Impact on Federal Spending

Implementation of the ACA is affecting both mandatory and discretionary spending. Mandatory spending —also referred to as direct spending—is controlled through authorizing laws. It includes spending on entitlement programs such as Medicare and Social Security. Authorizing laws may provide permanent or temporary appropriations or other forms of budget authority for such spending. When the authorizing law contains no appropriations, mandatory programs may be funded through the annual appropriations process. This is sometimes referred to as "appropriated mandatory" or "appropriated entitlement" spending. Discretionary spending is both controlled and funded through the annual appropriations process. It typically covers the routine costs of running federal agencies and offices, including wages and salaries.

Federal spending on ACA implementation can be grouped into three categories: (1) mandatory spending on expanding insurance coverage, (2) mandatory spending on other programs, and (3) discretionary spending. Each of these categories is briefly discussed below.

Mandatory Spending on Expanding Insurance Coverage

This category accounts for most of the federal spending under the ACA. It includes the exchange subsidies (i.e., premium tax credits and cost-sharing subsidies), the federal government's share of the costs of Medicaid expansion, and tax credits for small employers. The Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) projected that this and other ACA mandatory spending (discussed in the second category, below) would be more than offset by (1) revenues from the ACA's new taxes and fees, and (2) savings from the law's adjustments to Medicare provider payments that are projected to slow the rate of growth of Medicare spending.

Mandatory Spending on Other Programs

The ACA authorized new Medicare and Medicaid spending. For example, it phased out the Medicare prescription drug benefit "donut hole" through a combination of subsidies and manufacturer discounts, and it increased Medicare payments for primary care services and medical education. The ACA also included numerous appropriations that are providing billions of dollars of mandatory funding to support grant programs and other activities authorized by the law. For example, the law funded temporary insurance programs for targeted groups prior to the exchanges becoming operational, and it provided funding for grants to states to plan and establish health insurance exchanges. The ACA included a permanent appropriation, available for 10-year periods, for the Center for Medicare & Medicaid Innovation (CMMI), within the Centers for Medicare & Medicaid Services (CMS), to test and implement innovative health care payment and service delivery models.

In addition, the ACA created four special funds and appropriated amounts to each one. First, the Community Health Center Fund (CHCF) provided almost $11 billion over five years (FY2011-FY2015) for the federal health centers program and the National Health Service Corps. Second, the Patient-Centered Outcomes Research Trust Fund (PCORTF) is supporting patient-centered comparative clinical effectiveness research through FY2019 with a mix of appropriations, fees on health plans, and transfers from the Medicare trust funds. Third, the Prevention and Public Health Fund (PPHF), for which the ACA provided a permanent annual appropriation, is supporting prevention, wellness, and other public health-related programs and activities. Finally, the Health Insurance Reform Implementation Fund (HIRIF), for which the ACA appropriated $1 billion, helped pay for the initial administrative costs of implementing the law.

Discretionary Spending

The ACA is affecting discretionary spending in two ways. First, the law created numerous new discretionary grant programs and provided each of them with an authorization of appropriations. To date, however, few of these programs have received discretionary funding through annual appropriations acts, though several of them have been supported with mandatory funds from the PPHF.

Second, the two agencies primarily responsible for implementing the ACA's provisions to expand insurance coverage—CMS's Center for Consumer Information and Insurance Oversight (CCIIO) and the Internal Revenue Service (IRS)—are incurring significant costs in connection with administering and enforcing the law. Both agencies requested increases in funding in each of their past five budget submissions (i.e., FY2013-FY2017) to help pay for ACA implementation. But congressional appropriators have not provided either agency with any additional discretionary funds.

CMS instead has relied on funding from other sources to support the federal health insurance exchange (Healthcare.gov) and other ACA implementation activities. Those sources include discretionary fund transfers from other accounts, amounts from the Nonrecurring Expenses Fund (NEF), ACA mandatory funds (i.e., HIRIF, PPHF), and, more recently, user fees assessed on health insurers that participate in the federal exchange.

ACA Provisions in Enacted Appropriations Acts

The House Appropriations Committee has added numerous ACA-related provisions to annual appropriations acts since the Republicans regained control of the House at the beginning of the 112 th Congress. Most of these provisions were included in the Departments of Labor, Health and Human Services, and Education, and Related Agencies (LHHS) Appropriations Act, which funds CMS. A few were incorporated in the Financial Services and General Government (Financial Services) Appropriations Act, which funds the IRS. Appropriations bills drafted by the Senate Appropriations Committee remained largely free of ACA-related provisions during the 112 th and 113 th Congresses, while the Senate remained under Democratic control, with one key exception. Each year, the Senate LHHS appropriations bill included instructions on the allocation of PPHF funding.

Disagreement between the Republican-controlled House and the Democrat-led Senate during the 113 th Congress on whether to include ACA provisions in the FY2014 continuing resolution (CR) shut down programs and activities across the federal government in October 2013; see text box.

With Republicans in control of both chambers in the 114 th Congress, House and Senate appropriators were able to coordinate their efforts to include ACA-related provisions in appropriations bills. The House and Senate FY2016 and FY2017 LHHS appropriations bills included several overlapping ACA provisions and reporting requirements.

The appropriations committees have used a number of legislative options available to them through the appropriations process in an effort to defund, delay, or otherwise address implementation of the ACA. These options are briefly summarized below.

Administrative Spending Levels

The appropriators have denied CMS and the IRS new funding to cover the administrative costs of ACA implementation. CMS has requested substantial increases in funding for its Program Management account in each of the past five budgets (i.e., FY2013-FY2017). Those new funds were to help support operation of the federally facilitated exchange and other ACA-related activities. Congress, however, did not provide any additional discretionary funds for CMS in the enacted LHHS appropriations acts for FY2013-FY2017. Similarly, the IRS requested additional discretionary funds in each of the last five budgets to support administration and enforcement of the ACA's tax provisions, including the premium tax credits and the individual mandate penalties. Again, Congress has not given the IRS the extra funds it requested.

Limitation Provisions

House appropriators repeatedly have added limitations (often referred to as riders) to the LHHS and Financial Services appropriations bills. Limitation provisions within appropriations measures are provisions that restrict the use of funds provided by the bill. They do this either by capping the amount of funding that may be used for a particular purpose or by prohibiting the use of any funds for a specific purpose. For example, House appropriators on multiple occasions have added language prohibiting an agency from using any of the funds for ACA implementation activities. Limitation provisions also may be used to restrict the availability of funds for transfer. During the FY2011-FY2015 appropriations cycles the ACA limitation provisions added by House appropriators were removed during negotiations with the Senate.

The House FY2016 and FY2017 LHHS appropriations bills included limitations that would have prohibited HHS (and the Labor Department) from using any discretionary funding to enforce the ACA's market reforms, operate the federal exchange, or administer other ACA programs. Also, they would have banned the use of other funding made available by the appropriations act to implement the ACA. For example, CMS would have been prohibited from funding the Medicaid expansion, and prohibited from collecting user fees from health insurers to help cover the costs of operating the federal exchange.

None of these limitation provisions were included in the final enacted versions of the FY2016 and FY2017 LHHS appropriations acts.

Legislative Provisions

House appropriators have incorporated ACA-related legislative language in the LHHS appropriations bills. Unlike limitations, legislative provisions have the effect of making new law or changing existing law. As an example, appropriators have included language to rescind (i.e., cancel) certain mandatory funding provided by the ACA. The enacted FY2016 LHHS appropriations act included a temporary moratorium on the ACA's medical device tax and the annual fee on health insurance providers, as well as a two-year delay of the Cadillac tax (i.e., the ACA's excise tax on high-cost employer-sponsored health plans).

House rules prohibit legislative provisions in appropriations acts, while the rules of the Senate allow exceptions under some circumstances. However, special rules in the House (approved by the Rules Committee) and unanimous consent agreements in the Senate can be used to set aside each chamber's rules, including those that relate to legislating in appropriations measures.

Reporting and Other Administrative Requirements

Appropriators have added to recent LHHS appropriations acts several reporting and other administrative requirements regarding implementation of the ACA. These include instructing the HHS Secretary to establish a website with information on the allocation of PPHF funds and to provide an accounting of administrative spending on ACA implementation.

Table 1 summarizes the ACA-related legislative and other provisions that were incorporated in the enacted LHHS and Financial Services appropriations acts for each of FY2011-FY2017. For each fiscal year, the table also provides a brief overview of any legislative action taken by the House and Senate Appropriations Committees on their respective versions of the two appropriations bills prior to the two chambers reaching agreement on the final version of the legislation. This discussion lists all the ACA language added to the bills by the committees. As already noted, none of the ACA limitations added by the House appropriators were included in the enacted LHHS and Financial Services appropriations acts.