CRS Reports

The Army's M-1 Abrams, M-2/M-3 Bradley, and M-1126 Stryker: Background and Issues for Congress

This report discusses various issues surrounding the M-1 Abrams Tank, the M-2/M-3 Bradley Fighting Vehicle (BFV), and the M-1126 Stryker Combat Vehicle, centerpieces of the Army's Armored Brigade Combat Teams (ABCTs) and Stryker Brigade Combat Teams (SBCTs). Congress is concerned with the long-term military effectiveness of these vehicles.

Oct 15, 2015

The Internet of Things: Frequently Asked Questions

“Internet of Things” (IoT) refers to networks of objects that communicate with other objects and with computers through the Internet. “Things” may include virtually any object for which remote communication, data collection, or control might be useful, such as vehicles, appliances, medical devices, electric grids, transportation infrastructure, manufacturing equipment, or building systems. In other words, the IoT potentially includes huge numbers and kinds of interconnected objects. It is often considered the next major stage in the evolution of cyberspace. Some observers believe it might even lead to a world where cyberspace and human space would seem to effectively merge, with unpredictable but potentially momentous societal and cultural impacts. Two features make objects part of the IoT—a unique identifier and Internet connectivity. Such “smart” objects each have a unique Internet Protocol (IP) address to identify the object sending and receiving information. Smart objects can form systems that communicate among themselves, usually in concert with computers, allowing automated and remote control of many independent processes and potentially transforming them into integrated systems. Those systems can potentially impact homes and communities, factories and cities, and every sector of the economy, both domestically and globally. Although the full extent and nature of the IoT’s impacts remain uncertain, economic analyses predict that it will contribute trillions of dollars to economic growth over the next decade. Sectors that may be particularly affected include agriculture, energy, government, health care, manufacturing, and transportation. The IoT can contribute to more integrated and functional infrastructure, especially in “smart cities,” with projected improvements in transportation, utilities, and other municipal services. The Obama Administration announced a smart-cities initiative in September 2015. There is no single federal agency that has overall responsibility for the IoT. Agencies may find IoT applications useful in helping them fulfill their missions. Each is responsible for the functioning and security of its own IoT, although some technologies, such as drones, may fall under the jurisdiction of other agencies as well. Various agencies also have relevant regulatory, sector-specific, and other mission-related responsibilities, such as the Departments of Commerce, Energy, and Transportation, the Federal Communications Commission, and the Federal Trade Commission. Security and privacy are often cited as major issues for the IoT, given the perceived difficulties of providing adequate cybersecurity for it, the increasing role of smart objects in controlling components of infrastructure, and the enormous increase in potential points of attack posed by the proliferation of such objects. The IoT may also pose increased risks to privacy, with cyberattacks potentially resulting in exfiltration of identifying or other sensitive information about an individual. With an increasing number of IoT objects in use, privacy concerns also include questions about the ownership, processing, and use of the data they generate. Several other issues might affect the continued development and implementation of the IoT. Among them are the lack of consensus standards for the IoT, especially with respect to connectivity; the transition to a new Internet Protocol (IPv6) that can handle the exponential increase in the number of IP addresses that the IoT will require; methods for updating the software used by IoT objects in response to security and other needs; energy management for IoT objects, especially those not connected to the electric grid; and the role of the federal government, including investment, regulation of applications, access to wireless communications, and the impact of federal rules regarding “net neutrality.” No bills specifically on the IoT have been introduced in the 114th Congress, although S.Res. 110 was agreed to in March 2015, and H.Res. 195 was introduced in April. Both call for a U.S. IoT strategy, a focus on a consensus-based approach to IoT development, commitment to federal use of the IoT, and its application in addressing challenging societal issues. House and Senate hearings have been held on the IoT, and several congressional caucuses may consider associated issues. Moreover, bills affecting privacy, cybersecurity, and other aspects of communication could affect IoT applications.

Oct 13, 2015

New Climate Change Joint Announcement by China and the United States

Oct 2, 2015

Disparate Impact Claims Under the Fair Housing Act

The Fair Housing Act (FHA) was enacted “to provide, within constitutional limitations, for fair housing throughout the United States.” It prohibits discrimination on the basis of race, color, religion, national origin, sex, physical and mental handicap, and familial status. Subject to certain exemptions, the FHA applies to all sorts of housing, public and private, including single family homes, apartments, condominiums, and mobile homes. It also applies to “residential real estate-related transactions,” which include both the “making [and] purchasing of loans ... secured by residential real estate [and] the selling, brokering, or appraising of residential real property.” There has been controversy over whether, in addition to outlawing intentional discrimination, the FHA also prohibits certain housing-related decisions that have a discriminatory effect on a protected class. That controversy was settled when, in June 2015, a divided U.S. Supreme Court ruled that disparate impact claims are cognizable under the FHA. Key Takeaways of This Report In February 2013, Department of Housing and Urban Development (HUD) for the first time issued regulations “formaliz[ing] HUD’s long-held interpretation of the availability of discriminatory effects’ liability under the Fair Housing Act and to provide nationwide consistency in the application of that form of liability.” In June 2015, the Supreme Court held in Texas Department of Housing and Community Affairs v. Inclusive Communities Project that disparate impact claims are cognizable under the FHA—a view previously espoused by HUD and the 11 U.S. Courts of Appeals to render opinions on the issue. The Court also outlined certain limiting factors that should apply when assessing disparate impact claims. The Supreme Court appears to have adopted a three-step burden-shifting test for assessing disparate impact liability under the FHA. The test outlined by the Court, which is similar though not identical to the one adopted by HUD, places the initial burden on the plaintiffs to establish evidence that a housing decision or policy caused a disparate impact on a protected class. Defendants can counter the plaintiff’s prima facie showing by establishing that the challenged policy or decision is “necessary to achieve a valid interest.” The defendant’s “valid interest” will stand unless the “plaintiff has shown that there is an available alternative practice that has less disparate impact and serves the entity’s legitimate needs.” Going forward, the minority of federal circuits that historically have used a different type of test likely will begin using a burden-shifting scheme consistent with the test outlined in Inclusive Communities. The Supreme Court stressed that lower courts and HUD should rigorously evaluate plaintiffs’ disparate impact claims to ensure that evidence has been provided to support, not only a statistical disparity, but also causality (i.e., that a particular policy implemented by the defendant caused the disparate impact). The Court also emphasized that claims should be disposed of swiftly in the preliminary stages of litigation when plaintiffs have failed to provide sufficient evidence of causality. Although plaintiffs historically have faced fairly steep odds of getting their disparate impact claims past the preliminary stages of litigation, much less succeeding on the merits, the “cautionary standards” stressed by the Supreme Court might result in even fewer successful disparate impact claims being raised in the courts and/or swifter disposal of claims that are raised.

Sep 24, 2015

The Chinese Military: Overview and Issues for Congress

This report provides a brief overview of the Chinese military. In order to cover a wide range of issues in a concise format, the report does not go into great depth on many topics and omits other topics that might be considered germane.

Sep 18, 2015

Federal Credit Programs: Comparing Fair Value and the Federal Credit Reform Act (FCRA)

The U.S. government uses direct loans and loan guarantees in a range of policy areas. More than 100 direct federal loans and private financial institution loans guaranteed by the government, known as federal credit programs, are available to individuals and firms. The credit programs support a wide range of economic activities, including home ownership, education, small business, farming, energy, infrastructure investment, and exports. At the end of fiscal year (FY) 2014, outstanding federal credit totaled $3.3 trillion, with direct loans at $1.0 trillion and loan guarantees at $2.3 trillion. For budget formulation, the costs or profits of these government programs are estimated as prescribed by the Federal Credit Reform Act of 1990 (FCRA; P.L. 101-508). As measured by FCRA, some of these credit programs generate a profit while others incur costs to the government. The costs of these credit programs are commonly referred to as subsidy costs. When these programs generate a profit, they are considered negative subsidy costs. In recent years, Congress has debated the best way to measure subsidy costs. The debate has revolved around whether the subsidy costs should be measured as prescribed by FCRA or by what is referred to as the fair-value method. Subsidy costs estimates under FCRA adjust the cash outflows and inflows for the various risks a loan portfolio might face. These cash flows are also discounted using Treasury interest rates for estimating subsidy costs. One method of estimating the fair-value costs of the credit programs is to use private-market interest rates. Generally, private-sector firms would charge a borrower with a government loan guarantee lower interest rates than they would charge a borrower without the government guarantee. Switching to fair value, therefore, is expected to increase the subsidy costs estimates of credit programs. For example, the Congressional Budget Office (CBO) projects that changing the method of calculating subsidy costs estimates to the fair-value method would increase the 10-year budget cost estimates of student loans by $223 billion, single-family mortgage insurance by $93 billion, and the Export-Import Bank by $16 billion. Many of the credit programs that are estimated to make a profit under FCRA have a subsidy cost (incur loss) under fair value. Proponents of fair-value cost estimates argue the government’s cost of credit programs should reflect market risks. Those risks are currently excluded from FCRA cost estimates. In their view, the risk posed by the borrowers should be considered as a cost to the taxpayers because taxpayers are ultimately responsible for paying the debt of the U.S. government. Supporters of using the FCRA method argue that it is appropriate for the government to discount at the rate at which it borrows and that market risk is not the same as budgetary costs. In their view, including market risks to estimate credit subsidies includes amounts that the government will never incur. Further, adopting fair value for budget estimates does not necessarily imply that there would be a need to raise taxes or to borrow additional funds because such costs affect only the budget projections not the actual amount of cash flows. Legislation has been introduced in the 114th Congress (S. 399 and H.R. 119) that would change the method of calculating subsidy costs to the fair-value method. Similar legislative proposals passed the House in the 113th Congress but were not acted on in the Senate. FY2016 budget resolutions in the 114th Congress, S.Con.Res. 11 and H.Con.Res. 27, include provisions that would address the issue of fair value in federal credit programs by requiring CBO to provide fair-value estimates for credit programs at the request of the budget committees. S.Con.Res. 11 was adopted by the House on April 30, 2015, and by the Senate on May 5, 2015.

Sep 14, 2015

Encryption and Evolving Technology: Implications for U.S. Law Enforcement Investigations

This report provides an overview of the perennial issue involving technology outpacing law enforcement and discusses how policy makers and law enforcement officials have dealt with this issue in the past. It discusses the current debate surrounding smartphone data encryption and how this may impact U.S. law enforcement operations. The report also discusses existing law enforcement capabilities, the debate over whether law enforcement is "going dark" because of rapid technological advances, and resulting issues that policy makers may consider.

Sep 8, 2015

Federal Reserve: Emergency Lending

This report provides a review of the history of Section 13(3) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act; P.L. 111-203), including its use in 2008. It discusses the Federal Reserve's (Fed's) authority under Section 13(3) before and after the Dodd-Frank Act. It then discusses policy issues and legislation to amend Section 13(3).

Sep 8, 2015

Essential Air Service (EAS)

The Airline Deregulation Act of 1978 gave airlines almost total freedom to determine which domestic markets to serve and what airfares to charge. This raised the concern that communities with relatively low passenger levels would lose service as carriers shifted their operations to serve larger and often more profitable markets. To address this concern, Congress established the Essential Air Service (EAS) program to ensure that small communities that were served by certificated air carriers before deregulation would continue to receive scheduled passenger service, with subsidies if necessary. The EAS program is administered by the Office of the Secretary of the U.S. Department of Transportation (DOT), which enforces the eligibility requirements and determines the level of service required at eligible communities. As of June 1, 2015, 159 communities in the United States received subsidized service under EAS. Over the years, Congress has limited the scope of the program, mostly by eliminating subsidy support for communities within a specified driving distance of a major hub airport and capping subsidies under certain criteria. The FAA Modernization and Reform Act of 2012 (P.L. 112-95) included additional EAS reform measures, including the requirement that a community have a minimum number of daily enplanements to remain eligible for subsidy. Further, the Consolidated Appropriations Act, 2014 (P.L. 113-76), and the Continuing Appropriations Resolution, 2015 (P.L. 113-164), introduced additional measures to shrink the program. As of yet, some of these measures have not been fully enforced. Despite these efforts to limit spending for EAS subsidies, program expenditures have risen 123% since 2008, after adjusting for inflation, and are projected to continue rising through FY2016. Some factors contributing to the rising program costs are external, such as unusually high aviation fuel prices from 2008 through 2014 and the prospect of higher pilot wage costs due to changes in federal regulations. However, certain features of the EAS program itself may have contributed to the rising costs. The statute governing EAS does not list cost among the four factors DOT must consider when evaluating air carriers’ bids to provide subsidized EAS service, and neither the carriers nor the communities receiving subsidized service are obliged to select service options that minimize the government’s costs. EAS traditionally has been authorized in laws reauthorizing the Federal Aviation Administration (FAA) and other civil aviation programs. The current authorization act expires September 30, 2015. EAS is likely to be among the subjects of debate as Congress considers extending the current law or writing a new authorization act.

Sep 3, 2015

ESEA Title I-A Formulas: In Brief

Aug 28, 2015

The Patient Protection and Affordable Care Act’s Essential Health Benefits (EHB)

Congressional Research Service 7-5700 www.crs.gov R44163 Summary The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) requires all non-grandfathered health plans in the non-group and small-group private health insurance markets to offer a core package of health care services, known as the essential health benefits (EHB). The ACA does not specifically define this core package but rather lists 10 benefit categories from which benefits and services must be included. The 10 benefit categories are as follows: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness and chronic disease management; and pediatric services, including oral and vision care. For 2014-2016, each state was required to select an EHB-benchmark plan. The benchmark plan serves as a reference plan on which non-group and small-group market plans must substantially base their benefits packages. Because each state selected its own EHB-benchmark plan under the 2014-2016 approach to the EHB, there is considerable variation in EHB coverage from state to state. This variation occurs in terms of specific covered services as well as in terms of amount, duration, and scope. For example, some state EHB-benchmark plans may include bariatric surgery as a covered service whereas other state EHB-benchmark plans may not cover bariatric surgery. State benefit mandates also may be considered to be part of that state’s EHB and thus add to state-level coverage differences. Furthermore, because states can allow non-group and small-group plans to substitute certain services within the categories, coverage in plans within a state also may vary by benefit amount, duration, and scope. For example, a state’s EHB-benchmark plan could offer up to 20 physical therapy visits and 10 occupational therapy visits. Another plan in the state could offer coverage consistent with the EHB-benchmark plan by covering up to 10 physical therapy visits and 20 occupational therapy visits. In addition to covering the EHB, the ACA imposes a limit on cost sharing (which includes co-payments, coinsurance, and deductibles) for the EHB. The ACA also prohibits plans from applying lifetime and annual dollar limits on the EHB. Contents Essential Health Benefits 1 Essential Health Benefits for 2014-2016 3 State Selection of Benchmark Plans 3 Coverage in Each Benefit Category 5 Pediatric Oral and Vision Services 6 Habilitative Services 6 Mental Health and Substance Use Disorder Services 8 Prescription Drug Services 8 Inclusion of State Benefit Mandates 8 Variation in Essential Health Benefits Coverage 9 Interstate Variation 9 Intrastate Variation 9 Essential Health Benefits for 2017 10 Applicability of Essential Health Benefits Requirements to Health Plans 11 Health Plans Subject to Essential Health Benefits Requirements 11 Qualified Health Plans 12 Catastrophic Plans 12 Health Plans Not Subject to Essential Health Benefits Requirements 13 Grandfathered Plans 13 Large-Group Market Plans 13 Self-Insured Plans 14 Dental-Only Plans 14 Essential Health Benefits and Other ACA Provisions 14 Cost Sharing 14 Lifetime and Annual Dollar Limits 14 Minimum Essential Coverage 15 Figures Figure 1. The 10 Essential Health Benefits Categories 2 Figure 2. Overview of the Essential Health Benefits (EHB) Process 3 Figure 3. State Selection of 2014-2016 Essential Health Benefits Benchmark Plans 5 Figure 4. State Selection of Supplementary Plan Types for Pediatric Oral and Vision Services 7 Figure 5. Applicability of Essential Health Benefits Requirements to Health Plans 11 Tables Table 1. Illustrative Examples of Coverage Variation in State Essential Health Benefits Benchmark Plans for Selected Services 10 Contacts Author Contact Information 15 The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) includes many provisions that apply to health plans offered in the private health insurance market. The private market often is described as having three segments: the non-group, small-group, and large-group markets; and many of the ACA’s provisions focus specifically on the non-group and small-group insurance markets. These reforms are intended to address perceived failures in those markets, such as limited access to coverage and higher costs of coverage relative to the large-group market plans, and to provide some parity with the large-group market. For example, benefit coverage in non-group and small-group market health plans generally was perceived to be limited in comparison to benefit coverage in large-group market health plans. Thus, to provide some similarity to plans in the large-group market, the ACA requires non-group and small-group health plans to offer the essential health benefits (EHB), which is a core package of health care services. The EHB are one of the three components of the EHB package. The EHB package requires plans to (1) cover certain benefits (i.e., the essential health benefits); (2) comply with specific cost-sharing limitations; and (3) meet a certain generosity level. This report provides an overview of the first component of the EHB package—the essential health benefits. The report examines how the EHB are defined, regulations related to the EHB, state variation in the EHB, applicability of the EHB to health plans, and how the EHB interact with other ACA provisions. Essential Health Benefits Since 2014, all non-grandfathered plans in the non-group and small-group markets are required to offer a core package of health care services, known as the EHB. The ACA does not specifically define this core package. Instead, it lists 10 benefit categories from which benefits and services must be included (see Figure 1) and requires the Secretary of the Department of Health and Human Services (HHS) to further define the EHB. The HHS Secretary has the purview to define and periodically update the EHB. However, in defining the EHB, the HHS Secretary must take a number of parameters into account. For example, the scope of the EHB is to be equivalent to the scope of benefits typically provided under an employer-sponsored insurance plan. To accomplish this task, the ACA requires the Secretary of the Department of Labor (DOL) to conduct surveys of employer-sponsored insurance plans to determine typical benefits and provide a summary of the findings to the HHS Secretary. Figure 1. The 10 Essential Health Benefits Categories Source: 42 U.S.C. §18022. The EHB are to be balanced among the 10 categories, without a weighted preference toward any category. The HHS Secretary cannot make any coverage decisions, determine reimbursement rates, establish incentive programs, or design benefits in ways that discriminate against individuals because of their age, disability, or expected length of life. Furthermore, the HHS Secretary must take into account the diverse health care needs of the population, which includes women, children, persons with disabilities, and other groups. The HHS Secretary is tasked with reviewing the EHB, and part of the EHB review process includes providing a report to Congress and the public. The report is supposed to assess whether enrollees are facing any difficulty accessing services, either due to coverage or cost, and to consider whether the EHB need to be modified or updated due to changes in medical evidence or scientific advancement. If any modifications are to be made, the HHS Secretary is to include in the report how the EHB would be modified. Consequently, the Secretary periodically may update the EHB based on issues identified during the review process. Essential Health Benefits for 2014-2016 Figure 2. Overview of the Essential Health Benefits (EHB) Process / Source: Congressional Research Service (CRS) analysis of the essential health benefits (EHB) process based on 45 C.F.R. §156.100-115. State Selection of Benchmark Plans In December 2011, the Centers for Medicare & Medicaid Services (CMS) released a bulletin that outlined a reference plan approach for the EHB. This approach was based on employer-sponsored coverage in the current market. To define the EHB, HHS considered findings from the DOL’s report that described the scope of benefits under a typical employer-sponsored plan. HHS also considered a report from the Institute of Medicine that recommended criteria and methods for determining and updating the EHB. The HHS Secretary outlined a process in which each state identified a single plan to serve as a reference plan on which most non-group and small-group market plans must base their benefits packages in terms of the scope of benefits offered (see Figure 2). These reference plans are known as EHB-benchmark plans. The benchmark selection approach identified by the Secretary applied for the 2014, 2015, and 2016 coverage years. Each state’s EHB-benchmark plan applied to non-grandfathered health plans offered in the non-group and small-group markets, both inside and outside the exchanges (also known as marketplaces). The process required each state to select an EHB-benchmark plan that was based on plans available in the 2012 coverage year. States could select a benchmark plan among the following four options: Small-group market health plan. Any of the three largest small-group market health plans, by enrollment, in that state; State employee health benefit plan. Any of the three largest employee health benefit plan options, by enrollment, available to state employees in that state; Federal Employees Health Benefits (FEHB) plan. Any of the three largest national FEHB plan options, by aggregate enrollment; or Non-Medicaid Health Maintenance Organization (HMO). The largest insured commercial non-Medicaid HMO, by enrollment, operating in that state. If a state did not make a selection, the default EHB-benchmark plan was the largest health plan, by enrollment, in that state’s small-group market. Each state’s benchmark plan was finalized in early 2013. Figure 3 maps the type of benchmark plan selected by each state. The EHB-benchmark plan for 45 states and the District of Columbia (DC) is the small-group market health plan. Three states selected a non-Medicaid HMO, and two states selected a state employee health benefit plan as their EHB-benchmark plans. No state selected an FEHB plan as its benchmark plan. Figure 3. State Selection of 2014-2016 Essential Health Benefits Benchmark Plans Source: CRS analysis of EHB-benchmark plan selection information from the Department of Health and Human Services, “Patient Protection and Affordable Care Act: Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation,” 78 Federal Register 12834-12872, February 25, 2013. Notes: No state selected a Federal Employees Health Benefits (FEHB) plan as its essential health benefits benchmark plan for 2014-2016. HMO = health maintenance organization. Coverage in Each Benefit Category According to the regulations, the EHB-benchmark plan had to provide coverage for all 10 EHB categories. However, a number of state benchmark plans did not include all 10 EHB categories. If the selected benchmark plan did not include items or services within a category, the plan had to be supplemented accordingly. Generally, if an EHB-benchmark plan did not cover 1 or more of the 10 EHB categories, the state supplemented the EHB-benchmark plan by adding that particular category in its entirety from another benchmark plan option (i.e., the small-group market health plan, state employee health benefit plan, FEHB plan, or non-Medicaid HMO options described in “State Selection of Benchmark Plans,” above). For states that did not select an EHB-benchmark plan and thus defaulted to an EHB-benchmark plan (the largest health plan, by enrollment, in that state’s small-group market), HHS, if necessary, supplemented the state’s EHB-benchmark plan. The default benchmark plan was supplemented in the following order: (1) the second-largest plan, by enrollment, in the state’s small-group market; (2) the third-largest health plan, by enrollment, in the state’s small-group market; and (3) the largest national FEHB plan by enrollment across states. CMS also released additional guidance for certain EHB categories. In a December 2011 bulletin, CMS noted that of the 10 EHB categories, 3 categories were lacking under “typical employer plans.” These three categories were pediatric oral and vision services, habilitative services, and mental health and substance use disorder services. To address these issues, CMS outlined a separate supplemental process for pediatric oral and vision services and a separate determination process for habilitative services. Furthermore, CMS released additional guidance in regard to mental health and substance use disorder and prescription drug services. Pediatric Oral and Vision Services HHS outlined separate guidelines for supplementing pediatric oral and vision services. An EHB-benchmark plan that does not cover the pediatric oral and vision category is to be supplemented by adding the pediatric oral and/or vision services from either (1) the Federal Employees Dental and Vision Insurance Program (FEDVIP) plan with the largest national enrollment or (2) the benefits from a state’s separate Children’s Health Insurance Program (CHIP) plan with the highest enrollment, if a separate CHIP plan exists. For the 2014-2016 coverage years, 49 states and DC had to supplement their EHB-benchmark plans for pediatric oral services—25 states and DC selected a FEDVIP plan, and 24 states selected a CHIP plan as their supplementary plan type (see Figure 4). For pediatric vision services, 45 states and DC had to supplement their EHB-benchmark plans; 38 states and DC selected a FEDVIP plan, and 7 states selected a CHIP plan as their supplementary plan type (see Figure 4). Habilitative Services HHS found that many employer-sponsored plans did not identify habilitative services as a distinct group of services. Thus, in determining habilitative services, HHS proposed policies for coverage of such services. For the 2014 and 2015 coverage years, the HHS policies allowed states to define the benefits if the EHB-benchmark plan did not include coverage for habilitative services. If a state did not define habilitative services, either plans would have to cover habilitative services benefits that were similar in scope, amount, and duration to benefits covered for rehabilitative services or plans could determine their habilitative services benefits and report them to HHS for review. For the 2016 coverage year, HHS has modified the habilitative services benefits policy. Rather than allowing plans to cover habilitative services that are offered at parity with rehabilitative services, HHS has adopted a uniform definition for habilitative services. Habilitative services are defined as follows: Health care services that help a person keep, learn, or improve skills and functioning for daily living. Examples include therapy for a child who is not walking or talking at the expected age. These services may include physical and occupational therapy, speech-language pathology and other services for people with disabilities in a variety of inpatient and/or outpatient settings. Although HHS has adopted a definition, states may continue to define habilitative services so long as the state definition complies with EHB policies, including nondiscrimination. Plans, however, no longer may define habilitative services themselves. Figure 4. State Selection of Supplementary Plan Types for Pediatric Oral and Vision Services / Source: CRS analysis of individual state EHB-benchmark plan summaries provided by Centers for Medicare & Medicaid Services, Additional Information on Proposed State Essential Health Benefits Benchmark Plans, at http://www.cms.gov/CCIIO/Resources/Data-Resources/ehb.html as of May 14, 2015. Notes: FEDVIP = Federal Employees Dental and Vision Insurance Program. CHIP = Children’s Health Insurance Program. Mental Health and Substance Use Disorder Services For non-group and small-group plans to be EHB compliant, the plans must provide mental health and substance use disorder services, including behavioral health treatment services. These services must be compliant with the Mental Health Parity and Addiction Equity Act (MHPAEA; P.L. 110-343, as amended), which generally requires health insurance coverage for mental health services to be offered on par with covered medical and surgical benefits. Prescription Drug Services As part of the EHB, HHS outlined additional requirements regarding prescription drug services. Non-group and small-group market plans must cover at least the greater of (1) one drug in every United States Pharmacopeia (USP) category or class or (2) the same number of prescription drugs in each category and class as the EHB-benchmark plan. For the 2016 coverage year, HHS finalized additional guidance for the drug exceptions process and formulary drug lists. HHS outlined a drug exceptions process for enrollees to request and gain access to clinically appropriate drugs that are not covered by their health plan. The process takes 72 hours for a standard exception and 24 hours for an expedited review request. If the exception is granted, the plan must treat the drug as an EHB, including counting any cost sharing toward the plan’s annual cost-sharing limits. In 2016, plans also must have an up-to-date, accurate, and complete formulary drug list, which must include price tiers, on their websites. The formulary must be easily accessible to plan enrollees, prospective enrollees, the state, the exchange, HHS, the U.S. Office of Personnel Management (OPM), and the general public. Inclusion of State Benefit Mandates Prior to the passage of the ACA, many states had laws, known as state benefit mandates, that required health plans to cover certain health care services, health care providers, and/or dependents. Examples of state benefit mandates include coverage for substance abuse treatment, chiropractors, or adopted children. A state may require non-group and small-group plans to cover these state benefit mandates in addition to the EHB. Moreover, any state benefit mandates enacted on or before December 31, 2011, are considered to be part of the EHB. Nonetheless, in addition to covering the EHB, states may choose to impose additional benefit mandates. However, if a state does decide to impose additional benefits, the state itself must defray the cost of those benefits for plans offered in the exchange. The state must make a payment either to the enrollee or directly to the plan on behalf of the enrollee for all plans, regardless of whether an individual is receiving financial assistance. The plan quantifies the cost of the additional benefits. The cost calculation is based on analysis in accordance with generally accepted actuarial principles and methodologies, is conducted by a member of the American Academy of Actuaries, and is reported to the exchange by the plan. Variation in Essential Health Benefits Coverage Interstate Variation Because states selected their own EHB-benchmark plan under the 2014-2016 approach to the EHB, there is considerable variation in EHB coverage from state to state. This variation occurs in terms of specific covered services as well as in terms of amount, duration, and scope. For example, some state EHB-benchmark plans may include bariatric surgery as a covered service whereas other state EHB-benchmark plans may not cover bariatric surgery. In addition, among states that cover bariatric surgery as an EHB, the amount, scope, and duration of the service may vary. For example, the service may be limited to individuals diagnosed as morbidly obese in one state and limited to individuals for whom the service was deemed medically necessary in another state. Additional discussion and illustrative examples of coverage variation from state to state for selected services can be found in Table 1. State benefit mandates also may be considered to be part of that state’s EHB and thus add to state-level coverage differences. Intrastate Variation In addition to EHB variation by state, benefit coverage among plans within a state may differ. States may allow non-group and small-group market plans that offer the EHB to substitute benefits. A benefit may be substituted if the substitution is actuarially equivalent to the benefit being replaced and is made within the same EHB category. For example, a plan could offer coverage of up to 10 physical therapy visits and up to 20 occupational therapy visits as a substitute for EHB-benchmark plan coverage of up to 20 physical therapy visits and 10 occupational therapy visits, assuming actuarial equivalence and the other criteria are met. Substitutions, however, cannot be made for prescription drug benefits. Table 1. Illustrative Examples of Coverage Variation in State Essential Health Benefits Benchmark Plans for Selected Services Service Variation Bariatric Surgery Fewer than half of state EHB-benchmark plans provide coverage for bariatric surgery. Among state benchmark plans that do cover bariatric surgery services, the coverage itself varies by state. Many state benchmark plans limit bariatric surgery to individuals diagnosed as morbidly obese or to individuals for whom the service was deemed medically necessary. Some benchmark plans have additional limitations on the service, such as one procedure per lifetime or exclusions of certain types of bariatric procedures. Moreover, some plans exclude weight-reduction programs or supplies from the service. Chiropractic Care A majority of state EHB-benchmark plans provide coverage for chiropractic care. The benefit description itself varies by state; for example, some states include spinal manipulations with chiropractic care. Chiropractic care coverage varies by benefit amount, ranging from 10 visits to 40 visits per year (with certain exclusions). Some state benchmark plans combine chiropractic care visit limits with rehabilitative, habilitative, and occupational therapy benefit limits. Home Health Care All state EHB-benchmark plans provide coverage for home health care services. Nonetheless, coverage varies by amount (e.g., ranging from 20 visits to 150 visits per year; 30 days to 100 days per year; or 28 hours per week). Benefit exclusions vary by benchmark plan. Reimbursement for services provided by a family member, dietician services, and custodial care often are excluded from a plan’s home health care benefits. Infertility Treatment Fewer than half of state EHB-benchmark plans provide coverage for infertility treatment services. The benefit scope varies by benchmark plans. For example, some plans exclude assistive reproductive technology, artificial insemination, donor eggs, or surrogacy. Furthermore, plans may limit the benefit amount by treatment limits (e.g., one procedure per lifetime or six complete ooctye retrievals per lifetime). Source: CRS analysis of state EHB-benchmark plan summary information provided by Centers for Medicare & Medicaid Services, “Additional Information on Proposed State Essential Health Benefits Benchmark Plans,” at http://www.cms.gov/CCIIO/Resources/Data-Resources/ehb.html as of May 14, 2015. Note: Examples provided in this table are for illustrative purposes only. Essential Health Benefits for 2017 For the 2017 coverage year, the EHB will continue to be defined by the benchmark approach—that is, having states select a reference plan on which most non-group and small-group market plans must substantially base their benefits package. However, for 2017, states will select a new EHB-benchmark plan based on plans available in the 2014 coverage year. In addition to requiring new EHB-benchmark plans, HHS finalized additional guidance for habilitative services and prescription drug services. (For information on current regulations surrounding these services, see the “Habilitative Services” and “Prescription Drug Services” sections of this report.) For the 2017 coverage year, HHS will require plans to have separate visit limits on habilitative and rehabilitative services. For prescription drug services, HHS will require plans to use a pharmacy and therapeutics (P&T) committee system in addition to the current USP drug count standard. The P&T committees will develop formulary drug lists that cover prescription drugs across a broad range of therapeutic categories and classes and that do not discourage enrollment by any group of consumers. The P&T committees will have to review and approve plan policies that affect consumer access to drugs. Applicability of Essential Health Benefits Requirements to Health Plans Health Plans Subject to Essential Health Benefits Requirements Generally, non-group and fully insured small-group market health plans are required to offer the EHB. This requirement applies to non-group and small-group plans offered both inside and outside the exchanges. Additional plan types are subject to the EHB (see Figure 5). Figure 5. Applicability of Essential Health Benefits Requirements to Health Plans Sources: CRS analysis of 42 U.S.C. §18021 and 42 U.S.C. §18022. Notes: This figure is not an exhaustive list of existing plan types. Limited exceptions may apply. Qualified Health Plans The ACA generally requires that non-group and small-group health insurance plans offered through exchanges are Qualified Health Plans (QHPs). Typically, to be a certified as a QHP a plan has to offer the EHB, comply with cost-sharing limits, and meet certain market reforms. Each exchange is responsible for certifying the plans it offers. However, QHPs can be offered both inside the health insurance exchanges and outside the exchanges on the private health insurance market. The exchanges also offer variants of QHPs such as multistate plans and child-only plans. Multistate Plans The ACA directs OPM to contract with private insurers in each state to offer at least two comprehensive health insurance options, known as multistate plans (MSPs). MSPs are designed to offer nationally available QHPs through the exchanges; MSPs are not available outside the exchanges. Some MSP options also offer in-network care for out-of-state services, but not all do. MSPs must offer a package of benefits that includes the EHB (see Figure 1). MSPs also must offer a package of benefits that is substantially equal to either the state-selected EHB-benchmark plan for the state in which the plan is offered or an OPM-selected benchmark plan. Moreover, MSPs must comply with any state standards related to benefit mandates, substitution of benefits, and habilitative services. Child-Only Plans Child-only health insurance plans are a type of QHP available in the exchanges. To offer child-only plans in an exchange, a health insurance plan must also offer a QHP in the exchange. The ACA requires the plan to offer the child-only exchange plan at the same coverage level as the QHP. Only individuals under the age of 21 may enroll in child-only exchange plans. Child-only health plans are treated as a type of QHP and thus are subject to EHB requirements. Catastrophic Plans Catastrophic plans are a type of health plan offered in the individual exchanges. Catastrophic plans offered through exchanges provide the EHB and coverage for at least three primary care visits. The monthly premium for catastrophic plans generally is lower than for other QHPs. However, catastrophic plans impose a very high deductible, and cost sharing generally is higher. These plans also do not meet the minimum requirements related to coverage generosity (i.e., actuarial value). Catastrophic plans may be offered only in the individual market for (1) individuals under the age of 30 and (2) persons exempt from the ACA requirement to obtain health coverage because no affordable coverage is available or they have a hardship exemption. Health Plans Not Subject to Essential Health Benefits Requirements Certain health plans are not subject to the EHB requirements. Examples of these health plans include grandfathered plans, large-group market plans, self-insured plans, and dental-only plans (see Figure 5). Grandfathered Plans Health insurance plans that were in existence (in the non-group, small-group, or large-group market) and in which at least one person was enrolled on the date of the ACA’s enactment (March 23, 2010) are considered grandfathered and have a unique status under the ACA. As long as a plan maintains its grandfathered status, the plan has to comply with some but not all ACA provisions. Grandfathered plans are not subject to the EHB requirements. Plans may lose their status if they apply certain changes to benefits, cost sharing, employer contributions, and access to coverage. Large-Group Market Plans Large-group market plans typically are employer-sponsored insurance plans and are defined by the number of employees. In general, a large-group plan has 50 or more employees. Starting with the 2016 coverage year, the ACA requires states to define large-group plans as 100 or more employees. Many of the market reform provisions in the ACA targeted the non-group and small-group markets. The reforms focused on perceived failures in these markets and provided parity with the large-group market. Accordingly, large-group plans are exempt from a number of ACA market reforms, including coverage of the EHB. Nonetheless, benefits and coverage offered in large-group market plans play an important role for the EHB. Recall that in defining the EHB, HHS examined the scope of benefits under a typical employer-sponsored insurance plan and used that information in determining what services would be covered as well as additional supplemental guidelines. Self-Insured Plans Self-insured plans are a type of group health plan. Organizations that self-insure do not purchase health coverage from insurance carriers. Self-insured plans refer to health coverage that is provided directly by the organization seeking coverage for its members (e.g., a firm providing health benefits to its employees). Such organizations set aside funds and pay for health benefits directly. Under self-insurance, the organization bears the risk for covering medical expenses. Firms that self-insure may contract with third-party administrators to handle administrative duties such as member services, premium collection, and utilization review. Self-insured plans are not subject to many of the ACA market reforms, including the EHB. Dental-Only Plans In the exchanges, an individual can obtain dental coverage as part of a QHP or as a stand-alone dental plan. Dental-only plans must provide coverage for pediatric oral services (1 of the 10 EHB categories). Dental-only plans are not required to cover the remaining EHB categories. Essential Health Benefits and Other ACA Provisions Cost Sharing The ACA imposes an annual cap on consumer cost sharing for the EHB. The ACA specifies that the limits work in two ways: they prohibit (1) applying deductibles to preventive health services and (2) annual out-of-pocket limits that exceed existing limits in the tax code. The cost-sharing limits apply only to in-network benefits and must include all co-payments, coinsurance, and deductibles. In 2015, the cost-sharing limits are $6,600 for an individual plan and $13,200 for a family plan. For 2016, the cost-sharing limits are $6,850 for an individual plan and $13,700 for a family plan. Lifetime and Annual Dollar Limits Prior to the ACA, plans generally were able to set lifetime and annual limits—dollar limits on how much the plan would spend for covered health benefits either during the entire period an individual was enrolled in the plan (lifetime limits) or during a plan year (annual limits). The ACA prohibited both lifetime and annual limits on the EHB. Plans are permitted to place lifetime and annual limits on covered benefits that are not considered EHBs, to the extent that such limits are permitted by federal and state law. Minimum Essential Coverage The EHB differs from minimum essential coverage. Minimum essential coverage is a term defined in the ACA and its implementing regulations that refers to the individual mandate, or the ACA requirement that most individuals must have health insura

Aug 27, 2015

Apprenticeship in the United States: Frequently Asked Questions

This Frequently Asked Questions (FAQ) report focuses on the Registered Apprenticeship system, through which the U.S. Department of Labor (or a recognized state apprenticeship agency) certifies a program as meeting certain federal requirements related to duration, intensity, and benefit to the apprentice. The report also discusses federal programs for which supporting apprenticeship activities is an allowable, but not required, use of funds.

Aug 25, 2015

The Excise Tax on High-Cost Employer-Sponsored Health Coverage: Background and Economic Analysis

Congressional Research Service 7-5700 www.crs.gov R44160 Summary Beginning in 2018, the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) imposes a 40%, nondeductible excise tax on the value of applicable employer-sponsored health coverage above specific dollar thresholds. In 2018, these thresholds are $10,200 for single health coverage and $27,500 for non-single (e.g., family) coverage. The thresholds are adjusted for eligible retirees, workers in certain high-risk professions, and plans whose demographics differ from the national workforce. This excise tax on high-cost employer-sponsored coverage, commonly referred to as the Cadillac tax, is intended to raise revenue and reduce the growth of aggregate health care costs. Particularly, the Cadillac tax effectively counteracts part of the tax exclusion for employer sponsored insurance (ESI), which many economists believe encourages the overconsumption of health benefits. The Cadillac tax is estimated to raise $3 billion in 2018 and is projected to collect higher amounts of revenue each year through 2024. More plans are projected to be subject to the tax over time, because the Cadillac tax threshold is adjusted annually for inflation with the Consumer Price Index, which generally has been below the rate of growth in insurance premiums. Over the first eight years of implementation, the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) estimate that the tax will raise $87 billion in revenue. As the 2018 implementation date draws closer, congressional interest in the tax has increased. For example, the Ax the Tax on Middle Class Americans’ Health Plans Act (H.R. 879) and the Middle Class Health Benefits Tax Repeal Act (H.R. 2050) would specifically repeal the Cadillac tax. Opponents of the Cadillac tax argue that the tax unfairly targets certain employers’ health plans because their workforce has higher health care risks. Some organized labor groups also oppose the tax because they collectively bargained for workers to receive more compensation through health benefits instead of higher wages. Proponents of the Cadillac tax argue it will help to slow the growth of national health care costs by increasing the price of excess health benefits. Based on an analysis of employer plans in the 2013 Medical Expenditure Panel Survey Insurance Component (MEP-IC) dataset, 10.2% of single and 6.0% of non-single insurance plans have premiums that could exceed the Cadillac tax threshold in 2018 (assuming premiums grow at the same rate as their five-year averages). By 2028, 24.7% of single and 19.1% of non-single plans have premiums that could exceed the tax threshold. These estimates do not assume any plan modifications to avoid the tax and do not include contributions to health-related savings or reimbursement accounts. The share of plans that could be subject to the tax is sensitive to projections in premium growth rates. Contents Introduction 1 Description of the Tax 2 General Thresholds 3 Exceptions to the General Thresholds 3 Legislative Background 4 Brief History of ESI Tax Exclusion 4 Economic Impact of ESI Tax Exclusion in Brief 5 Congressional Discussions on Reforming the ESI Tax Exclusion 5 Legislative Origins of the Cadillac Tax 6 Estimated Revenue Effects of the Cadillac Tax 7 Share of Plans with Insurance Premiums Exceeding the Tax’s Threshold 8 2018 10 2019 and Beyond 12 Interaction of the Cadillac Tax and a Hypothetical Employer-Sponsored Plan 14 Interaction of the Cadillac Tax and Small Group and Small Business (SHOP) Insurance Exchange Plans 16 Economic Analysis 17 Economic Efficiency 17 Economic Incidence of the Tax 18 Effects on the Market for Medical Care 18 Equity 20 Administrative Simplicity 22 Conclusion 22 Figures Figure 1. Percentage of Employer-Sponsored, Single Premiums Estimated to Exceed the Cadillac Tax Threshold in 2018, by State 11 Figure 2. Percentage of Employer-Sponsored, Non-Single Premiums Estimated to Exceed the Cadillac Tax Threshold in 2018, by State 12 Figure 3. Percentage of Employer-Sponsored, Single Premiums Estimated to Exceed the Cadillac Tax Threshold, Nationally, 2018-2038 13 Figure 4. Percentage of Employer-Sponsored, Non-Single Premiums Estimated to Exceed the Cadillac Tax Threshold, Nationally, 2018-2038 14 Figure 5. Illustration of the Long-Term Interaction of the Cadillac Tax Threshold and the Premium for a Hypothetical Employer-Provided Single Plan 15 Figure 6. Illustration of the Long-Term Interaction of the Cadillac Tax Threshold and the Premium for a Hypothetical Employer-Provided Non-Single Plan 16 Appendixes Appendix. Analytical Review and Methodology 23 Contacts Author Contact Information 25 Introduction Beginning in 2018, the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) imposes a nondeductible 40% excise tax on the value of applicable employer-sponsored health coverage above specific dollar thresholds. In 2018, these thresholds are $10,200 for single health coverage and $27,500 for non-single (e.g., family) coverage. This excise tax on high-cost employer-sponsored coverage, commonly referred to as the Cadillac tax, was an important feature of the ACA for two primary reasons. One, the tax was among several revenue-raising provisions in the ACA meant to raise revenue to offset the cost of other ACA provisions (e.g., the financial subsidies available through the health insurance exchanges). Two, the tax was among several provisions intended to reduce the growth of national health care costs. Particularly, the tax is intended to target higher-cost “Cadillac” health plans (which are characterized as having more generous coverage or lower cost-sharing requirements than average health plans) and to counteract the income tax exclusion for employer-sponsored insurance’s (ESI) incentives. Many economists believe ESI incentives result in the overconsumption of health benefits, resulting in upward pressure on health care costs. Proponents of the Cadillac tax point out that employer-sponsored plans are the single largest source of health insurance coverage for the non-elderly in the United States and that the current, unlimited ESI tax exclusion (the single largest tax expenditure in the Internal Revenue Code) tends to benefit higher-income individuals more than lower-income individuals. Critics of the Cadillac tax voice concerns that it might lead insurers to redesign their plans. Some employers claim that the tax imposes an unfair burden on their workforce because of the demographic traits of that workforce or the location of the business—not due to the generosity of their health plans. Some organized labor groups have also opposed the tax because they have negotiated collective bargaining contracts such that their members receive a larger share of their compensation in the form of health benefits in lieu of higher wages. According to these groups, the tax could disrupt these contracts such that employers’ costs could increase (in the form of higher prices of the goods and services that the employers provide) or workers could bear the additional burdens of the tax (in the form of lower total compensation). In the 114th Congress, the Ax the Tax on Middle Class Americans’ Health Plans Act (H.R. 879) and the Middle Class Health Benefits Tax Repeal Act (H.R. 2050) would specifically repeal the Cadillac tax. This report gives a brief description of the Cadillac tax. It discusses the legislative origins of the tax and provides an analysis of the revenue effects of the tax. It then analyzes health insurance premium data to provide insights into what share of health insurance plans could exceed the Cadillac tax threshold and how the threshold could affect more health plans over time. This report also analyzes the Cadillac tax using standard economic criteria of efficiency, equity, and administrative simplicity. This report is based on interpretation of the statute, and it does not consider how future regulations could affect the impact of the tax. For more detailed description of the administration of the tax, see CRS Report R44147, Excise Tax on High-Cost Employer-Sponsored Health Coverage: In Brief, by Annie L. Mach. Description of the Tax The ACA will impose a 40% tax on the value of applicable employer-sponsored coverage above a specified dollar threshold, also referred to as the excess benefit, beginning in 2018. Applicable employer-sponsored coverage includes, but is not limited to, the following items that are subject to preferential tax exclusions: premiums for accident or health coverage paid by the employer or employee, and certain contributions to tax-advantaged accounts, such as flexible spending accounts (FSAs) and health savings accounts (HSAs). Additionally, employer-sponsored health coverage that is paid by the employee with after-tax dollars (i.e., not subject to tax exclusion) could be included as applicable coverage. The excess benefit is calculated as the difference between the value of applicable employer-sponsored coverage and the applicable threshold level. The excess benefit is based on the aggregate cost of all employer-sponsored coverage (unless excepted). Two different thresholds apply: one for workers with single coverage, and one for workers with non-single coverage (e.g., family plans or self plus one plans). The tax specifically does not apply to (“excepts”) coverage such as long-term care insurance, stand-alone dental and vision insurance, liability insurance, and accident and disability benefits. Plans provided by public employers are not excepted, and health benefits of public employees could be subject to tax. Employers will be responsible for calculating the Cadillac tax owed for each employee’s employer-sponsored coverage, as well as the share attributable to each coverage provider. The tax is levied on coverage providers, which in some cases will be the health insurance companies that issue the employer-sponsored plans and in some cases will be the employer. The excise tax is nondeductible from the insurer’s gross income (or the employer’s gross income, in cases where the employer self-insures). This treatment is unlike some other deductible excise taxes (such as the excise tax on medical device manufacturers) but similar to other ACA revenue-raising provisions (such as the annual fee on health insurance providers). General Thresholds In 2018, the threshold for calculating excess benefits will be $10,200 for single coverage and $27,500 for non-single coverage. Employees in multiemployer (e.g., union) coverage will be subject only to the non-single thresholds. In 2019, the base threshold of $10,200 (single) and $27,500 (non-single) will be indexed to the annual change in inflation, as measured by the Consumer Price Index for All Urban Consumers (CPI-U), plus one percentage point. In years 2020 and beyond, the threshold will be further adjusted using only annual changes in the CPI-U. In all instances, the inflation adjustments will be rounded to the nearest multiple of $50. Exceptions to the General Thresholds There are several exceptions to the general thresholds. First, the thresholds are higher for retired individuals aged 55 and older who do not qualify for Medicare. For eligible plans, the threshold increases by $1,650 to $11,850 for single coverage and by $3,450 to $30,950 for non-single (or family) coverage. Second, there is an adjustment for certain high-risk occupations. To be eligible for the occupation exception, the plan must cover employees involved in the repair or installation of electrical or telecommunication lines, law enforcement, fire-protection activities, out-of-hospital emergency medical care (e.g., paramedics), longshore work, construction, mining, agriculture (not including food processing), forestry, and fishing industries. The same inflation adjustment used for the standard calculation of the Cadillac tax is used to adjust these modified thresholds over time. Third, employers may also adjust the cost of the health insurance coverage if their workforce differs substantially, in terms of age and gender, from a national risk pool. Regulations in this area could affect the share of plans that are subject to the tax. Legislative Background The legislative history of the Cadillac tax is rooted in efforts to limit the effects of the long-standing income tax exclusion for employer-sponsored insurance (ESI). Before discussing the specific legislative origins of the Cadillac tax, it is important to briefly review the legislative history of the ESI tax exclusion. Brief History of ESI Tax Exclusion Since the 1920s, ESI benefits have been excluded from federal income tax. The Stabilization Act of 1942 (P.L. 77-729) further encouraged this practice through its wage controls during World War II. With wages—but not benefits—frozen, more firms began offering health benefits to attract employees. After the war, the exclusion remained in place and firms continued to offer health benefits as a fringe benefit. In 1954, the exclusion was codified in the Internal Revenue Code. ESI coverage rates have leveled off or even declined slightly since the 1960s, in part due to the creation of major programs to cover the health benefits for the poor and elderly (and subsequent expansions of such benefits). Still, ESI coverage plays a large role in the modern economy. First, employer-sponsored plans provide the largest single source of health coverage for the non-elderly population in the United States. As of 2012, 65.8% of the non-elderly population (175.4 million people) were covered by private health insurance. Of that total, 88.9% (156.0 million people) were covered by an employer-sponsored plan. Second, the exclusion has become the largest single tax expenditure in the Internal Revenue Code. For FY2015, the Joint Committee on Taxation (JCT) estimates that the ESI tax exclusion is the single largest federal tax expenditure—$150.6 billion. Economic Impact of ESI Tax Exclusion in Brief Economists note that the ESI tax exclusion can both increase and decrease economic efficiency as well as decrease the perceived “fairness” or equity of the income tax. Incentives for ESI could enhance economic efficiency because ESI provides a risk-pooling mechanism that is unrelated to health factors among the working population. Further, ESI could reduce health costs through increased bargaining power and decreased administrative costs. In contrast, studies have concluded that the tax exclusion for ESI encourages greater health care consumption than would be the case without a tax preference, thus generating an economically inefficient outcome. In addition to the debate over economic efficiency, the ESI tax exclusion changes the burden distribution of the income tax. Generally, the ESI exclusion is regressive, since the exclusion is more valuable to those in higher income brackets. Individuals who obtain coverage outside of an employer-sponsored plan or uninsured workers generally do not benefit from the ESI tax exclusion. Congressional Discussions on Reforming the ESI Tax Exclusion Economists and policy experts discussed the merits and potential options for eliminating the ESI tax exclusion over the course of a three-session Senate Finance Committee roundtable discussion held in spring 2009 (one year before enactment of the ACA). In one opening statement, Senate Finance Chairman Max Baucus said We should also look at the current tax treatment of health care. I know that there is some controversy about doing so. Some do not want to modify the current unlimited exclusion for employer-provided health care, and I agree that we are not going to eliminate that exclusion. But the current tax exclusion is not perfect. It is regressive and often leads people to buy more health coverage than they need...We should look at ways to modify the current tax exclusion so that it provides the right incentives, and we should look to ways to make it fairer and more equitable for everyone. Members of the Senate Finance Committee and a bipartisan panel of health care experts discussed several issues within the context of limiting or eliminating the ESI tax exclusion in 2009, including limiting the exclusion for certain taxpayers above a particular income; limiting the exclusion for the value of plans over a percentile of the average actuarial value of employer-sponsored plans; adjusting any limit for regional difference in plans or for age of the workforce; what types of health benefits should be tax preferred (e.g., HSAs, FSAs); and how to adjust the limit over time. Legislative Origins of the Cadillac Tax The idea of the Cadillac tax emerged in legislation as part of the chairman’s mark of the America’s Healthy Future Act of 2009, the Senate Finance Committee’s draft bill for health care reform, released on September 16, 2009. This first version of the Cadillac tax would have taxed insurance policies with excess benefits above a threshold ($8,000 for single plans and $21,000 for family plans) at a rate of 35% beginning in 2013. The Congressional Budget Office (CBO) and the JCT estimated that the provision would have raised $215 billion over the budget window from 2010 to 2019 (i.e., within the first seven fiscal years of implementation). The threshold would have been adjusted for inflation in 2014 and beyond. This version of the bill also included a three-year transition rule that would have increased the threshold for the 17 highest-cost states. On September 22, 2009, the modified chairman’s mark was released, and the Senate Finance Committee began to mark up the bill over seven days. The modified mark increased the Cadillac tax rate to 40%, but it adjusted the threshold in 2014 and beyond for changes in inflation plus one percentage point. The initial threshold amounts were not modified. The Cadillac tax provision in the modified mark was estimated by CBO and JCT to raise $201 billion over the budget window (i.e., $14 billion less than the initial version). On December 19, 2009, CBO and JCT released analysis of S.Amdt. 2786, a substitute for the House-passed Affordable Care Act (H.R. 3590). The version of the Cadillac tax in this bill had higher thresholds ($8,500 singles, and $23,000 family policies) than the Senate version, but retained the higher 40% tax rate and the adjustment for inflation plus one percentage point. This version of the Cadillac tax would remain intact until the ACA was approved by Congress on March 21, 2010. On March 20, 2010, CBO and JCT released analysis of the Health Care and Education Reconciliation Act (HCERA), an amendment to the provisions in the ACA. In particular, HCERA delayed the implementation of the Cadillac tax from 2013 to 2018 and raised the thresholds ($10,200 for singles, and $27,500 for families). CBO and JCT scored the revised Cadillac tax as raising $32 billion from 2010 to 2019 (i.e., after the first two years of implementation). The House passed the Senate-modified ACA and HCERA on March 21, 2010, and the Senate passed the bill (which eventually became P.L. 111-148) by reconciliation on March 25, 2010. After enactment, bipartisan concerns emerged. These concerns culminated in a letter organized by Representative Joe Courtney and Representative Tom Cole opposing the Cadillac tax and any provision intended to reduce the benefits associated with the ESI tax exclusion. Estimated Revenue Effects of the Cadillac Tax In April 2014, CBO and JCT estimated that the Cadillac tax will raise $5 billion in FY2018 and will collect higher amounts of revenue each year through FY2024. Over the first seven years of implementation, CBO and JCT estimated that the tax will raise $120 billion in revenue. In March 2015, CBO and JCT significantly reduced their most recent estimates of the Cadillac tax to indicate that the tax will raise $87 billion over the first eight years of implementation (FY2018 to FY2025). Because premium growth is now projected to be slower, fewer workers are expected to enroll in employment-based insurance plans whose costs exceed the excise tax thresholds specified in the ACA. In comparison, CBO and JCT estimated in March 2015 that two other provisions in ACA, the employer penalty and the individual mandate, will raise $145 billion and $36 billion, respectively, over the same eight-year period (FY2018 to FY2025). The $3 billion projected to be raised by the Cadillac tax in FY2018 is also small relative to the estimated $172 billion annual tax expenditure associated with the tax exclusion for ESI in that same year. Official scores indicate that the Cadillac tax will raise revenue directly on applicable plans exceeding the threshold and indirectly through increases in taxable income for employers that reduce health benefits and increase wages. Roughly one-quarter of the revenue gain stems from excise tax receipts, and roughly three-quarters stems from a net increase in employees’ taxable compensation and, to a lesser extent, in employers’ deductible expenses. This assessment assumes that employers will shift compensation over time from health benefits to wages to reduce or avoid the Cadillac tax. Share of Plans with Insurance Premiums Exceeding the Tax’s Threshold This section of the report analyzes insurance premiums to provide insights into what share of plans have insurance premiums exceeding the Cadillac tax threshold. These premiums are a major component of health plan coverage as defined by ACA, but they are not the only component of coverage. Thus, the Cadillac tax could affect more health plans over time than estimated here if all components of applicable coverage are included. Note that the estimates also assume no further changes are made by employer providers to avoid or reduce exposure to the tax. Other studies are reviewed in the Appendix of this report. In June 2015, the Congressional Research Service (CRS) requested that the Department of Health and Human Services’ (HHS’s) Agency for Healthcare Research and Quality (AHRQ) estimate the share of premiums that could have a health insurance premium greater than the applicable Cadillac tax threshold. At the request of CRS, AHRQ used the 2013 Medical Expenditure Panel Survey Insurance Component (MEP-IC) dataset, which is a sample of plans provided by 39,216 private-sector establishments and public employers. CRS provided AHRQ with Cadillac tax thresholds adjusted for CBO’s projected annual changes in the CPI-U between 2018 and 2038. CRS then asked AHRQ to simulate the growth of insurance premium values offered by employers in the MEPS-IC data. These scenarios are based on different historical trends exhibited by the cost of the average insurance premium found the Kaiser Family Foundation’s (KFF’s) and the Health Research & Educational Trust’s 2014 Employer Health Benefits Survey. The scenarios include “Lower Growth”: assuming an annual growth rate in average insurance premiums of 4.6% for single coverage and 4.7% for family coverage, based on a five-year average of trends within the KFF data. “Moderate Growth”: assuming an annual growth rate in average insurance premiums of 5.0% for single coverage and 5.4% for family coverage, based on a 10-year average of trends within the KFF data. “Higher Growth”: assuming an annual growth rate in average insurance premiums of 7.0% for single coverage and 7.4% for family coverage, based on a 15-year average of trends within the KFF data. The analysis at the state level is provided using only the lower-growth scenario, given the low probability that insurance premium growth by 2018 will increase to rates seen more than a decade ago. In contrast, analyses of the Cadillac tax at the national level are plotted according to all three growth scenarios. While it is uncertain that insurance premium growth will reach the rates in the moderate- to high-growth scenarios, these scenarios illustrate how changes in the actual rate of insurance premium growth can affect the number of premiums subject to the tax. A full description of the data and methodology used to derive these illustrations appears in the Appendix. Caution should be exercised when interpreting some state results due to potential estimation issues stemming from smaller sample sizes and significant variation in premium amounts in some states. The estimates of the share of plans with premiums that exceed the Cadillac tax threshold provided in this section of the report should not be conflated with analysis of how many plans could actually be subject to the Cadillac tax. This analysis only includes insurance premiums and does not include the costs of other types of coverage that count toward the threshold (e.g., certain contributions to FSAs and HSAs). Additionally, any estimate of the Cadillac tax is subject to a number of uncertainties. First, the growth rate of premium costs has generally been declining in recent years. The analysis in this report models different assumptions in the potential growth of health care costs. Additionally, the analysis in this section of the report does not imply that each scenario is equally likely; rather, this analysis illustrates how sensitive estimates of the Cadillac tax are to inflation projections. Estimates of the impact of the tax using older data could overestimate the actual increase in average health insurance costs in more recent years. Future insurance premium growth rates could continue slowing, or could deviate from the trends used here. Second, it is uncertain how employers will respond (or have already responded) to the tax. Since the tax was enacted in 2010, some employers have already begun to offer less generous plans (thus, some behavioral effects would already be contained within observed data). For example, employers could offer a high-deductible health plan, which might be less likely to cross the threshold than their traditional PPO/HMO plan. The analysis in this section assumes that employers do not take any actions to adjust the plans offered to employees. Third, this report does not take into consideration how regulations could affect implementation of the tax. Treasury and IRS could issue regulations clarifying the benefits potentially subject to tax, safe harbors for employers, and modifications in various cost adjustments (e.g., under the workforce age and gender provision). Regulations in these areas could reduce (or increase) the number of plans subject to the tax. 2018 Figure 1 and Figure 2 depict the share of single and non-single plans, respectively, with premiums that could exceed the tax threshold in 2018, by state. As shown in Figure 1, approximately 10.2% of single plans, nationally, have premiums that could exceed the tax threshold in 2018. As shown in Figure 2, approximately 6.0% of non-single plans, nationally, have premiums that could exceed the tax threshold in 2018. It should be noted that the following figures do not provide insight into what share of a plan’s health benefits is subject to tax or the amount by which the plan exceeds the threshold. Only the portion of health benefits in excess of the threshold is subject to tax. Additionally, these figures do not quantify how many enrollees in these plans could be affected. Figure 1. Percentage of Employer-Sponsored, Single Plans with Premiums Estimated to Exceed the Cadillac Tax Threshold in 2018, by State (under the assumption of 4.7% annual premium growth, in individual plans) Source: U.S. Department of Health and Human Services (HHS), Agency for Healthcare Research and Quality (AHRQ) analysis of 2013 Medical Expenditure Panel Survey-Insurance Component (MEPS-IC) data provided to the Congressional Research Service (CRS) in June 2015. Notes: All reported values have a standard error (SE) of less than 2% and a relative standard error (RSE) of less than 30%. Caution should be taken when interpreting the results with an asterisk (*), which denotes an RSE of greater than 25%. Any estimate with an RSE greater than 30% is considered unreliable and omitted from this graphic. Reported values are weighted by the number of plans in the data sample. This graphic does not take into account any exceptions to the general Cadillac tax threshold for certain “high-risk” professions or for employers with workforces that differ from the age and gender profile of the national risk pool. See report text for more details. Figure 2. Percentage of Employer-Sponsored, Non-Single Plans with Premiums Estimated to Exceed the Cadillac Tax Threshold in 2018, by State (under the assumption of 4.6% annual premium growth, in family plans) Source: AHRQ analysis of 2013 MEPS-IC data provided to CRS in June 2015. Notes: All reported values have a standard error (SE) of less than 2% and a relative standard error (RSE) of less than 30%. Caution should be taken when interpreting the results with an asterisk (*), which denotes an RSE of greater than 25%. Any estimate with an RSE greater than 30% if considered unreliable and omitted from this graphic. Reported values are weighted by the number of plans in the data sample. This graphic does not take into account any exceptions to the general Cadillac tax threshold for certain “high-risk” professions or for employers with workforces that differ from the age and gender profile of the national risk pool. See report text for more details. 2019 and Beyond Figure 3 and Figure 4 show the national share of single and non-single plans, respectively, with premiums that could exceed the Cadillac tax threshold over time. The share of plans that could be subject to the Cadillac tax is estimated to increase over time, primarily because the growth of inflation in the CPI-U (which is used to adjust the Cadillac tax threshold) is projected to increase more slowly than the historical trends for premium growth. Figure 3 shows that between 2018 and 2028, the share of single plans with premiums that could exceed the Cadillac tax threshold increases from 10.2% to 24.7% under the lower-growth scenario. Figure 4 shows that between 2018 and 2028, the share of non-single plans that could be subject to the Cadillac tax increases from 6.0% to 19.1% under the lower-growth scenario. For both single and non-single plans, the share of plans that exceed the threshold by 2028 is higher under the moderate- and higher-growth scenarios. Figure 3. Percentage of Employer-Sponsored, Single Plans with Premiums Estimated to Exceed the Cadillac Tax Threshold, Nationally, 2018-2038 Sources: AHRQ analysis of 2013 MEPS-IC data provided to CRS in June 2015; growth rates in the different scenarios are derived from historical average premium values from Kaiser Family Foundation (KFF), 2014 Annual Survey of Employer Health Benefits, September 10, 2014, at http://kff.org/health-costs/report/2014-employer-health-benefits-survey/; and projections of the Consumer Price Index for All Urban Consumers (CPI-U) from the Congressional Budget Office, The Budget and Economic Outlook: 2015 to 2025, January 26, 2015, at https://www.cbo.gov/publication/45066. Notes: “Lower Growth” scenario assumes annual growth in average health insurance premiums of 4.6%, based on a 5-year average in historical trends; “Moderate Growth” scenario assumes an annual growth rate of 5.0%, based on a 10-year average; and “Higher Growth” estimate assumes an annual growth rate of 7.0%, based on a 15-year average. Historical trends are averaged from KFF data. Regarding the tax threshold, trends in the CPI-U are held constant at 2024 levels for years outside of CBO’s projection window (i.e., 2025 to 2038). See Appendix for more details on methodology. This graphic does not take into account any exceptions to the general Cadillac tax threshold for certain “high-risk” professions or for employers with workforces that differ from the age and gender profile of the national risk pool. See report text for more details. Figure 4. Percentage of Employer-Sponsored, Non-Single Plans with Premiums Estimated to Exceed the Cadillac Tax Threshold, Nationally, 2018-2038 Sources: AHRQ analysis of 2013 MEPS-IC data provided to CRS in June 2015; growth rates in the different scenarios are derived from historical average premium values from KFF, 2014 Annual Survey of Employer Health Benefits, September 10, 2014, at http://kff.org/health-costs/report/2014-employer-health-benefits-survey/; and projections of the CPI-U from the CBO, The Budget and Economic Outloo

Aug 20, 2015

The Excise Tax on High-Cost Employer-Sponsored Health Insurance: Estimated Economic and Market Effects

The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) included a provision to impose an excise tax on high-cost employer-sponsored insurance (ESI) coverage beginning in 2018. This provision, popularly termed the Cadillac tax, imposes an excise tax on ESI coverage in excess of a predetermined threshold. The tax is imposed on the coverage provider, typically the health insurance provider or the entity that administers the plan benefits. Currently, employers’ spending on ESI coverage and most employees’ contributions to ESI plans are exempt from income and payroll taxes. Although proposals to limit the amount of health insurance benefits eligible for this exclusion were considered, the ACA, as enacted, did not limit the exclusion for employer-provided health insurance coverage. The Cadillac tax discourages high-cost employer health plans through another approach. The Cadillac tax is imposed at a rate of 40%. This tax rate is applied on a tax-exclusive basis, as is generally the case with excise tax rates. That is, like a sales tax, the rate applies to the price or cost excluding the tax. By contrast, the tax rate relevant to an income tax exclusion is on a tax-inclusive basis: it is applied to a base that includes the tax. The Cadillac tax is nondeductible from the insurer’s gross income (or the employer’s gross income, in cases where the employer self-insures). This treatment is unlike other excise taxes. The Cadillac tax takes effect in 2018 and is imposed on plans that cost more than $10,200 for single health plans and $27,500 for non-single (e.g., family) plans. The exempt amount is indexed for inflation, and, because health costs tend to grow faster than inflation, the share of premiums covered by the tax and the revenue collected is expected to grow. This report examines several issues. It evaluates the potential of the Cadillac tax to affect health insurance coverage and the health care market. It also examines the expected incidence (burden) of the tax—that is, which group’s income will be reduced by the tax. Finally, the report discusses implications for economic efficiency in the context of tax administration. Estimates suggest that the Cadillac tax could lead to an overall decline in the quantity of health services as some firms reduce the size of their insurance coverage. This decline is estimated to range from 0.5% to 0.6% in 2018 and from 2.2% to 2.5% in 2024. Prices could fall by up to 0.4% in 2018 and up to 1.5% in 2024 (although costs paid by some consumers could rise due to cutbacks in Cadillac plans). Overall expenditure (the sum of the fall in quantity and the fall in price) could decline by 0.6%-0.9% in 2018 and by 2.5%-3.6% in 2024. In other words, the tax could result in a gross reduction of $7.6-$11.0 billion in national health expenditures in 2018 and $41.0-$60.3 billion by 2024. Although the tax is imposed on insurers or employers, the burden is expected to fall on wages. In some cases, employers will retain the Cadillac insurance plans and pass the tax on to workers in the form of lower wages. In other cases, employers will substitute taxable wages for insurance coverage in excess of the threshold, and employees will be subject to income and payroll taxes on those wages. Revenue projections assume the latter situation will be more common.

Aug 20, 2015

Trade Adjustment Assistance for Workers and the TAA Reauthorization Act of 2015

Congressional Research Service 7-5700 www.crs.gov R44153 Summary Trade Adjustment Assistance for Workers (TAA) provides federal assistance to workers who have involuntarily lost their jobs due to foreign competition. It was last reauthorized by the Trade Adjustment Assistance Reauthorization Act of 2015 (TAARA; Title IV of P.L. 114-27). This report discusses the TAA program as enacted by TAARA. To be eligible for TAA, a group of workers must establish that they were separated from their employment either because their jobs moved outside the United States or because of an increase in directly competitive imports. Workers at firms that are suppliers to or downstream producers of TAA-certified firms may also be eligible for TAA benefits. Under TAARA, private sector workers who produce goods or services are eligible for TAA benefits. To establish eligibility for TAA benefits, a group of trade-affected workers (or their representative) must petition the Department of Labor (DOL) and a DOL investigation must verify the role of foreign trade in the workers’ job losses. Once a petition is certified by DOL, covered workers may apply for individual benefits. Individual benefits are funded by the federal government and administered by the states through their workforce systems and unemployment insurance systems. Benefits available to individual workers include the following: Reemployment services are a group of benefits and services designed to assist workers in preparing for and obtaining new employment. Training subsidies are the largest reemployment services expenditure and support workers in developing skills for a new occupation. Workers may also receive case management services and job search assistance. In some cases, workers who pursue employment outside their local commuting area may be eligible for job search or relocation allowances. Trade Readjustment Allowance (TRA) is a weekly income support payment for TAA-certified workers who have exhausted their unemployment insurance (UI) and who are enrolled in an eligible training program. Weekly TRA payments are equal to the worker’s final UI benefit. Workers may collect UI and TRA for a combined maximum of 130 weeks, the final 13 of which are only available if necessary for the worker to complete a training program. Reemployment Trade Adjustment Assistance (RTAA) is a wage insurance program available to certified workers age 50 and over who obtain reemployment at a lower wage. The wage insurance program provides a cash payment equal to 50% of the difference between the worker’s new wage and previous wage, up to a two-year maximum of $10,000. The Health Coverage Tax Credit is a credit equal to 72.5% of qualified health insurance premiums. Eligibility is aligned with TRA. Unlike other TAA benefits, it is administered through the tax code. TAA is mandatory spending. Total funding for reemployment services, including training, is capped at $450 million per year. Total funds for TRA and RTAA benefits are uncapped, though there are limits for individual beneficiaries. Contents Program Rationale and Purpose 1 Trade Adjustment Assistance Reauthorization Act of 2015 1 Applicability of TAARA Provisions 2 Benefits for Certified Workers 2 Reemployment Services 5 Training Assistance 6 Case Management and Employment Services 6 Job Search and Relocation Allowances 7 Trade Readjustment Allowance 7 Reemployment Trade Adjustment Assistance 8 Health Coverage Tax Credit 8 TAA Administration and Financing 2 Administration 2 Financing 2 Eligibility and Application Process 2 TAA Group Eligibility Criteria 3 TAA Group Petition and Certification Process 4 Retroactive Group Eligibility Under TAARA 4 TAA Individual Eligibility 5 Appendixes Appendix. Program History 10 Contacts Author Contact Information 12 Trade Adjustment Assistance for Workers (TAA) provides federal assistance to workers who involuntarily lose their jobs due to foreign competition. The primary benefits for TAA-eligible workers are funding for reemployment services (including training) and income support while a worker is enrolled in training. Workers may also be eligible for other benefits, including a tax credit equal to a portion of qualified health insurance premiums. Workers age 50 and over may be eligible for Reemployment Trade Adjustment Assistance, a wage supplement program. After a brief discussion of the program’s purpose and recent reauthorization, this report describes TAA as reauthorized by the Trade Adjustment Assistance Reauthorization Act of 2015 (TAARA, Title IV of P.L. 114-27). Program Rationale and Purpose Reduced barriers to international trade are widely acknowledged to offer benefits to consumers in the form of increased choices and lower prices. Expanded trade may also offer expansionary opportunities to firms that produce goods or services that see increased exports. Reduced barriers to trade may, however, have concentrated negative effects on domestic industries and workers that face increased competition. TAA is designed to provide readjustment assistance to workers who suffer dislocation (job loss) due to foreign competition or offshoring. TAA was created in 1962 and, historically, has been reauthorized alongside expansionary trade policies. A detailed legislative history of the program is in the Appendix. Trade Adjustment Assistance Reauthorization Act of 2015 In June 2015, TAA was reauthorized by TAARA. The eligibility and benefit provisions of TAARA are authorized to continue through June 30, 2021. TAARA was part of a bill that extended other trade-related policies as well. TAARA was also passed in conjunction with a separate bill that reauthorized the Trade Promotion Authority (TPA, Title I of P.L. 114-26). TPA (also known as “fast track”) grants the President authority to negotiate trade agreements, which are then subject to an “up or down” vote in Congress. Applicability of TAARA Provisions This report focuses on the eligibility and benefit provisions of TAA as enacted by TAARA. These provisions apply to all workers certified for TAA after the law’s enactment. The law also had retroactivity provisions and, in some cases, workers that were parts of groups certified prior to the 2015 reauthorization may also be covered under the TAARA provisions. In some cases, however, a worker who was certified under pre-2015 provisions may continue to receive benefits under the prior provisions. As such, while the version of the program described in this report will apply to all new program participants certified through June 30, 2021, it may not apply to some participants who were already enrolled in TAA prior to the enactment of TAARA. In these cases, states may operate multiple TAA programs to concurrently serve workers certified under the TAARA provisions and workers certified under other provisions. TAA Financing and Administration TAA is jointly administered by the federal government and the states. It is funded by the federal government. The respective roles of federal and state governments in administering and financing the TAA program were in place prior to TAARA and were not changed by it. Administration TAA is jointly administered by the U.S. Department of Labor (DOL) and cooperating state agencies. DOL makes group eligibility determinations, allots appropriated funds to cooperating state agencies, and oversees grantees. Individual benefits are provided through state workforce systems and state unemployment insurance systems. Workers may physically receive benefits and services through local American Job Centers (also known as One-Stop Career Centers). States are responsible for collecting participation and outcome data and reporting these data to DOL. The Health Coverage Tax Credit, which is available to qualified TAA-certified workers who purchase qualified health insurance, is administered by the Internal Revenue Service (IRS). It is administered separately from the TAA program’s other benefits and services. Financing TAA is funded by mandatory appropriations. Typically, Congress appropriates a single sum that supports all TAA activities. DOL then allocates these funds to various program activities. Under TAARA, funding for reemployment services is capped at $450 million per year. Funds are allotted to the states via a grant allocation formula that considers past and anticipated program usage. States may expend reemployment service funds in the year of allotment or in either of the next two fiscal years. Training subsidies are states’ primary expenditures out of their reemployment services funding. TAARA specifies that states must allocate at least 5% of their reemployment services funding to case management and no more than 10% to administrative costs. Funds for the Trade Readjustment Allowance income support and Reemployment Trade Adjustment Assistance wage insurance program are not capped. Appropriations for these benefits are based on congressional estimates. Funding for these benefits that is not spent in the year of allotment is returned to the Treasury. TAA is a direct spending (also referred to as “mandatory”) program and subject to sequestration under the Budget Control Act of 2011, as amended. For FY2016, the Office of Management and Budget (OMB) has estimated that the reduction for non-exempt, nondefense spending will be 6.8%. Sequester levels in subsequent years will be determined by OMB. Eligibility and Application Process Obtaining TAA benefits is a two-stage process. First, a group of workers or their representative (e.g., firm, union, or state) must petition DOL to establish that foreign trade “contributed importantly” to their job losses and become TAA certified. Once a group has been certified by DOL, individual workers covered by the group’s petition apply for state-administered benefits at local American Job Centers (AJCs; also known as One-Stop Career Centers). TAA is available to workers in the 50 states, the District of Columbia, and Puerto Rico. TAA Group Eligibility Criteria To be eligible for TAA group certification, a group of workers from a firm (or a subdivision of a firm) must have become totally or partially separated from their employment or have been threatened with becoming totally or partially separated. Under TAARA, private sector workers who produce goods (“articles” in the law) or services are eligible for TAA. The petitioning workers must establish that foreign trade contributed importantly to their separation. The role of foreign trade can be established in one of several ways: An increase in competitive imports. The sales or production of the petitioning firm have decreased absolutely and imports of articles or services like or directly competitive with those produced by the petitioning firm have increased. A shift in production to a foreign country. The workers’ firm has moved production of the articles or services that the petitioning workers produced to a foreign country or the firm has acquired, from a foreign provider, articles or services that are directly competitive with those produced by the workers. Adversely affected secondary workers. The petitioning firm is a supplier or a downstream producer to a TAA-certified firm and either (1) the sales or production for the TAA-certified firm accounted for at least 20% of the sales or production of the petitioning firm or (2) a loss of business with a TAA-certified firm contributed importantly to the workers’ job losses. USITC workers. Workers separated from firms that have been publicly identified by the United States International Trade Commission (USITC) as injured by a market disruption or other qualified action. TAA Group Petition and Certification Process To establish TAA eligibility, a group of workers (or their representative, such as a union, firm, or state) must complete a two-page petition and submit it, along with any supporting documentation, to DOL. An additional copy of the TAA petition must also be filed with the governor of the state in which the affected firm is located. After receiving the petition, DOL investigates to determine if the petition meets any of the criteria outlined in the previous subsection of this report. Determinations of TAA petitions are published in the Federal Register and on the DOL website. If a petition is certified, DOL will also determine an impact date on which trade-related layoffs began or threatened to begin. This date can be as early as one year prior to the petition. A certified petition will cover all workers laid off by the firm (or applicable subdivision of the firm) between the impact date and two years after the certification of the petition. For example, if a petition is certified on November 1, 2015, and the impact date is found to be March 1, 2015, all members of the certified group laid off between March 1, 2015, and November 1, 2017, would be eligible for TAA benefits. If a petition is denied, the group may request administrative reconsideration by DOL. Reconsideration requests must be mailed within 30 days of the publication of the initial denial in the Federal Register. Workers who are denied certification may seek judicial review of DOL’s initial petition denial or denial following administrative reconsideration. Appeals for judicial review must be filed with the U.S. Court of International Trade within 60 days of Federal Register publication of the initial denial or the administrative reconsideration denial. Retroactive Group Eligibility Under TAARA TAARA contains several mechanisms to extend TAA benefits to groups of workers who met the eligibility criteria under TAARA but were dislocated when prior provisions with narrower eligibility criteria were in effect. The narrower eligibility criteria (described as the “Reversion 2014 provisions” in the Appendix) took effect January 1, 2014, and were in effect until the enactment of TAARA. TAARA specifies that petitions that were denied between January 1, 2014, and the enactment of TAARA will automatically be reconsidered under the new criteria. TAARA further specifies that petitions that were filed before the enactment of TAARA but not determined before its enactment will be considered under the new criteria. TAARA also specifies that for petitions filed within 90 days of TAARA’s enactment, DOL could determine an impact date as early as January 1, 2014. (Typically, an impact date can be no earlier than one year prior to a certification.) This broader window allows for the coverage of workers whose job loss occurred after January 1, 2014, and who meet the criteria of TAARA but did not meet the criteria of the pre-TAARA provisions. TAA Individual Eligibility After DOL certifies a group of workers as eligible, the individual workers covered by the certification then apply to their local AJCs for individual benefits. To be eligible for Trade Readjustment Allowance payments, a worker must meet all of the following conditions: (1) separation from the firm on or after the impact date specified in the certification but within two years of DOL certification, (2) employment with the affected firm in at least 26 of the 52 weeks preceding layoff, (3) entitlement to state UI benefits, and (4) no disqualification for extended unemployment benefits. Additionally, workers must be enrolled in an approved training program or have received a waiver from training. Group-certified workers who are denied individual benefits can appeal the decision. The determination notice that individual workers receive after filing their applications for each benefit explains their appeal rights and time limits for filing appeals. Benefits for Certified Workers TAA benefits for individuals include reemployment services and income support for workers who have exhausted their UI benefits and are enrolled in training. Workers age 50 and over may participate in the Reemployment Trade Adjustment Assistance (RTAA) wage insurance program. Certified workers may also be eligible for a tax credit for a portion of the premium costs for qualified health insurance. Reemployment Services TAA-certified workers may receive several types of benefits and services to aid them in preparing for and obtaining new employment. The largest reemployment benefit from a budgetary standpoint is training assistance. Workers may also receive case management services and reimbursements for qualified job search and relocation expenses. TAARA caps annual funding for reemployment services at $450 million per year. Reemployment funds are granted to state workforce agencies via formula. Training Assistance Eligible workers request training assistance through their local AJCs. Once approved, training can be paid on the worker’s behalf directly to the service provider or through a voucher system. To receive funding, the worker must be qualified to undertake the requested training, the training must be available at a reasonable cost, and there must be a reasonable expectation of employment following the completion of training. The range of approved training includes a variety of governmental and private programs. There is no federal limit on the amount of training funding an individual can receive, though some states have a cap. A concise summation of TAA training programs is difficult due to the range of acceptable activities and the decentralized nature of job training. Data from DOL, however, offer some insight into the nature and duration of TAA-sponsored training programs. In FY2014, approximately 87% of TAA training participants received what DOL describes as occupational skills training: training in a specific occupation, typically provided in a classroom setting. The remainder of training was classified as remedial, prerequisite, on-the-job, or other customized training. Among the training participants who completed a program in FY2014, the average duration of enrollment in the program was 585 days. TAA does not require training programs to lead to a degree or other credential. In its FY2014 annual report, DOL reported that 83% of workers who completed training earned an industry-recognized credential, or a secondary school diploma or equivalent. Case Management and Employment Services TAARA specifies a series of case management and employment services to which all TAA-certified workers are entitled. These services include a comprehensive assessment of a worker’s skills and needs, assistance in developing an individual employment objective and identifying the training and services necessary to achieve that goal, and guidance on training and other services for which a worker may be eligible. Under TAARA, states are required to use at least 5% of their reemployment services allotments for case management and employment services. Job Search and Relocation Allowances States may use their reemployment services funding to provide job search and relocation allowances. These allowances target workers who are unable to obtain suitable employment within their commuting areas. Certified workers can receive an allowance equal to 90% of each of their job search and relocation expenses, up to a maximum of $1,250 for each benefit. A Job Search Allowance may be available to subsidize transportation and subsistence costs related to job search activities outside an eligible worker’s local commuting area. Subsistence payments may not exceed 50% of the federal per diem rate and travel payments may not exceed the prevailing mileage rate authorized under federal travel regulations. A Relocation Allowance may be available to workers who have secured permanent employment outside their local commuting area. The benefit covers 90% of the reasonable and necessary expenses of moving the workers, their families, and their household items. Relocating workers may also be eligible for a lump sum payment of up to three times their weekly wage, though the total relocation benefit may not exceed $1,250. Trade Readjustment Allowance Trade Readjustment Allowance (TRA) is a weekly income support payment to certified workers who have exhausted their UI benefits and are enrolled in training. To be eligible for TRA, a worker must be enrolled in training within 26 weeks of separation from the worker’s job or within 26 weeks of TAA certification, whichever is later. In some circumstances, a worker may obtain a training waiver. TRA is funded by the federal government and administered by the states through their unemployment insurance systems. TRA is an individual entitlement and not subject to an annual funding cap. Appropriation levels are based on estimated usage and unused funds are returned to the Treasury at the end of the fiscal year. Individual TRA benefit levels are equal to a worker’s final UI benefit. UI benefit levels are based on earnings during a base period of employment (typically, the first four of the last five completed calendar quarters). UI benefits typically replace a portion of a worker’s wages up to a statewide maximum. Since states each administer their own UI programs, there is some variation in benefit levels. In July 2014, the highest maximum weekly UI benefit for a worker with no dependents was $679 in Massachusetts and the lowest maximum weekly benefit was $240 in Arizona. There are three stages of TRA: Basic TRA. The weekly basic TRA payment begins the week after a worker’s UI eligibility expires. To receive the basic TRA benefit, workers must be enrolled or participating in TAA-approved training, have completed such training, or have obtained a waiver from the training requirement. The total amount of basic TRA benefits available to a worker is equal to 52 times the weekly TRA benefit minus the total amount of UI benefits. For example, assuming a constant benefit level, a worker who received 20 weeks of UI benefits would be eligible for 32 weeks of basic TRA. Additional TRA. After basic TRA has been exhausted, workers who are enrolled in a TAA-approved training program are eligible for an additional 65 weeks of income support, for a total of 117 weeks of benefits. Additional TRA is limited to workers who are enrolled in a training program; workers who have received a training waiver are not eligible for additional TRA. TAA participants may only collect additional TRA as long as they remain enrolled in a qualified training program. In cases where a worker’s training program is shorter than the maximum TRA duration, the worker is not entitled to the maximum number of TRA weeks. Completion TRA. In cases where a worker has collected 117 weeks of combined TRA and UI and is still enrolled in a training program that leads to a degree or industry-recognized credential, the worker may collect TRA for up to 13 additional weeks (130 weeks total) if the worker will complete the training program during that time. Reemployment Trade Adjustment Assistance RTAA is an entitlement that provides a wage supplement for workers age 50 and over who are certified for TAA benefits and obtain reemployment at a lower wage. The program provides a cash payment to an eligible worker equal to 50% of the difference between the worker’s wage at the trade-affected job and the worker’s wage at his or her new job. The maximum benefit is $10,000 over a two-year period. Workers may not receive TRA and RTAA benefits simultaneously. To be eligible for RTAA, a worker must either (1) be reemployed on a full-time basis, as defined by the law of the state in which the worker is employed or (2) be reemployed at least 20 hours a week and be enrolled in a TAA-sponsored training program. Workers who receive RTAA payments while enrolled in training and working less than full time may be subject to a reduced benefit. Health Coverage Tax Credit Workers who are receiving TRA, UI in lieu of TRA, or RTAA benefits may also be eligible for a tax credit that covers a portion of eligible health insurance premiums. The Health Coverage Tax Credit (HCTC) is equal to 72.5% of qualified health insurance premiums. TAARA includes provisions specifying that a worker must elect between the HCTC and premium credits under the Patient Protection and Affordable Care Act (P.L. 111-148, amended). Unlike other provisions of TAARA, which are in effect through June 30, 2021, the HCTC is authorized through December 31, 2019. Program History Early History The first TAA programs were enacted in 1962 but little used until the Trade Act of 1974 eased eligibility requirements. Program use expanded through the 1970s and the number of certified workers increased from about 59,000 in FY1975 to nearly 600,000 in FY1980. In light of rapidly increasing program costs, the Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35) cut spending by reducing benefits and emphasizing training and other reemployment services. TAA participation levels fluctuated throughout the 1980s, but were mostly well below the levels of the 1970s. In 1988, the program was reauthorized through FY1993 by the Omnibus Trade and Competitiveness Act of 1988 (P.L. 100-418). Among other changes, the 1988 reauthorization expanded eligibility for TRA but also placed a new emphasis on training by making it a program requirement. 1990s and NAFTA The Omnibus Reconciliation Act of 1993 (P.L. 103-66) reauthorized TAA through 1998 with reductions in training funding. The North American Free Trade Agreement (NAFTA) Implementation Act of 1993 (P.L. 103-182) established a new component of TAA that offered dedicated benefits to workers whose job loss was attributable to trade with Mexico and Canada. Trade Act of 2002 The next major reauthorization of TAA was part of the Trade Act of 2002 (P.L. 107-210). This law combined TAA, TPA, and other trade-related issues into a single piece of legislation. Among other changes, the 2002 TAA reauthorization merged the NAFTA-TAA program into the general TAA program and created the Health Coverage Tax Credit for TAA workers. The Trade Act of 2002 reauthorized TAA through FY2007. Several short-term extensions continued the program until it was reauthorized in February 2009. American Recovery and Reinvestment Act In February 2009, TAA was reauthorized and expanded by the American Recovery and Reinvestment Act (ARRA; P.L. 111-5). Unlike other reauthorizations, which tended to be aligned with expansionary trade policy or budget reconciliations, this reauthorization was aligned with other domestic initiatives to spur economic activity during a time of above-average unemployment. The ARRA reauthorization of TAA expanded the program in several ways. Among other provisions, it increased funding for training, increased the maximum number of weeks that a worker could receive TRA, and extended eligibility to service sector and public sector workers who had been displaced by trade. The ARRA provisions of TAA were scheduled to expire after December 31, 2010. A short-term extension continued the program through February 12, 2011. After that date, TAA reverted to the more limited eligibility and benefit provisions that were in place prior to ARRA. 2011 Reauthorization: Trade Adjustment Assistance Extension Act In October 2011, the Trade Adjustment Assistance Extension Act (TAAEA; Title II of P.L. 112-40) was enacted. This reauthorization was aligned with the separate passage of three implementing bills of free trade agreements with Colombia, Panama, and South Korea. TAAEA reinstated some, but not all, of the expansions that had been enacted under ARRA. Most notably, it re-expanded eligibility to service sector (but not public sector) workers and increased training funding to near-ARRA levels. TAAEA also curtailed benefits by reducing the eligible reasons for training waivers from six to three. Sunset and Termination Provisions of 2011 Reauthorization The eligibility and benefit provisions initially enacted by TAAEA were scheduled to remain in place until December 31, 2013. Beginning January 1, 2014, the TAA program reverted to a more limited set of eligibility and benefit provisions (“Reversion 2014 provisions”). Among other changes, the Reversion 2014 provisions ended eligibility for service workers and reduced the cap on training funding to the 2002 levels. The Reversion 2014 provisions were scheduled to remain in place for one year before authorization expired after December 31, 2014, and the program was scheduled to begin to be phased out. The program did not, however, expire as scheduled at the end of 2014. Instead, the Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235) provided funding for full operation of the program under the Reversion 2014 provisions through FY2015. 2015 Reauthorization: Trade Adjustment Assistance Reauthorization Act TAA continued to operate under the Reversion 2014 provisions until the enactment of the Trade Adjustment Assistance Reauthorization Act of 2015 (TAARA; Title IV of P.L. 114-27). This reauthorization was aligned with the separate extension of the Trade Promotion Authority (TPA, also known as “fast track”). Any agreements negotiated under TPA are subject to an “up or down” vote in Congress. TAARA reinstated many of the eligibility and benefit provisions that were enacted by TAAEA in 2011. TAARA reinstated eligibility for service workers and increased training funding to a level between those of TAAEA and the Reversion 2014 provisions. Sunset and Termination Provisions of 2015 Reauthorization TAARA contains sunset provisions similar to those in TAAEA that took effect in 2014. Beginning July 1, 2021, the TAA program is scheduled to revert to a more limited set of eligibility and benefit provisions that are similar to the Reversion 2014 provisions. These provisions are scheduled to remain in place for one year until authorization is set to expire after June 30, 2022, and then the program is scheduled to begin to be phased out. Author Contact Information Benjamin Collins Analyst in Labor Policy [email protected], 7-7382

Aug 18, 2015

Excise Tax on High-Cost Employer-Sponsored Health Coverage: In Brief

Aug 14, 2015

U.S. Farm Policy: Certified Organic Agricultural Production

Aug 14, 2015

Indian Water Rights Settlements

Aug 14, 2015

Consumer and Credit Reporting, Scoring, and Related Policy Issues

The consumer data industry collects and subsequently provides information to firms about the behavior of consumers when they participate in various financial transactions. Firms use consumer information to screen for the risk that consumers will engage in behaviors that are costly for businesses. For example, lenders rely upon credit reports and scores to determine the likelihood that prospective borrowers will repay their loans. Insured depository institutions (i.e., banks and credit unions) rely on consumer data service providers to determine whether to make available checking accounts or loans to individuals. Some insurance companies use consumer data to determine what insurance products to make available and to set policy premiums. Some payday lenders use data regarding the management of checking accounts and payment of telecommunications and utility bills to determine the likelihood of failure to repay small-dollar cash advances. Merchants rely on the consumer data industry to determine whether to approve payment by check or electronic payment card. Employers may use consumer data information to screen prospective employees to determine the likelihood of fraudulent behavior. In short, numerous firms rely upon consumer data to identify and evaluate potential loss risks before entering into financial relationships with new consumers. Congress has shown concern about consumer protection and consumer credit access in light of some challenges facing the credit reporting industry. First, reporting inaccuracies may result in the rejection of consumer credit requests. Second, negative or derogatory information, such as multiple overdrafts, involuntary account closures, loan defaults, and fraud incidents, may stay on consumer reports for several years. Likewise, the exclusion of more positive or updated information, such as the timely repayment of non-credit obligations, may also limit credit access. Differences in billing and collection practices can also adversely affect the consumer reports, an issue of particular concern with medical billing practices. Having a non-existent, insufficient, or a stale credit history may also prevent credit access. The use of alternative or newer versions credit scores, which have been developed in response to these concerns, arguably may increase credit access. It takes time, however, to implement alternative scoring algorithms, and credit scores are only one factor among many that are used in lender underwriting decisions. These issues are discussed in this report after some background information on the consumer data industry as well as a general overview of the current regulatory framework has been provided. Greater reliance by firms on consumer data greatly affects consumer access to financial products or opportunities, prompting congressional concerns about consumer protection. The Facilitating Access to Credit Act of 2015 (H.R. 347) would enhance the ability of consumer reporting firms to correct inaccuracies by clarifying the applicability of existing consumer legal protections. The Medical Debt Relief Act of 2015 (H.R. 2362) would exclude from consumer credit reports certain medical debt that is less than 180 days delinquent or that has been in collections and has been fully paid or settled. The Federal Adjustment in Reporting (FAIR) Student Credit Act of 2015 (H.R. 2363) would allow a consumer to request the removal of a reported default on a qualified education loan if the consumer voluntarily and successfully meets the requirements of a private loan rehabilitation program.

Jul 30, 2015

An Introduction to Child Nutrition Reauthorization

Jul 28, 2015

Balance Billing in Private Health Insurance Plans

Jul 23, 2015

Update on the Highly-Pathogenic Avian Influenza Outbreak of 2014-2015

The U.S. poultry industry is experiencing a severe outbreak of highly-pathogenic avian influenza (HPAI). The U.S. Department of Agriculture’s (USDA’s) Animal and Plant Health Inspection Service (APHIS) has reported 223 cases of HPAI in domestic flocks in 15 states. With the start of summer, the finding of new cases slowed. The last reported new case was in Iowa on June 17, 2015. More than 48 million chickens, turkeys, and other poultry have been euthanized to stem the spread of the disease. Cases have been caused by several highly pathogenic H5 avian influenza (AI) strains that result in substantial mortality in domestic poultry. Turkey and egg-laying hen farms in Minnesota and Iowa have been hardest hit. Commercial broiler farms have not been affected to date. According to the Centers for Disease Control and Prevention (CDC), no infections in humans have been associated with the HPAI outbreak, and the public health risk is low. Under the Animal Health Protection Act (AHPA; 7 U.S.C. §8301 et seq.), APHIS, in cooperation with state and local animal health officials, has the authority to take extraordinary measures, such as seizing, restricting movement, or euthanizing animals to protect the health of animals. During the current outbreak, APHIS has paid to euthanize poultry, clean and disinfect poultry premises and equipment, and then test for the AI virus to ensure poultry farms can be safely repopulated. USDA has indemnified poultry owners for euthanized poultry. USDA has received approval to use nearly $700 million in additional funds from the Commodity Credit Corporation (CCC) to address HPAI. As of July 7, 2015, APHIS has committed over $500 million of the $700 million to help producers control the spread of HPAI, including $190 million for indemnity payments. The agency is committed to covering cleaning and disinfecting costs on affected farms. The cost of the HPAI outbreak to the poultry industry is high. The value of turkey and laying hen losses is estimated at nearly $1.6 billion. Economy-wide losses are estimated at $3.3 billion. Since the HPAI outbreak in December 2014, 18 U.S. trading partners have imposed bans on all shipments of U.S. poultry and products, and 38 trading partners have imposed partial, or regional, bans on shipments from states or parts of states with HPAI cases. China, Russia, and South Korea, 3 of the top 10 destinations for U.S. poultry meat in 2014, have banned all imports of U.S. poultry. It is believed that an HPAI outbreak is likely to occur again in the fall when wild birds begin their migrations through the four flyways. This may result in more spread of AI, possibly in the poultry-producing eastern and southeastern regions untouched by the current outbreak. APHIS and the poultry industry are taking lessons from the current outbreak to prepare for the fall. USDA is developing a vaccine to be available for manufacture if the agency decides to adopt a vaccination policy to manage any future outbreak. APHIS and the poultry industry are reassessing biosecurity, indemnity payment formulas, and other measures that aim to improve the containment and elimination process.

Jul 20, 2015

Cybersecurity: Legislation, Hearings, and Executive Branch Documents

This report provides links to cybersecurity-related committee hearings in the 112th and 113th Congresses. It also provides a list of executive orders and presidential directives pertaining to information and computer security.

Jul 15, 2015

Use of the Annual Appropriations Process to Block Implementation of the Affordable Care Act (FY2011-FY2016)

Jul 8, 2015

China’s “Intended Nationally Determined Contribution” to Addressing Climate Change in 2020 and Beyond

Jul 6, 2015

Estimated FY2015 State Grants Under Title I-A of the Elementary and Secondary Education Act (ESEA)

Jul 2, 2015

How the Federal Sentencing Guidelines Work: An Overview

Sentencing for all serious federal noncapital crimes begins with the federal Sentencing Guidelines. Congress establishes the maximum penalty and sometimes the minimum penalty for every federal crime by statute. In between, the Guidelines establish a series of escalating sentencing ranges based on the circumstances of the offense and the criminal record of the offender. The Guidelines do so using a score-keeping procedure. The Guidelines process involves: I. Identification of the most appropriate Guidelines section for the crime(s) of conviction, based on the nature of the offense (the most commonly applicable are noted in the Guidelines Index) II. Identification of the applicable base offense level indicated by the section III. Addition/subtraction of offense levels per section instructions for the circumstances in the case at hand IV. Addition/subtraction of offense levels per instructions in those chapters of the Guidelines relating to A. Victim related matters B. Role in the offense C. Obstruction D. Multiple counts E. Acceptance of responsibility V. Calculation of the criminal history score VI. Consideration of departures (more/less severe treatment) which the Guidelines permit VII. Application Guidelines instructions relating to A. Imprisonment (Sentencing Table) B. Probation C. Supervised release D. Special assessments E. Fines F. Restitution G. Forfeiture VIII. Sentencing of Organizations IX. Deviation based on the sentencing principles in 18 U.S.C. 3553(a). This report is available in an abridged version entitled CRS Report R41697, How the Federal Sentencing Guidelines Work: An Abridged Overview.

Jul 2, 2015

Greenhouse Gas Pledges by Parties to the United Nations Framework Convention on Climate Change

This report briefly summarizes the existing commitments and pledges of selected national and regional governments to limit their greenhouse gas (GHG) emissions as contributions to the global effort.

Jun 29, 2015

U.S.-North Korea Relations

Jun 25, 2015

Wildfire Statistics

Jun 23, 2015

Civilian Federal Retirement: Current Law, Recent Changes, and Reform Proposals

Jun 18, 2015

Independence Day: Fact Sheet

Independence Day, often called the Fourth of July, is a federal holiday celebrating the adoption of the Declaration of Independence on July 4, 1776. This guide is designed to assist congressional offices with work related to Independence Day celebrations. It contains links to census and demographic information, CRS reports, sample speeches and remarks from the Congressional Record, and presidential proclamations and remarks. It also contains links to selected historical and cultural resources.

Jun 17, 2015

The Independent Payment Advisory Board (IPAB): Frequently Asked Questions

Jun 16, 2015

South Korea: Background and U.S. Relations

Jun 12, 2015

President Obama Pledges Greenhouse Gas Reduction Targets as Contribution to 2015 Global Climate Change Deal

Jun 12, 2015

Overview of Health Insurance Exchanges

Jun 10, 2015

The Earned Income Tax Credit (EITC): An Economic Analysis

This report discusses the Earned Income Tax Credit (EITC), which is a refundable tax credit available to eligible workers earning relatively low wages

Jun 2, 2015

National Park Service: FY2016 Appropriations and Recent Trends

May 29, 2015

Worker Rights Provisions in Free Trade Agreements (FTAs)

May 28, 2015

Environmental Provisions in Free Trade Agreements (FTAs)

May 28, 2015

Health Resources and Services Administration (HRSA) FY2016 Budget Request and Funding History: Fact Sheet

May 26, 2015

DHS Budget v. DHS Appropriations: Fact Sheet

(TO BE SUPPRESSED) Department of Homeland Security DHS budget Appropriations FY2016, FY2015 funding analysis non-appropriated funding adjustments under the Budget Control Act supplemental mandatory user fee trust fund

May 26, 2015

U.S. Trade with Free Trade Agreement (FTA) Partners

The United States is negotiating two mega-regional comprehensive and high-standard trade agreements that potentially could affect U.S. economic and trade relations with Europe and Asia. Discussions of these and other FTAs often focus on trade balances, particularly U.S. bilateral merchandise trade balances with its FTA partner countries as one way of measuring the success of the agreement. Although bilateral merchandise trade balances can provide a quick snapshot of the U.S. trade relationship with a particular country, most economists argue that such balances serve as incomplete measures of the comprehensive nature of the trade and economic relationship between the United States and its FTA partners. Indeed, current trade agreements include trade in services, provisions for investment, and trade facilitation, among others that are not reflected in bilateral merchandise trade balances. This report presents data on U.S. merchandise (goods) trade with its Free Trade Agreement (FTA) partner countries. The data are presented to show bilateral trade balances for individual FTA partners and groups of countries representing such major agreements as the North America Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement and Dominican Republic (CAFTA-DR) relative to total U.S. trade balances. This report also discusses the issues involved in using bilateral merchandise trade balances as a standard for measuring the economic effects of a particular FTA.

May 21, 2015

The Renewable Fuel Standard (RFS): Waiver Authority and Modification of Volumes

This report discusses the process and criteria for the Environmental Protection Agency to waive various portions of the renewable fuel standard (RFS), and the modification of applicable volumes.

May 21, 2015

Defense Spending and the Budget Control Act Limits

This report discusses the Budget Control Act, which sets limits on defense spending between FY2012 and FY2021. The current debate in Congress has centered on whether to adjust the BCA defense caps upward; move base budget spending to accounts designated for Overseas Contingency Operations (OCO) that are not subject to spending limits; reduce the defense spending in the Administration's request to comply with BCA revised caps; or use some combination of these approaches, all in order to avoid a sequester.

May 19, 2015

U.S. Citizenship and Immigration Services (USCIS) Functions and Funding

U.S. Citizenship and Immigration Services (USCIS), an agency within the Department of Homeland Security (DHS), performs multiple functions including the adjudication of immigration and naturalization petitions, consideration of refugee and asylum claims and related humanitarian and international concerns, and a range of immigration-related services, such as issuing employment authorizations and processing nonimmigrant change-of-status petitions. Processing immigrant petitions remains USCIS’s leading function. In FY2014, it handled roughly 6 million petitions for immigration-related services and benefits. USCIS’s budget relies largely on user fees. The agency and its predecessor, the former Immigration and Naturalization Service (INS), have had the legal authority to charge fees for immigration services since before the passage of the Immigration and Nationality Act of 1952 (INA). In 1988, Congress created the Immigration Examinations Fee Account, which made the portion of USCIS’s budget collected from user fees no longer subject to annual congressional approval. Since the President announced the Immigration Accountability Executive Action on November 20, 2014, USCIS’s budgetary structure has received increased attention. Among other provisions, the executive action included an expansion of the existing Deferred Action for Childhood Arrivals (DACA) program that was initiated in 2012, as well as a new Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA) program that grants certain unauthorized aliens protection from removal, and work authorization, for three years. If implemented, these programs would require applicants to submit petitions and pay a user fee to USCIS. The user fees would purportedly pay for the cost of administering the program. Some in Congress oppose deferred action programs. However, Congress has limited options for halting the programs using the annual appropriations process. The executive action highlights some challenges Congress faces if it wishes to exert control over an agency whose funding is largely independent of the annual appropriations process. To alter existing statutory provisions governing the collection of user fees in the Immigration Examinations Fee Account, the availability of user fees for expenditure, or their prohibited use for certain purposes would require an enactment of law. Congress does appropriate a small portion of the agency’s budget each year, primarily to fund E-Verify, a system used to electronically confirm that individuals have proper authorization to work in the United States. Since 2003, such annual direct appropriations have constituted a declining portion of USCIS’s budget. While some have welcomed this trend for reducing the cost to U.S. taxpayers of running USCIS, others have voiced concerns over the limitations on congressional oversight it reflects. Some contend that such budget independence also makes the agency less responsive to the need for affordable user fees and timely and effective customer service. Potential issues that Congress may decide to consider include USCIS’s accountability to Congress, given that much of its funding does not require annual congressional approval; whether some fees are at levels that inhibit some potential applicants from applying for benefits or inhibit lawful permanent residents from becoming citizens; whether the pace and progress of information technology modernization is sufficient to meet the agency’s multiple functions and efficiently serve petitioners; and whether USCIS’s management of its personnel and resources adequately addresses sudden demands for processing and adjudication of petitions while maintaining processing times and adequate levels of service for all other petitions.

May 15, 2015

Legislative Branch: FY2016 Appropriations

May 13, 2015

The Railroad Rehabilitation and Improvement Financing (RRIF) Program

Congress created the Railroad Rehabilitation and Improvement Financing (RRIF) program to offer long-term, low-cost loans to railroad operators, with particular attention to small freight railroads, to help them finance improvements to infrastructure and investments in equipment. The program is intended to operate at no cost to the government, and it does not receive an annual appropriation. Since 2000, the RRIF program has made 34 loans totaling $2.7 billion (valued at $2.9 billion in 2015 dollars). Although the program, which is administered by the Federal Railroad Administration (FRA), regularly receives applications, it has approved only one loan since 2012. Congress has authorized $35 billion in loan authority for the RRIF program and repeatedly has urged FRA to increase the number of loans the program makes. Reports suggest the uncertain length and outcome of the RRIF loan application process and the up-front costs to prospective borrowers are among the elements of the program that have reduced its appeal compared with other financing options available to railroads. By statute, FRA has 90 days from the time a completed application is submitted to render a decision on the application. This timeline becomes uncertain due to FRA’s discretion in determining when a loan application is “complete.” A 2014 audit indicated that some loan applications had been in process for more than a year. Unlike the Department of Transportation’s other prominent loan assistance program, the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, RRIF loan recipients are required to deposit the equivalent of a bond, referred to as a credit risk premium, which is intended to offset the risk of a default on their loan. The money is returned to the borrower when the loan is paid back. The credit risk premium helps the program comply with a congressional requirement that federal loan assistance programs operate at no cost to the federal government. However, it may make RRIF loans less attractive to borrowers than TIFIA loans, for which Congress appropriates funds to pay the cost of the credit risk premium for loan recipients, or than private loans, in which risk premiums typically are folded in to the cost of the loan and paid as part of the loan repayment schedule. Since 2008, several RRIF loans have been made to government-run intercity passenger rail projects. A number of private companies seeking to build intercity passenger rail lines also have expressed interest in RRIF loans. Such loans likely would be quite large relative to those RRIF typically extends to small freight railroads, raising questions about the risk to the federal government if the projects are not completed or if they fail to generate sufficient revenue to service the loans. Legislation introduced in the 114th Congress would reserve 40% of RRIF lending authority for Amtrak and would change elements of the RRIF program to make it more attractive to potential applicants.

May 13, 2015

Principles, Requirements, and Guidelines (PR&G) for Federal Investments in Water Resources

May 13, 2015

U.S. Global Health Assistance: The FY2016 Budget

May 11, 2015