Federal Legislative Update 1/23

News from the National Council on Nonprofits.

Bi-Partisan Opposition Grows for ACA Repeal Without Replacement

The 115th Congress convened with the majorities clearly intent to quickly repeal the Affordable Care Act (ACA, or “Obamacare”) within a month and develop a replacement plan months or even years later. That two-step strategy has now been stymied by a combination of outside advocacy efforts, financial and coverage concerns expressed by governors and moderate Republicans in Congress, and recent reaffirmation by the new President who campaigned on the immediate repeal and replacement of the landmark health care law. The Senate and House passed a budget resolution that sets the stage for repeal of the ACA in a few weeks, but leaders in the majority are now assuring their colleagues and the public that a replacement plan will be enacted in tandem with repeal legislation.

Numerous nonprofits, including the Alliance for Strong Families and Children, initiated letter-writing campaigns calling on Congress not to repeal the ACA, in whole or in part, “without simultaneously replacing it with a revised program that addresses many of the concerns that nonprofits have for the people they serve.” Thirty-one states adopted Medicaid expansion under the ACA, including 16 led by Republican Governors who reportedly expressed their concerns to policymakers in Washington. Repeal without a replacement would cost those states billions in previously promised funds and disrupt state budgets for years. Senator Susan Collins (R-ME) expressed the views of many of her colleagues when she stated that repeal “risks leaving millions of vulnerable Americans without affordable health insurance and would undo important consumer protections provided by current law.” Senator Bill Cassidy (R-LA) is expected to introduce a bill soon that would partially resolve the question of a replacement plan by giving states the flexibility to keep Obamacare, abolish it entirely, or transition to a new system of health savings accounts and automatic health plan enrollment.

The need for a viable replacement plan for Obamacare was underscored last week when the Congressional Budget Office warned that partial repeal without replacement would leave tens of millions of people uninsured and cause a spike in insurance premiums. President Trump has signaled that he expects the replacement of the ACA to be enacted simultaneously with repeal, but has said he will not release his legislative plan until his nominee is confirmed to lead the Department of Health and Human Services. On his first day in office, President Trump signed an executive order instructing federal agencies to use their discretion to provide maximum flexibility to states and others to reduce the costs, burdens, and mandates of the ACA, a step that some see as adding pressure on Congress to adopt a replacement law. Republican Senators and Representatives are meeting this week at a retreat in Philadelphia and the subject of a replacement health care plan is sure to be one of the most hotly debated topics.

Spending Cut Plans Emerging

The federal spending plan for the rest of this fiscal year remains unclear, but details are emerging for the Trump budget proposals for Fiscal Year 2018 that begins on October 1. In recent speeches, Administration officials have revealed that the President will seek to reduce federal spending by $10.5 trillion over 10 years. One reported source of ideas for what to cut comes from the Heritage Foundation, a conservative DC think tank, that has offered up “106 ways to reduce the size and scope of government.” Another source is the budget plan of the Republican Study Committee, a group of deficit hawks in the House. The Heritage blueprint calls for eliminating the Justice Department’s Violence Against Women Grants, the Legal Services Corporation, and reducing funding for the Civil Rights division. It is also expected that a Trump budget proposal will seek to privatize the Corporation for Public Broadcasting and eliminate both the National Endowment for the Arts and the National Endowment for the Humanities. More details on the Trump plan are likely to be released over the next month, with his formal recommendations to Congress expected by Spring.

  • Putting Pending Regulations on Hold: Federal departments were ordered to freeze all federal regulations currently in the pipeline to give the new Administration time to review and revise. In a memorandum from White House Chief of Staff Reince Priebus issued late Friday, bureaucrats were ordered to take no action on proposals that have not been finalized, to withdraw those sent for formal publication in the Federal Register, and to delay the implementation date for 60 days for those that have been promulgated, but are not yet effective. The memo makes exceptions for “critical health, safety, financial, or national security matters.” Earlier in the week, 18 Republican state Attorneys General sent a letter to then Vice President-elect Mike Pence and Congressional leadership expressing their support for the House-passed “Regulations from the Executive in Need of Scrutiny Act of 2017 or (REINS Act), that would require the House and Senate to accept or reject within 70 legislative days rules that have an economic impact of more than $100 million. That measure has raised concerns among environmental and other advocates that the measure could hamper the work of various federal agencies.
  • New Administration, New Look at Voting Rights: The Trump Administration successfully petitioned for delaying a hearing this week in a major voting rights case in which the Civil Rights Division of the Department of Justice successfully proved that a restrictive Texas voter identification law had a discriminatory effect on the civil rights of African-Americans and Latinos. The extension was sought to allow time for incoming officials at the Justice Department to decide the direction it wants to take in the case regarding state discrimination against minorities.
  • Form 1023-EZ Challenged: The reliance by the Internal Revenue Service on its short Form 1023-EZ causes it to erroneously grant tax-exempt status to unqualified organizations, the National Taxpayer Advocate concluded in its Annual Report to Congress for 2016. The Form 1023-EZ, requires applicants to merely attest that they meet the requirements for qualification as Section 501(c)(3) organizations. The Taxpayer Advocate found that most applications for the exemption are now submitted on Form 1023-EZ and the IRS approves many that do not qualify under the law. The Taxpayer Advocate recommends that the IRS require Form 1023-EZ applicants to submit their organizing documents and summary financial information, and that the IRS make a determination only after considering narrative statements and this additional information. For more on the challenges and concerns about the Form 1023-EZ, read Is the 1023-EZ a Step Backward for Regulators and Nonprofits?

Analysis Worth a Read

The 2016 Elections: Impact on the Work of CharitableNonprofits,” Tim Delaney and David L. Thompson, Nonprofit Policy Journal, January 2017, previewing how some of the policy decisions made across the multidimensional local, state, and federal levels of governments and made by officials across the executive, judicial, and legislative branches of governments could affect the work of charitablenonprofits and private foundations, and emphasizing that the advocacy function ofnonprofits is going to be more important than ever in the foreseeable future.

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