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In addition, the division's staff provided technical assistance on a broad range of Medicaid issues, focusing, in particular, on proposals to restructure the financing of Medicaid. Those proposals, which would change the fiscal relationship between the federal government and the states, included block grants to the states and limits on average federal Medicaid spending per person, known as "per capita caps."

The division's staff also analyzed the private sector impacts of various proposals to modify the terms under which private health insurance is offered. Specific proposals included: standards to improve the portability of private insurance policies (such as limiting the length of exclusions for preexisting conditions, guaranteeing the initial coverage and subsequent renewal of insurance for those shifting from group to individual insurance coverage, and extending COBRA continuation coverage for a longer period of time than is currently required); provisions to assure parity in insurance coverage of mental health treatment; requiring insurance coverage of a minimum hospital stay for newborns and their mothers; and preventing managed care plans from restricting communications between physicians and their patients regarding treatment options.

The division produced several formal products in the health area. Topics that were analyzed included: Medicare's financing problems in the shortterm and over the long-term, with the retirement of the baby boom generation, as well as specific reform proposals considered in the 104th Congress; alternative approaches to restructure Medicaid financing, including block grant and per capita cap approaches which could redefine the federal-state relationship; Medicare's overpayment to HMOs caused by a payment system that does not account for the favorable selection into those plans of enrollees who use less health care; design features of medical savings accounts; recent trends in private sector spending on health; and the impact of reforms in private sector health insurance, including provisions designed to improve portability of insurance, assure parity in the coverage of mental health, and establish a minimum hospital stay for newborns and mothers.

Human Resource Policy:

The division made significant informal contributions to the work of Congressional


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In the area of welfare reform, issues included the costs and other effects of proposals to: limit the duration of food-stamp eligibility among certain able-bodied adults; tighten SSI eligibility rules for disabled children; eliminate or restrict participation of noncitizens in the AFDC, Food Stamp, and SSI programs; increase federal block grants in periods of high unemployment; and limit the duration of AFDC benefits.

Other human resource topics included: analyzing proposals for increasing the federal minimum wage rate and changing other provisions of the Fair Labor Standards Act; investigating recent growth in the numbers of participants in the Social Security Disability Insurance program and the disability portion of the SSI program; examining several options to reduce federal spending on multifamily housing projects while minimizing the impacts on tenants; analyzing a variety of proposals to amend federal immigration policies, projecting changes in unemployment insurance revenues and outlays resulting from a variety of proposals; forecasting the premium income of the Pension Benefit Guaranty Corporation; exploring methods of consolidating federal training programs; and estimating the costs and effects of proposed change in federal student aid programs, especially the Pell Grant


Formal products in the human resource area included: an analysis of alternative child support assurance programs; an examination of longterm options for scaling-back Social Security commitments; and privatesector mandates statements for bills and other proposed legislation in a wide variety of human resource areas, including education, welfare, immigration, labor-management relations, regulation of the labor market, and social services.

National Security Division:

In fiscal year 1996, the National Security Division provided information on defense budget issues to various Congressional committees and subcommittees, especially those on the Budget, Armed Services/National Security, and Foreign Relations/International Relations. Some of the division's work involved informal assistance. For example, members of the division supported Congressional staff in assessing proposals concerning tactical aviation and strategic lift programs, military


During the year, the division provided three testimonies before committees and subcommittees. The division also completed about a dozen written products, including analyses of:

Bonuses for Navy nuclear-trained officers;

Rewards for performance in the military pay structure;

The military implications and costs of expanding NATO to include some countries of East Central Europe;

The U.S. Army's helicopter programs;

Aircraft carrier operations and the efficiency of carrier presence;

Options for strategic airlift; and

The costs of national missile defense systems.

Special Studies Division:

In fiscal year 1996, the Special Studies Division provided information to various committees on budget process, accounting, and general government and personnel issues. In addition, the division worked collaboratively with other Congressional support agencies and with executive branch agencies.

Special Studies took the lead in preparing testimonies on the costs and benefits of Fannie Mae and Freddie Mac and on biennial budgeting and other changes in the budget process.

In addition, the division prepared:

A draft report on federal employee pensions,

A report on federal spending for the administration of justice,

A paper on trends in federal employment,


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A mandated report on unauthorized appropriations and expiring authorizations,

A system linking CBO with OPM's automated personnel data system,

A database on supplementals and rescissions,

A draft paper on small business investment companies,

A draft paper on federal pay comparability,

A report on mandatory spending control mechanisms, and

A draft report on asset sales.

The division contributed to:

The CBO-wide volume analyzing options for reducing the deficit, and

A series of short analytical memos on natural disaster insurance and on private-sector mandates.

Special Studies provided staff assistance to:

The Federal Accounting Standards Advisory Board and

SBIC Reinvention Council of the Small Business Administration.


Priorities for the program divisions for fiscal year 1998 include:

Natural Resources and Commerce Division:

The NRCD will continue to meet the requests of committees and to support other CBO divisions in the subject areas covered in the past, although the relative emphasis on the topics may change. We also expect the workload under the provisions of the Unfunded Mandates Reform Act of 1995 will continue to be demanding. Specifically, the division will examine all legislation to see if it contains a privatesector mandate. If so, it will prepare the analysis of expected private-sector cost for all areas covered by the division's responsibility. Beyond that, we expect that there


legislation and accompanying regulations. There may be increased interest in examining the potential effects of reduced federal activity in some areas, with the possibility that in some instances the activity will shift to other government entities or to the private sector, and in other instances, the activity may decline or be eliminated. A number of governmental activities may be considered for privatization or for sale (as in the case of auctioning licenses at the FCC). We would expect to supply analysis of the efficiency changes of such proposals as well as the potential effects on the federal budget.

Health and Human Resources Division:

During fiscal year 1998, the division will continue to provide analytic support to Congressional committees and other CBO divisions on issues of immediate legislative and budgetary concern. Depending on legislative action in 1997, the division expects to analyze policies to address the impending insolvency of the Medicare HI Trust Fund, including policy options for slowing the rate of growth in federal outlays for services in the home health, skilled nursing care, and outpatient areas. In addition, proposals for broader restructuring of Medicare and Medicaid are likely to be the subject of policy debate, and the division anticipates extensive analyses of such proposals. Other areas of focus are expected to include modifications to the retirement and disability components of the Social Security and SSI programs, and possible interactions with the nation's private pension system; continued long-term restructuring of federal housing assistance programs; changes in federal student aid policies, including alternative loan repayment schemes; and the costs and other effects on the private sector of proposed federal legislation in the division's areas of expertise.

National Security Division:

The division expects no change in its basic mission in fiscal year 1998: supplying high-quality, timely information on defense budget issues at the request of Congressional committees of jurisdiction. Overall fiscal stringency and concern about the federal deficit are likely to continue to constrain choices about defense. The division will continue to analyze options that can improve the efficiency and effectiveness of defense programs within overall fiscal constraints. Ongoing work about the affordability of the Defense Department's modernization plans, military compensation and benefits, peace operations, and the military industrial base will continue. In addition, likely areas for new work include research and development spending, unmanned aerial vehicles, Guard and reserve programs, and veterans'

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