Reuters: U.S. health benefits recommendations coming Oct. 7

U.S. health benefits recommendations coming Oct. 7

Thu, Sep 29 2011

By Alina Selyukh

WASHINGTON, Sept 29 (Reuters) – A key recommendation for medical coverage standards under President Barack Obama’s healthcare overhaul will be released on Oct. 7, according to the organization preparing the report.

The Institute of Medicine, one of the national academies of science that advises U.S. policymakers, was tasked with recommending how U.S. health regulators should determine the basic health benefits for millions of Americans who will qualify for coverage sold through state-based insurance exchanges beginning in 2014.

IOM spokeswoman Christine Stencel said on Thursday that the agency will release the report on Oct. 7, just a week later than its self-imposed deadline of the end of September.

Stencel has previously told Reuters that IOM will not produce specific benefits standards for the exchanges. Instead, the group is working toward recommendations on criteria and methods that would allow the Department of Health and Human Services to determine and update the essential health benefits package.

The findings will guide HHS in drafting the final rules, expected by the end of the year.

Those rules are perhaps the most anticipated piece of information still awaited by states, employers, health providers and especially insurers under Obama’s landmark healthcare reform. They will outline which health services should be mandated by the government from all insurance plans looking to compete for new customers on the exchanges.

The exchanges are envisioned as open marketplaces of competing insurance plans where small businesses and uninsured individuals could band together and get cheaper rates as well as automatically be considered for government subsidies.

As Washington increasingly focuses on efforts to rein in spending, the U.S. health sector will be closely watching the cost of the new coverage requirements.

HHS has been subject to intense lobbying over the rule as virtually the entire U.S. healthcare system could be affected by it. It remains unclear how specific both IOM’s recommendations and HHS’s final rules will be.

Obama’s Affordable Care Act is designed to extend healthcare coverage to an estimated 32 million Americans who are now uninsured. (Reporting by Alina Selyukh; Editing by Carol Bishopric and Tim Dobbyn)

Source: http://www.reuters.com/article/2011/09/29/health-obama-benefits-idUSS1E78S1UM20110929

Christian Science Monitor: Why a fast Supreme Court ruling on health-care law might benefit Obama

The Christian Science Monitor – CSMonitor.com

Why a fast Supreme Court ruling on health-care law might benefit Obama

By Linda Feldmann, Staff writer
posted September 29, 2011 at 3:00 pm EDT

WASHINGTON

The Obama administration says it did not consider politics when it asked for a ruling from the US Supreme Court on the constitutionality of health-care reform.

But the reality is that Wednesday’s unexpectedly quick request for the high court to review an appeals court ruling on the Affordable Care Act (ACA) could propel the issue front and center at the height of the 2012 presidential campaign.

The Supreme Court is now expected to hear the case (and possibly other, similar cases) after the new year, and likely hand down a decision in June.

The ruling at issue came from a three-judge panel of the 11th Circuit Court of Appeals in August, which struck down the mandate for individuals to purchase health insurance but did not invalidate the entire law.

The Obama administration could have asked the entire 11th Circuit to take up the issue. But analysts see the 11th Circuit as a conservative court, and thus may well have upheld the three-judge panel’s decision.

In a statement Wednesday, the Justice Department sought to include the health-care law in the lofty company of high-profile cases that have survived Supreme Court scrutiny.

“Throughout history, there have been similar challenges to other landmark legislation such as the Social Security Act, the Civil Rights Act, and the Voting Rights Act, and all of those challenges failed,” the department said. “We believe the challenges to the Affordable Care Act – like the one in the 11th Circuit – will also ultimately fail and that the Supreme Court will uphold the law.”

It’s hard to predict how the high court’s ruling might affect the political calculus in 2012. To be sure, both parties will hope to spin a positive story from the result.

If the high court rules in June and strikes down all or part of the law, it would deal a major blow to Mr. Obama just a few months before the November election. The health-care issue has faded of late; the economy and jobs dominate voters’ concerns.

On the other hand, if the individual mandate – or the entire law – goes down, that could cause Obama’s dispirited Democratic base to rally around him.

And if the Supreme Court upholds the law, Obama would head into November 2012 vindicated on the signature, though controversial, legislative achievement of his presidency. Conservatives would likely become even more energized than they already are, not only to defeat Obama, but also to elect more conservative members of Congress pledging to repeal the law.

Another possibility is that the Supreme Court defers its decision until after the 2012 election, diffusing health care as a potential election issue.

On the political front, if the Republican Party nominates former Massachusetts Gov. Mitt Romney for president, it would likely cause the health-care issue to lose some of its bite against Obama. Mr. Romney authored the 2006 Massachusetts health-care reform, which has resulted in near-universal coverage and was a model for Obama’s plan.

Romney has defended his reform, including the individual mandate to buy insurance. But he argues that while it was an appropriate experiment for Massachusetts, it represents an unconstitutional reach for power by Washington. If elected, Romney has said he would issue an executive order allowing states to opt out of the law, and also seek the law’s repeal by Congress.

On Monday, after the Justice Department announced that it had filed a petition asking the Supreme Court to review the 11th Circuit’s health-care ruling, a senior Justice Department official briefed reporters on its action.

According to The New York Times, the official said the administration was not influenced by political timing when it sought an early conclusion to the case.

“Rather, the official, who spoke to reporters on a background basis with no direct attribution, said Mr. Obama’s advisers had concluded that the country needed the closure that would come by an end to the many legal cases and the uncertainty surrounding the huge health care law,” the Times reported Tuesday.

Source: http://www.csmonitor.com/USA/Politics/2011/0929/Why-a-fast-Supreme-Court-ruling-on-health-care-law-might-benefit-Obama

WSJ: Allstate Revamps Agent Commission Structure

Allstate Thins Ranks

Insurer to Revise Compensation Eight Years After Expansion

By ERIK HOLM

Allstate Corp. pushed for growth eight years ago by bringing on hundreds of new agents. Now the insurer is pushing for results by thinning its ranks.

The company is planning an overhaul of its compensation structure that will increase rewards for its best agents while pushing less-successful ones out the door.

The Northbrook, Ill., company says it will cut base pay by 20% for all its agents—who are contractors, not employees—so more money can be paid in additional performance bonuses to the top tier. Allstate also has ramped up an initiative to give its better agents loans to help them buy less-successful agencies and take over their client lists. The overhaul will be rolled out over the next two years. An Allstate spokeswoman said the company had no set target for how many agencies it expected to have once the process is completed. It now has about 11,500 agencies in the U.S.

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The goal of the changes: to have a sales force better at finding and retaining customers and more capable of cross-selling, that is, selling a bundle of products to each customer instead of just a single policy. The company says larger agencies are more able to achieve those goals, though some smaller agencies have expressed skepticism that the company’s solution is the best way to improve results.

The move to consolidate agencies is a reversal from a push Allstate made to add agents from 2003 to 2007, leading to an excess of agencies that are too small to thrive. Allstate agents bring in an average of about $1.9 million in premiums each year, while the agents at State Farm Mutual Automobile Insurance Co., a larger rival owned by its policyholders, bring in about $2.9 million on average.

Allstate’s new pay structure, which won’t take full effect until 2013, will reduce agents’ base commissions to 8% of their premiums from 10%. Agents have to pay office staff, rent and other expenses out of those commissions and are eligible for additional incentive compensation.

At stake is Allstate’s spot as the second-largest home-and-auto insurer in the U.S. by premiums. The company has been losing market share for years and ranks behind some rivals in recent customer-satisfaction surveys. The number of drivers buying Allstate’s standard auto policy has fallen 4% in the past three years, while the number of home-insurance customers have dropped 12% under an initiative to limit the company’s exposure to natural disasters.

Allstate

CEO Tom Wilson

Chief Executive Tom Wilson says he hopes a more-effective sales force will reverse the decline in policyholders and help return the company to the profit levels it had before the financial crisis. Allstate’s stock fell by roughly half in the three years through Monday. Allstate’s shares rose 27 cents, or 1.2%, to $23.80 in 4 p.m. composite trading Tuesday on the New York Stock Exchange.

"If you’re a small agency and you have 1,000 accounts, you can’t afford the kind of support staff you need, you can’t have the broad product knowledge you need, so you’re going to have trouble being an expert" in all the products Allstate sells, Mr. Wilson says in an interview. "You have to have enough size and scale and revenue flow to invest in what you need to."

Mr. Wilson says the company has internal measures of agent performance that show which ones will be successful, and it can lend those agents the funds to buy out underperformers.

Among the program’s recent sellers is Patrick Campbell, a longtime agent in Novato, Calif., who sold his book of $1.5 million in annual premiums last month.

"It worked out for us," he says. But with a growing number of sellers and Allstate’s veto power over sales, Mr. Campbell says he expects that the prices that agents can get will decline. "I think I got out just in time."

Some agents have objected to the company’s plans to alter the commission structure. The National Association of Professional Allstate Agents in August voted to affiliate with the Office and Professional Employees International Union, a decision NAPAA said was driven by anger over the changes.

NAPAA Executive Director Jim Fish said some agents see opportunity in Allstate’s changes. "The top tier of agents is going to do very well," Mr. Fish said. "But in general, morale is very low. People want out."

Mr. Wilson said in a conference call last month that morale wasn’t a problem. He said many agents are "highly supportive of our strategy," he said.

Analyst Robert Glasspiegel of the Langen McAlenney unit of Janney Capital Markets says implementation will be a key to Allstate’s success. "It all comes down to execution," he says. "Morale can be turned around by good performance.…They need better earnings…before anything can happen with respect to morale."

Write to Erik Holm at erik.holm

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The Hill: White House Expected to File Direct Supreme Court Appeal of Health Care Law

White House won’t seek to delay High Court healthcare review

By Sam Baker – 09/26/11 06:02 PM ET

The Obama administration opened the door Monday for the Supreme Court to decide the constitutionally of the healthcare law before the next election.

It opted not to seek a delay in the legal process, leaving little doubt that the court will rule on President Obama’s controversial legislation just months before he faces voters.

A three-judge panel of the 11th Circuit Court of Appeals ruled in August that the healthcare law’s individual coverage mandate is unconstitutional. The Justice Department declined to ask the full 11th Circuit to review the decision, clearing the way for a petition to the Supreme Court.

Legal experts have said they expect the Supreme Court to rule on the mandate in the summer of 2012. If the Obama administration had wanted to try to slow down the proceedings — possibly delaying them until after the election — an “en banc” review from the 11th Circuit was seen as its best opportunity.

But the administration did not take that option Monday, and the Justice Department is now expected to appeal the 11th Circuit decision to the Supreme Court.

Greg Katsas, a partner at Jones Day who represents the mandate’s challengers, said going straight to the Supreme Court is the best move for everyone involved.

“For the good of the country, we should know sooner rather than later what the rules are going to be,” Katsas said.

Katsas represents the National Federation of Independent Business, which joined 26 state attorneys general in filing the 11th Circuit suit.

The big question now is which specific case the high court will hear.

The administration’s strategy on that front will become clearer on Wednesday — the deadline for the Justice Department to file a brief in a separate suit. The administration must respond to the Thomas More Law Center’s request for a hearing in its suit against the mandate. The law center appealed to the Supreme Court after the 6th Circuit Court of Appeals ruled that the coverage requirement is constitutional.

How the Justice Department approaches that brief will help indicate which case it wants the Supreme Court to take, Katsas said.

In addition to the 11th Circuit’s ruling against the mandate and the 6th Circuit’s ruling in favor of it, the 4th Circuit Court of Appeals dismissed two suits over the coverage requirement on procedural grounds. Although the challengers in the dismissed cases will likely appeal to the high court as well, Katsas said he doesn’t think the Obama administration wants those cases to go any further.

Especially after deciding to go straight to the Supreme Court, it seems clear that the administration wants to settle the fundamental question of whether the mandate is constitutional, Katsas said. So asking the court to deal only with procedural issues seems unlikely, and it would only buy the law a short amount of time. The mandate could be challenged again after it takes effect in 2014.

Critics say the insurance mandate is unconstitutional because it requires people to buy a specific product solely because they’re U.S. taxpayers. Congress has the power to regulate economic activity, but critics say the mandate goes a step further and compels economic activity.

The White House and its allies say that the activity in question is using healthcare — not purchasing insurance. Requiring people to buy insurance is simply a way to regulate how people pay for healthcare services, they argue.

Source: http://thehill.com/blogs/healthwatch/health-reform-implementation/183981-white-house-wont-seek-delay-in-healthcare-suit

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Office: 202-625-1787

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AISHealth.Com: States May Take Lead on MLR Broker Issue As NAIC, Congress Turn Attention Elsewhere

Featured Health Business Daily Story, Sept. 26, 2011

States May Take Lead on MLR Broker Issue As NAIC, Congress Turn Attention Elsewhere

Reprinted from AIS’s HEALTH REFORM WEEK

By Jennifer Lubell, Editor – September 12, 2011 – Volume 2 Issue 30

As the insurance regulator’s major professional group backs off on its push to exempt broker commissions from being treated as administrative costs in calculating insurers’ minimum medical loss ratios (MLRs), industry insiders suggest that some states will work around the parameters of federal regulations to pursue their own solutions to this issue.

Arkansas, for example, is mulling an alternative that takes the insurer out of the equation in compensating brokers. It’s a proposal “that could work in many states,” Alan Katz, past president of the National Association of Health Underwriters and a principal at the Alan Katz Group, a consulting firm in Los Angeles, tells HRW.

Alice Jones, spokesperson for the Arkansas Insurance Department, confirms to HRW that the state is considering a bulletin “which proposes to permit the agent or broker to collect a ‘compensation fee’ directly from the client/group as a consultation fee. We are seeking feedback and suggestions from health producers and brokers so the commissioner can decide what is in the best interest of Arkansas consumers.”

Jones stresses that the bulletin is “only under discussion at this time.”

Federal regulations that took effect Jan. 1 require health insurers to have MLRs of at least 80% in the individual and small-group markets and 85% in the large-group market (HRW 12/6/10, p. 1). Broker commissions must be included in the adjusted earned premium used in calculating the MLR, thus having the effect of increasing the denominator, lowering the reported MLR and potentially increasing the amount of rebates that the carriers would have to make to customers.

An Aug. 29 Government Accountability Office report found that most insurers were planning to decrease commissions to brokers, in an effort to increase their MLRs (see chart, p. 3).

In June, a task force of the National Association of Insurance Commissioners (NAIC) on broker issues voted to support a bill (HR 1206) sponsored by Rep. Mike Rogers (R-Mich.) to exempt broker commissions from the MLR calculation. Some commissioners had supported the bill, citing concerns about brokers’ livelihood in the wake of significant commission cuts by insurers, and the resulting potentially negative impact on consumers and small groups seeking help in purchasing insurance.

This issue, however, appears to have lost steam within the NAIC. In a recent conference call, NAIC President-Elect and Florida Insurance Commissioner Kevin McCarty, who chairs the task force and backed the bill, acknowledged that “while we may be supportive of the Rogers bill in the task force, we have to be realistic about the opportunity of it becoming law” (HRW 7/18/11, p. 5).

“I don’t think the NAIC is going to take further action on this unless something changes pretty dramatically,” Timothy Jost, J.D., a health law professor at the Washington and Lee University School of Law in Virginia and an NAIC consumer representative, tells HRW.

Jost says the broker issue had been left off of the agenda for NAIC’s canceled summer meeting, though he acknowledges that “there wasn’t a lot of health care business” scheduled for the meeting to begin with. “I think it’s fair to say that the main agenda was to start looking at 2014, looking at exchange implementation and new market regulations,” he says of the meeting’s planned health reform discussions. “There weren’t any big agenda items that were set for decisions; it was to start talking about how various issues were going to be dealt with.”

In light of the canceled meeting, McCarty spokesperson Jack McDermott tells HRW, “I do not think there have been any more developments on this.”

Jost was also skeptical that lawmakers in Washington would take up the broker pay issue, in either the Rogers bill or other legislative avenues.

The Rogers legislation, which has about 100 co-sponsors, has not yet been marked up in a House committee and is actively opposed by consumer groups and some prominent Democrats, including Sen. Jay Rockefeller (D-W.Va.). “If Congress decides this is a top priority, and they may try to attach it to a bill, the president would have a hard time vetoing and push it through — but right now Congress has so many other things on its plate, it’s hard for me to imagine this is a top priority,” Jost says.

If any action takes place on broker fees, it may be on the Senate side where Sen. Mary Landrieu (D-La.) said she was going to introduce legislation to exempt the fees from the MLR calculation, he continues. “I don’t know where that stands, but the last I heard, she was asking HHS if this is something they could do, and…the position from HHS is there is nothing they can do, they’re just implementing the law, and if Congress wants to change the law, it can.”

States May Try to Circumvent MLR Regs

Attorney Bruce Merlin Fried, a partner in the Washington, D.C., office of law firm SNR Denton US LLP, acknowledges that “the feds have decided how they’re going to handle the broker agent issue. And while there may be members of Congress willing to fight the good fight for the brokers and agents, at the end of the day Jay Rockefeller is not going to let this change.”

While Congress may have drawn the line on the MLR, it’s also important to note that states have the ultimate authority over brokers and agents, Fried contends. “In that respect, states could have a lot of sway” in addressing the matter of broker compensation in the MLR.

As an example, the states could “basically take brokers and agents out of the realm of insurance, so they aren’t acting as agents of insurers, but instead are acting as the agent of the purchaser,” to possibly circumvent the issue of counting their commissions as administrative costs in the MLR, he says. Under Arkansas’ proposal, for example, employer groups would pay brokers as consultants, and the insurance carrier essentially would act as a third-party clearinghouse, Katz says. In other words, the carrier would aggregate all of the broker’s fees into one lump sum, list that distribution fee as a separate charge on the employer’s premium bill, and then pay it out to the broker. This way, the fee never gets counted toward the administrative cost of the carrier.

“It’s the facilitation of the fee between the client and the broker,” and there’s no violation of the reform law in that, Katz explains.

Some, but not all, states may be looking at these types of options, he predicts.

It’s a more transparent arrangement, but as David Tuomala, director of actuarial consulting at OptumInsight, suggests, one that may not necessarily work in favor of brokers. They still could face reduced compensation, he tells HRW.

Specifically, brokers might find it more difficult to justify the compensation they’re getting for selling a product every month if it’s separated out as a line item, Tuomala says. Once employers know how much they’re paying brokers for their services, “they may want to ratchet that down if the amount is higher than they might like it to be,” or if they feel they’re not getting value for the amount of broker fees they’re paying, he adds.

The broker issue remains controversial and “isn’t just going to go away,” Joe Paduda, a former insurance executive who now is a principal in Health Strategy Associates, tells HRW. “It will wax and wane, but as pressure mounts on insurers and regulators, broker fees will come back to the fore as everyone tries to ensure their piece of the pie remains as big as possible.”

View the GAO report at www.gao.gov/products/GAO-11-711.

Range of Traditional MLRs Reported in the Individual, Small-Group and Large-Group Markets, 2009

Notes: Excludes insurers with less than 1,000 life years in a market or where life years could not be determined, and insurers that reported negative values for premiums, claims, or number of covered lives. Life years refer to the total number of months of coverage for enrollees divided by 12. Large group includes plans participating in the Federal Employees Health Benefits Program.

aThe traditional MLRs in the individual market were more widely distributed than those in the small and large group markets. MLRs within one standard deviation above and below the mean ranged from 64.4%–105% in the individual market, compared to 69.4%–96.8% in the small group market, and 79%–97.9% in the large group market. The standard deviation is a measure of the amount of variation in the data from the mean — a larger standard deviation indicates more variability.

Source: Government Accountability Office analysis of National Association of Insurance Commissioners data.

National Journal: The Fate of Health Care Reform If the GOP Wins

The Cook Report: If the GOP Wins

Could the health care reform law survive a Republican sweep in 2012? Don’t count on it.

by Charlie Cook

Updated: September 23, 2011 | 10:08 a.m.
September 22, 2011 | 4:15 p.m.

It’s hard to find many upbeat and optimistic Democrats these days; many seem distinctly worried if not apoplectic about the 2012 elections. Thinking about those lofty days when Barack Obama was elected and sworn in as president of the United States, let’s just say this wasn’t the cruise that Democrats and particularly Obama supporters signed up for.

At the risk of sending more Democrats reaching for their Prozac, consider this not implausible scenario: Republicans lose 10 to 15 House seats but maintain their majority, albeit a more narrow one. In my mind, this is the single most likely outcome in the House. Across the way in the Senate, the GOP picks up a net gain of four or five seats, creating either a 51-49 or 52-48 Republican majority in that chamber. Now let’s say Obama loses reelection, whether it’s to Texas Gov. Rick Perry, former Massachusetts Gov. Mitt Romney, or any other GOP contender.

Obviously for Democrats, who less than two years ago held not only the presidency but also substantial House and Senate majorities, this scenario would represent something just short of the end of Western civilization as they know it. The conventional wisdom is that if Republicans pick up the presidency and a Senate majority while keeping control of the House, they would either starve or nibble away at the Patient Protection and Affordable Care Act (also known as the health care reform law), or at least as much of whatever the courts haven’t thrown out. The U.S. Supreme Court has not yet weighed in on the matter.

But consider a second scenario. Let’s assume that the first piece of legislation introduced in the House is H.R. 1, a bill to effectively repeal the health care law. Upon arriving in the Senate it is incorporated into the budget reconciliation process and therefore cannot be filibustered. Only 50 votes would be necessary, with the (Republican) vice president breaking the tie, or it could get 51 or 52 votes without the vice president even needing to weigh in. Thus in the first weeks of the newly minted Republican Washington, health care reform is effectively repealed—not just nibbled at or starved to death, or for that matter picked apart by courts.

Assume that H.R. 1 will be a bill to kill the health care law.

It’s important to note that nothing is ever quite as clear as it appears from the cheap seats in the upper deck. Reality is a bit more complicated. For example, under the “Byrd Rule” in the Senate, anything in the reconciliation bill not directly related to spending can be challenged and ruled out of order. Another practical consideration is that by throwing out the individual mandate and other aspects of the health care law that conservatives, Republicans, and some other folks don’t like, it makes it difficult if not impossible to keep the parts that many voters actually support, for example the protection for those with preexisting medical conditions. In the absence of universal coverage, it’s pretty hard to force insurance companies to cover new applicants with preexisting conditions.

One health care expert at a major law firm in town argues that “enormous amounts of work will have been done in preparation for going live in 2014 with the [insurance] exchanges, etc.” He went on to point out that “outreach efforts to patients and beneficiaries will have begun and states will have invested capital in putting in place the legislation, regulations, and infrastructure needed to carry out their responsibilities. In addition, the private sector has spent vast sums” responding to the various provisions of the health care law, such as ones dealing with Accountable Care Organizations and benefit designs. “Also, what happens to the provisions already in effect, such as the extension of coverage to children up to age 26? What about the additional discounts for Part D beneficiaries in the doughnut hole? … Repealing [the health care law] may not be as easy as it sounds and may create confusion and anger among key constituencies.”

Another really smart observer of Capitol Hill suggested that attaching the repeal to a debt-ceiling hike would be one way for conservatives to take the sting out of a debt-limit increase. That could be Plan B for Republicans and certainly another avenue that they could take.

One GOP health care expert worries that “Republicans may end up looking like the bad guys for putting the good parts of the bill at risk.” In the end, the expert said, “their best hope is that the Supremes do the dirty work for them.”

Some of the central elements in the Obama health care law really could be repealed. Even if Democrats are a sizable Senate minority, the filibuster might not be able to save the health care statute. While no one has doubted the importance of next year’s elections, the stakes are even higher than many might think.

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Washington Post: Council Closes Meeting Under the “Open Meetings” Law

D.C. Council closes meeting, removes news media

By Tim Craig, Published: September 22

The D.C. Council, struggling to repair fractured relationships among its members, met behind closed doors Thursday to discuss ethics and other reforms after it summoned police to remove reporters.

During an afternoon that punctuated the growing stress in the John A. Wilson Building, council Chairman Kwame R. Brown (D) gathered all 13 council members to distribute a new “code of official conduct” and to try to infuse more comity. Currently, many members find it difficult to identify one another as friends.

Brown called the meeting two days after members cursed at one another during a debate over whether to raise income taxes on the city’s wealthiest residents.

When some members of the local news media tried to cover Thursday’s meeting, citing the city’s open-meetings law, Brown moved to kick them out.

Noting that the open meetings act allows for exemptions, Brown asked his colleagues to vote to close the meeting, saying the council would be talking about “personnel issues” and “financial disclosure statements.”

Under the open-meetings act, closed-door meetings are allowed to “discuss the appointment, employment, assignment, promotion, performance evaluation, compensation, discipline, demotion, removal, or resignation of government appointees, employees, or officials.”

All nine members in the conference room where members had gathered voted to close the session. But several members of the news media, including The Washington Post, tried to remain in the room until an explanation was given for locking the news media out of the proceedings.

“Mr. Chairman, I am going to object,” said Tom Sherwood, a veteran reporter for WRC-TV (Channel 4).

A few minutes earlier, Sherwood and other reporters had caught a glimpse of the meeting agenda that Brown had brought into the conference room.

Brown first wanted to discuss “decorum,” the use of “ profanity” during meetings, an “internal code of conduct” and “financial disclosure information for members and staff,” according to a photographed copy of the agenda.

“Do you really believe this is not worthy of an open meeting?” asked WTOP reporter Mark Segraves, who also works for WJLA-TV (Channel 7).

After a five-minute standoff, Brown summoned Protective Services police officers who guard city buildings to escort members of the news media out of the room. “Officer, can you get them out of here, please?” council member Marion Barry (D-Ward 8) asked three officers who entered the room.

After council members left the three-hour meeting, most were unusually tight-lipped about the proceedings. “We talked about personnel issues,” Phil Mendelson (D-At Large) said.

But David A. Catania (I-At Large) said the meeting gave members a chance to vent about the body’s direction.

“It was an opportunity for people to have a candid, honest discussion about the state of affairs,” Catania said. “It was a nice chance for people to get stuff off their chests.”

In the past, council members would meet monthly in private before each legislative meeting. But the council started admitting reporters to those sessions several years ago.

In an interview after the meeting, Brown said members needed to talk about “personnel matters” and to hear a presentation from the body’s general counsel.

“I’m a supporter of the open-meetings law,” Brown said. “This will be a rare occasion.”

As for the confrontation with reporters, Brown said the news media shares in the blame for what he views as an overall breakdown of trust and civility at city hall.

“I think the decorum of some of the media leaves a little bit to be desired,” Brown said. “I understand some people want to get a story . . . and I understand some of it is theatrical.”

But in the coming weeks, Brown said he hopes the council can enact a series of ethics bills. On Tuesday, the council’s first meeting after a two-month summer recess, five council members introduced separate bills dealing with ethics or campaign finance or lobbying reforms.

Two weeks ago, Brown ordered the council and its staff to comply with the federal conflict-of-interest law, which bans staffers from participating in matters that involve their spouses, children, business partners or potential future employers.

But some members objected, questioning whether a law written for the federal government should apply to a body that is an independent lawmaking body.

During Thursday’s meeting, Brown said he also spoke about the new 25-page code of ethics he expects members and staffers to abide by.

The pamphlet, a copy of which was obtained by The Post, largely emphasizes existing regulations on conflicts of interest, the acceptance of gifts, the reporting of outside income, and what can be mailed with city postage.

Washington Post Editorial Board: “DC’s Irresponsible Income Tax Hike”

D.C.’s irresponsible income tax hike

By Editorial, Published: September 20

MEMBERS OF the D.C. Council who voted Tuesday to increase the income tax for wealthy residents said they had no choice if they were to spare retirees and other investors from an even more onerous tax. Never mind that it was the council itself, months earlier, that blithely came up with the idea of a tax on out-of-state municipal bonds. The decision to swap one ill-advised levy for another is the latest example of this council’s alarming tendency to improvise the District’s finances.

“Doing it on the fly,” is the apt description that council member Jack Evans (D-Ward 2) gave to the council’s decision to create a new tax bracket for wage earners with more than $350,000 in taxable income. Instead of going through the council’s tax and revenue committee or letting a soon-to-be appointed commission study the issue, seven council members endorsed a proposal hatched by Phil Mendelson (D-At Large) and Mary M. Cheh (D-Ward 3) behind closed doors Monday that would, if signed as expected by Mayor Vincent C. Gray (D), give the District one of the highest top income rates in the country at 8.95 percent. (Currently all D.C. residents who make $40,000 or more pay an 8.5 percent income tax rate.)

Joining Mr. Mendelson and Ms. Cheh were Jim Graham (D-Ward 1), Harry Thomas Jr. (D-Ward 5), Tommy Wells (D-Ward 6), Yvette M. Alexander (D-Ward 7) and Michael A. Brown (I-At Large).

To make the boost more palatable, the council voted to sunset it in four years — although no one should be under any illusion about this increasingly malfunctioning council maintaining the fiscal discipline to let that happen.

Council members have been under pressure to rethink their decision to charge income tax on bonds that had not been subject to taxes — and that residents had bought with the reasonable expectation that the rules wouldn’t be changed midstream. The evident unfairness of their policy hadn’t disturbed the council, but when legislators started hearing from pensioners who depended on the income from these municipal bonds, they got nervous. Political panic first drove them to the city’s diminished reserves, but Mr. Gray wisely — in light of the downgrading of the outlook on D.C. borrowing — vetoed that idea. So the next stop was to soak the rich, which sounds fine until you start thinking about what will happen to the tax base if high-income people decide to settle elsewhere.

The one idea that didn’t seem to occur to the council or mayor was living within their means. Over the months in which the council has deliberated on the budget that takes effect Oct. 1, more than $400 million in unexpected revenue has been forecast by the chief financial officer; the council has siphoned off every penny to spend on other purposes. Council member David A. Catania (I-At Large), who opposed the tax increase, noted that the city is spending 8 percent more than it did last year.

It became clear during the heated debate Tuesday that a majority of the council wasn’t interested in alternatives. Why do the hard work when you can just raise taxes? After all, as the point was repeatedly made, it’s only 6,000 residents and they have money. Mr. Evans, who also opposed the tax hike, is probably correct that it won’t cause many wealthy residents to move out, but it could deter some from moving in. Indeed, even those with incomes not affected by the higher bracket might think twice about living under a government as unconcerned with taxpayers’ money as with its own ethics.

Kevin Wrege, Esq.

Founder & President

Pulse Issues & Advocacy LLC

Office: 202-625-1787

Mobile: 202-253-4929

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

Washington Post: DC Council Infighting Intensifies Over Tax Issues

Contentious D.C. Council meeting exposes tensions

By Tim Craig and Vanessa Williams, Published: September 20

The D.C. Council’s Tuesday breakfast meeting was barely underway when one member accused his colleagues of hypocrisy for considering a tax increase even though some council members had failed to pay their taxes on time. He then cursed at a member who objected to his comments. A 20-year council veteran also tossed an expletive and later declared that this was the “worst council” he has ever served on.

This wasn’t how Chairman Kwame R. Brown (D) envisioned the council’s return to business after its summer recess. In an interview Friday, he dismissed suggestions that the council was unraveling over ethical questions about several members, himself included.

“We are coming back fresh,” he said.

Instead, the frustrations and tensions that have been evident since the new council was seated in January seem to be growing, raising questions about whether the city’s legislative body will be able to function effectively. With criminal investigations or ethical questions hanging over five of the 13 members and half of the council seats up for election in seven months, some members expect things to get worse.

The D.C. Council, like any political institution, has always had to navigate rivalries, turf tussles and big egos, but members acknowledge that ethical issues, particularly the U.S. attorney’s investigations involving two members, including Brown, have put extra stress on their ability to work together.

“We are losing our moral authority to govern between the ethical lapses and hypocrisy,” said David A. Catania (I-At Large). The council voted 7 to 6 to pass the tax increase.

Council member Muriel Bowser (D-Ward 4) said she is increasingly frustrated about the damaged reputation of the city’s government because of the controversies, in both the council and the office of Mayor Vincent C. Gray (D). “I don’t think anybody can be happy that the city is being dragged through the [news media] on a weekly basis,” Bowser said.

Although Brown has played down the effect of the turmoil, several members have said they don’t expect the mood in the John A. Wilson Building to improve until the U. S. attorney’s office concludes its investigations of Brown and council member Harry Thomas Jr. (D-Ward 5).

‘A cloud over the council’

Jack Evans (D-Ward 2), who with 20 years on the dais is the longest-serving member of the current council, voiced the frustrations of several members when he said: “The ongoing investigations involving some of the members hopefully will be concluded in a quick time frame because as long as they’re ongoing, there is a cloud over the council.”

Privately, council members say trust and respect is all but gone; before Tuesday’s outbursts, members had been uttering insults behind each other’s backs, with the chairman as a frequent target. Racial tensions also have flared anew, as some have complained that black members’ ethical behavior has been scrutinized more intensely than whites’.

Brown last week argued that disagreement among the members was normal. “People have been shouting at each other since Dave Clarke, John Wilson,” he said, referring to the chairmen of the D.C. Council during the 1980s and 1990s.

“Back in the day, they used to throw down,” Brown said. “They would be cursing on the dais, fighting each other.”

Little did he know that he would be refereeing a similar fight Tuesday, in a conference room with the photos of the previous six council chairmen overlooking the oval table around which the members sat.

It started with a proposal by council member Phil Mendelson (D-At Large) to raise taxes on wealthy city residents. Catania, noting that at least two members had failed to pay their taxes on time, called the measure hypocritical. Mendelson quickly responded that he didn’t think it was appropriate for Catania to bring up his colleagues’ personal behavior as part of the debate. Before Mendelson could finish his sentence, Catania shot back, “I don’t give a shit what you think.”

Brown pleaded for order, but Evans, another opponent of a tax increase, snapped at Mendelson, calling his objection “bullshit.”

A couple of hours later at the council’s formal legislative session, Brown struggled to maintain control during three hours of debate on the tax increase, as members bickered over who got to talk first, who was recognized and whether the council’s rules of debate were being followed.

Evans unsuccessfully tried to push through an amendment to scrap the proposed tax increase. In response, Mendelson accused Evans of being “reckless and cynical.”

After the meeting, Evans declared: “This is the worst council I’ve ever served on in my 20 years on the council.”

Facing ethics inquiries

Since the beginning of the year, when the council was seated, at least five members have faced ethical scrutiny:

Brown started his tenure with a controversy, drawing criticism for requesting a luxury sport utility vehicle, then asking for another when the first one didn’t meet his color specifications, resulting in taxpayers picking up the tab for leases on both vehicles. The U.S. attorney’s office is looking into allegations that Brown’s 2008 campaign used a now-defunct political consulting firm to funnel $239,000 to a firm operated by his brother.

The U.S. attorney also is investigating allegations that Thomas diverted $300,000 in city funds from youth programs and used some of the money to pay for luxury cars and expensive trips. Thomas has not admitted wrongdoing but agreed in July to repay the money.

Evans and council member Yvette M. Alexander (D-Ward 7) faced inquiries from the Office of Campaign Finance about how they spent money from their constituent services funds. Neither appears to have violated any rules governing the funds.

This year, council member Jim Graham’s former chief of staff, Ted G. Loza, was sentenced to eight months in prison after he admitted he received $1,500 from an FBI informant who sought his help to influence legislation related to the taxicab industry. At one point, Loza tried to pass a bribe to his boss. Graham (D-Ward 1) refused the money but did not report the attempted bribe.

Council members Michael A. Brown (I-At Large) and Marion Barry (D-Ward 8) have faced scrutiny for paying their taxes late. Barry also was censured by the council for giving his girlfriend a contract and receiving some of the money she was paid.

Questions raised

Shortly after Thomas repaid $300,000 to settle a lawsuit with the city’s attorney general, Catania and council members Mary M. Cheh (D-Ward 3) and Tommy Wells (D-Ward 6) called for his resignation. Other members have declined to follow suit, including Chairman Brown, who said the legal process has to “carry itself out” before the council considers any public rebuke of Thomas.

The three members who have called for Thomas to step down are white, while none of the African American members have suggested that Thomas, who is black, give up his seat.

“[T]here is a view among a segment of the Black population in the city that a double standard is applied to the alleged unethical conduct of Black politicians versus white politicians,” former council member Bill Lightfoot told the Georgetown Dish in an interview last week. “The [louder] outcry over the conduct of Harry Thomas does not seem to be [equal] to the outcry over Jim Graham’s conduct of not reporting a known bribe. Some people view that as a double standard.”

He soon got a phone call from Evans and Graham, and Lightfoot later told Post blogger Mike DeBonis that he was “not making any allegations of misconduct” and was not implying that Thomas’s alleged behavior is comparable to questions about other council members.

Several members have introduced ethics-reform bills, but there’s little optimism for any quick fixes to the council’s predicament.

“I don’t know any way out of this,” Graham said. “There is no one I would say who is in a position to say, ‘I’m going to lead you to the Promised Land.’ ”

Kevin Wrege, Esq.

Founder & President

Pulse Issues & Advocacy LLC

Office: 202-625-1787

Mobile: 202-253-4929

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

Wash Post: DC Council Votes to Raise Top Tax Rate to 8.95%

Posted at 02:15 PM ET, 09/20/2011

D.C. Council approves tax hike for high earners

By Tim Craig

The D.C. Council voted Tuesday to raise income taxes on residents who earn at least $350,000 annually, capping off a heated debate that revealed a deep philosophical divide on the city’s chief legislative body.

In the 7 to 6 vote, the council agreed to raise the rate from 8.5 percent to 8.95 percent on about 6,000 District residents who have more than $350,000 in annual in taxable income.

But the council agreed the new top tax bracket will sunset in four years. Mayor Vincent C. Gray (D) is expected to allow the increase to become law.

The vote, a priority of liberal activists, allows the council to delay the imposition of a new tax on out-of-state municipal bonds until early next year. But with the proposal slated to raise $106 million over four years, a vocal minority put up a fierce three-hour fight to block the tax increase. They noted the city’s chief financial officer reported Friday that the District will end fiscal year 2011 with an $89 million surplus.

"This is lazy government, this is ideologically driven, this is agenda driven," said Council member David A. Catania (I-At large), who referred to the tax increase as a "joke."

In a rare alliance that underscores the unusual dynamics on the council, Council member Marion Barry (D-Ward 8) joined Catania in speaking out against the increase. Barry, who admitted he’s rarely met a tax increase that he didn’t support, accused Council member Mary M. Cheh (D-Ward 3) of trying to sneak a tax increase past her wealthy constituents in Upper Northwest.

“She wants to tax those people in her own Ward 3,” said Barry, expressing concern the bill was brought up for vote without more input from the public.

But Cheh and Council member Phil Mendelson (D-At large), another sponsor, said they had little choice but to push for the tax increase because residents were complaining about the new tax on out of state bonds. The new bond tax will now only be assessed on out-of-state municipal bonds purchased after Dec. 31, 2011.

"This bill is not about raising taxes, it’s about swapping taxes," Mendelson said."I believe this is good policy. I think it’s good that our income tax becomes more progressive."

Council member Jim Graham (D-Ward 1), who also voted for the bill, argued the increase would restore more fairness to the tax code. Currently, all District residents who earn $40,000 or more pay the 8.5 percent rate.

Earlier in the year, Graham noted the council slashed tens of millions of dollars from social service programs to help balance the budget.

"How many children don’t have shoes? How many don’t have an evening meal?" Graham said. "Lets say to the wealthiest, give us a hand."

Council member Harry Thomas Jr. (D-Ward 5) noted the increase would only add $740 a year to the tax bill of someone who earns a half-million dollars annually.

"That is one-seventh of 1 percent of their income spread amongst those who can do it most," Thomas said. "That is very important in a city that is clearly a city of the haves and have nots."

But Council member Muriel D. Bowser (D-Ward 4) and other opponents argued it was unfair to raise taxes when the city budget has grown by nearly $1 billion since 2008. At one point, the debate grew so personal that Council member Jack Evans (D-Ward 2) referred to the council as "Alice in the Wonderland."

"This council is out of control," said Evans, who voted against the increase. "You can’t run a government like this."

Kevin Wrege, Esq.

Founder & President

Pulse Issues & Advocacy LLC

Office: 202-625-1787

Mobile: 202-253-4929

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

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