Clinton Signs Final Budget Bills, Total Spending at $630B

President Clinton on Dec. 21 signed the two remaining pieces of the FY 2001 budget into law, the Washington Times reports. The first legislative act appropriates funding for the departments of Commerce, State and Justice, while the second is a "catchall budget bill" passed by Congress on Dec. 15. Clinton's signing ends the budget work for the year, which required a lame duck session of Congress to complete. The omnibus spending bill includes a "five-year, $35 billion increase" in Medicare and Medicaid payments to providers and a "record level" of funding for the NIH. In total, the federal government budgeted about $630 billion for FY 2001 -- $27 billion more than President Clinton requested in his budget and $50 billion more than Congressional Republicans had anticipated when budget talks began last spring. Even though the budget is larger than expected, Clinton said the country will continue to operate under a surplus, allowing the government to pay off $200 billion in federal debt (Godfrey, Washington Times, 12/22)

Medicaid Loophole Closure Delayed
Under the budget legislation, states will get a "one-year reprieve" from a "federal crackdown" on the "Medicaid loophole," the Associated Press reports. Under the loophole, states pay local- or county-owned provider facilities more than the actual cost of services, receive inflated matching funds from the federal government and then require providers to return the extra state funds while keeping the additional federal funds. HHS had planned to implement rules in October to begin a five-year phase out of the practice, but a provision in the compromise spending bill pushes the loophole closure date to October 2002. HHS currently is reviewing public comments about the proposal to close the loophole before issuing a final version, which is expected soon. Until the loophole is closed, the Congressional Budget Office predicted that more than $127 billion "will be lost" due to the practice. HHS Secretary Donna Shalala estimated the loophole cost the federal government $2 billion in FY2000 (Associated Press, 12/21).