Prevention Fund Once Again at Risk in Congressional Spending Negotiations

by Rebecca Farley on April 27, 2012

Senator Tom Harkin (D-IA), author of the Prevention & Public Health Fund in the ACA

This week, the Affordable Care Act’s Public Health and Prevention Fund is once again on the chopping block as Congress looks for a way to prevent student loan interest rates from doubling in July.

Both parties agree that congressional action is necessary to maintain student loans at their current 3.4% interest rate for another year. Yet, Republicans and the House and Senate Democrats disagree on how to offset the estimated $6 billion this move will cost. The House will consider a bill (HR 4628) on Friday that would pay for the student loan reprieve by repealing the entire Prevention Fund, which now stands at $11.9 billion. House Republicans want to use whatever is left over from offsetting the student loan bill to reduce the 2013 budget deficit.

The Prevention Fund has already been used as an offset once this year, when Congress stripped the Fund of $5 billion to partially pay for a February deal to extend the payroll tax cut and postpone a cut to Medicare physician payments. Opponents of the Affordable Care Act have consistently criticized the Prevention Fund for being a “slush fund” that supports programs of questionable value. Currently, monies from this fund support a variety of grant programs, including a SAMHSA initiative to co-locate primary care services in behavioral health settings, and suicide prevention activities.

House and Senate Democrats have proposed different bills to pay for the one-year student loan reprieve by ending tax subsidies to oil and gas companies and ending a corporate tax break, respectively. With significant pressure on Congress to find a way to remedy the scheduled increase in student loan interest rates, it is unclear at this stage which offset – if any – will prevail. Even if the Prevention Fund survives intact, it will continue to be a target for repeal both during the budget process and as a source of funding offsets for other legislation.

This is the second article in this week’s series on the 2013 budget. Click to read our Editor’s Note from blog manager Rebecca Farley, along with our coverage of  the 2013 appropriations process and Congress’ efforts to avoid sequestration.

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