Omnibus Budget Reconciliation Act of 1990
Encyclopedia
The Omnibus Budget Reconciliation Act of 1990 (or OBRA-90) is a United States
statute enacted pursuant to the budget reconciliation
process to reduce the United States federal budget deficit.
It included the Budget Enforcement Act of 1990
which established the "pay-as-you-go" or "PAYGO
" process for discretionary spending and taxes. It increased income taxes by creating a new 31 percent individual income tax
rate, but capped the capital gains rate at 28 percent. Personal exemptions were temporarily phased out through 1995.
The tax limit cap on Medicare
taxes was raised from a $53,400 income to $125,000 in income. Itemized deduction
s were temporarily limited through 1995.
The gasoline
tax was temporarily extended and increased through September 30, 1995. Air transportation excise taxes were extended and increased through 1995. The federal telephone excise tax put into place in 1898 as a tax on the rich was permanently extended.
OBRA 1990 gave states permission to create Drug Utilization Review ("DUR") boards to manage state specific drug purchasing and formulary decisions for state purchased health care such as Medicaid programs, injured workers programs, and state employee benefits. As a result, these boards (now sometimes called "pharmacy and therapeutics" committees), define lists of drugs classes and drugs within those classes in which no drug on the list is felt to be any more effective or less safe than another. This decision is made by a body of independent physicians and pharmacists who are not seen as having a financial conflict of interest. OBRA stipulates the decision must be made in conjunction with a compilation of evidence, as well as public comment, to generate the class wide drug comparison. Once the drug makes the list, it can also be chosen as a "preferred drug". Preferred drugs are typically cheap generic drugs. OBRA specified that pharmacists can substitute for a preferred drug, (if one exists in that state), and must offer counseling to the patient on the substitution. OBRA 1990 also allows drugs listed as preferred to be eligible for "sealed non-transparent rebates" to occur from the manufacturer of the drug to the state agency. These are legally sanctioned kickbacks in which the public by federal law does not have a right to know the amount of the rebate below the average wholesale price (AWP). In cases where "no sufficient evidence exists" a drug is any less safe, (according to the evidence report) the drug is declared "substitutable", and eligible for placement on the PDL, and for the supplemental rebate program.
It was signed into law by President
George H. W. Bush
on November 5, 1990, counter to his 1988
campaign promise not to raise taxes
. This became an issue in the presidential election of 1992
.
A.D. Banker's textbook defines the Omnibus Budget Reconciliation Act of 1990 (or OBRA-90), as "a law that requires all Medicare Supplement policies to be standardized." This excerpt is taken from the A.D. Banker and Company Ohio Life and Health Insurance textbook valid as of January 2010.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
statute enacted pursuant to the budget reconciliation
Reconciliation (Senate)
Reconciliation is a legislative process of the United States Senate intended to allow consideration of a budget bill with debate limited to twenty hours under Senate Rules...
process to reduce the United States federal budget deficit.
It included the Budget Enforcement Act of 1990
Budget Enforcement Act of 1990
The Budget Enforcement Act of 1990 was enacted by the United States Congress as title XIII of the Omnibus Budget Reconciliation Act of 1990 to enforce the deficit reduction accomplished by that law and revise the budget control process of the Federal Government...
which established the "pay-as-you-go" or "PAYGO
PAYGO
PAYGO is the practice in the United States of financing expenditures with funds that are currently available rather than borrowed.-Budgeting:The PAYGO compels new spending or tax changes not to add to the federal deficit. Not to be confused with pay-as-you-go financing, which is when a government...
" process for discretionary spending and taxes. It increased income taxes by creating a new 31 percent individual income tax
Income tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
rate, but capped the capital gains rate at 28 percent. Personal exemptions were temporarily phased out through 1995.
The tax limit cap on Medicare
Medicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...
taxes was raised from a $53,400 income to $125,000 in income. Itemized deduction
Itemized deduction
An itemized deduction is an eligible expense that individual taxpayers in the United States can report on their federal income tax returns in order to decrease their taxable income....
s were temporarily limited through 1995.
The gasoline
Gasoline
Gasoline , or petrol , is a toxic, translucent, petroleum-derived liquid that is primarily used as a fuel in internal combustion engines. It consists mostly of organic compounds obtained by the fractional distillation of petroleum, enhanced with a variety of additives. Some gasolines also contain...
tax was temporarily extended and increased through September 30, 1995. Air transportation excise taxes were extended and increased through 1995. The federal telephone excise tax put into place in 1898 as a tax on the rich was permanently extended.
OBRA 1990 gave states permission to create Drug Utilization Review ("DUR") boards to manage state specific drug purchasing and formulary decisions for state purchased health care such as Medicaid programs, injured workers programs, and state employee benefits. As a result, these boards (now sometimes called "pharmacy and therapeutics" committees), define lists of drugs classes and drugs within those classes in which no drug on the list is felt to be any more effective or less safe than another. This decision is made by a body of independent physicians and pharmacists who are not seen as having a financial conflict of interest. OBRA stipulates the decision must be made in conjunction with a compilation of evidence, as well as public comment, to generate the class wide drug comparison. Once the drug makes the list, it can also be chosen as a "preferred drug". Preferred drugs are typically cheap generic drugs. OBRA specified that pharmacists can substitute for a preferred drug, (if one exists in that state), and must offer counseling to the patient on the substitution. OBRA 1990 also allows drugs listed as preferred to be eligible for "sealed non-transparent rebates" to occur from the manufacturer of the drug to the state agency. These are legally sanctioned kickbacks in which the public by federal law does not have a right to know the amount of the rebate below the average wholesale price (AWP). In cases where "no sufficient evidence exists" a drug is any less safe, (according to the evidence report) the drug is declared "substitutable", and eligible for placement on the PDL, and for the supplemental rebate program.
It was signed into law by President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....
George H. W. Bush
George H. W. Bush
George Herbert Walker Bush is an American politician who served as the 41st President of the United States . He had previously served as the 43rd Vice President of the United States , a congressman, an ambassador, and Director of Central Intelligence.Bush was born in Milton, Massachusetts, to...
on November 5, 1990, counter to his 1988
United States presidential election, 1988
The United States presidential election of 1988 featured no incumbent president, as President Ronald Reagan was unable to seek re-election after serving the maximum two terms allowed by the Twenty-second Amendment. Reagan's Vice President, George H. W. Bush, won the Republican nomination, while the...
campaign promise not to raise taxes
Read my lips: no new taxes
"Read my lips: no new taxes" is a now-famous phrase spoken by then presidential candidate George H. W. Bush at the 1988 Republican National Convention as he accepted the nomination on August 18. Written by speechwriter Peggy Noonan, the line was the most prominent sound bite from the speech...
. This became an issue in the presidential election of 1992
United States presidential election, 1992
The United States presidential election of 1992 had three major candidates: Incumbent Republican President George Bush; Democratic Arkansas Governor Bill Clinton, and independent Texas businessman Ross Perot....
.
A.D. Banker's textbook defines the Omnibus Budget Reconciliation Act of 1990 (or OBRA-90), as "a law that requires all Medicare Supplement policies to be standardized." This excerpt is taken from the A.D. Banker and Company Ohio Life and Health Insurance textbook valid as of January 2010.