By Talib I. Karim, Esq., Health & Law Writer
August 16, 2011
Through an 11th-hour deal, Congress recently avoided a potential “debt-magetton” — a predicted financial melt-down had the federal government defaulted on its debt by not raising its borrowing limit.
To be clear, the deal signed into law by the president on Aug. 2 contained no cuts to Medicare, Medicaid, and Social Security. However, in exchange for the $900 billion debt-limit hike, $917 billion was axed in federal spending through capping discretionary budgets over the next 10 years. This comes on the heels of $38 billion in federal cuts required by an earlier deal to avoid a government shutdown this spring. While not directly affecting Medicare, Medicaid, and Social Security, these new cuts will no doubt impact health agencies responsible for critical components of social safety-net programs including the Department of Health and Human Services, the Food and Drug Administration, and the Health Resources and Services Administration (HRSA).
How Much Will it Hurt
The immediate cuts may be the least of worries for Medicare, Medicaid, and health reform advocates such as Dr. Cedric Bright, M.D. who leads the 30,000-member National Medical Association (NMA). Dr. Bright is particularly focused on round two of the default-saving deal, which he fears could gut safety-net programs like Medicare and further stymie the landmark health reform law.
Under the deal-now-law, by year’s end, Congress is required to reduce the federal deficit by $1.5 trillion through one of two ways.
The first approach is via a newly formed Congressional bipartisan panel consisting of 12 members of both legislative chambers. The special panel is charged with combing the entire federal budget to find savings and/or new revenues. As far as cuts, even defense spending and guaranteed federal benefits (or “entitlements”) such as Medicare and Medicaid (long regarded as “sacred cows”) are on the chopping block. Analysts with the law firm of Patton Boggs expect a Supercommittee deal to be painful for the nation’s health system. “[Reductions] that would produce significant savings, including cuts to graduate medical education programs, home health providers, labs, rural hospitals, Medigap and Medicaid,” are likely targets for the budget-ax according to a Patton Boggs client update.
If this new committee cannot reach a consensus on at least $1.2 trillion in additional debt reductions by November 23 or if Congress does not approve a package recommended by this committee within 30 days later, a trigger automatically kicks in to guarantee the $1.2 trillion in federal deficit savings. This mechanism, in the form of a federal sequestration process, would amount to across-the-board cuts in defense and non-defense spending over the next decade. Included in these cuts would be a two-percent reduction in Medicare health provider payments. Medicaid would not be affected by the trigger.
The president and some Congressional Democrats hope to avoid the cuts-by-trigger because the required deficit reductions would completely shield the wealthy from new taxes, which President Obama has spoken out against as he campaigns for re-election.
Similarly, Republicans don’t see the trigger as the ideal solution as it portends deep cuts to the military, the most significant since before the Bush presidency. Sen. John McCain (R-AZ), the top Republican on the Senate Armed Services Committee described the possible military sequestration as “extraordinarily difficult.”
However amongst Progressives who generally opposed the deficit-deal, some such as Robert Creamer who writes for the blog Americans Against the Tea Party, suggest that the triggered cuts may be preferable to a supercommittee plan that could weaken Medicare and similar programs.
Health Reform, Medicare Doctors in Bullseye of Budget Cutters
Either path to federal budget austerity threatens health care reforms created by the Obama Administration’s prized achievement, the Affordable Care Act. Both deficit reduction approaches could zero-out funding for key health reform programs such as those supporting disease control efforts, initiatives to increase physicians of color, and aid for state health insurance exchanges. At least two health reform programs have already been scrapped, a win for conservatives who have made the reforms their top legislative target.
Health providers are also caught in the cross hairs of both deficit reduction paths. According to NMA’s Dr. Bright the anticipated reductions in health provider fees are “a double-edged sword” in light of the 29.5 percent Sustainable Growth Rate (SGR) formula’s cuts to Medicare physician payments set to kick in on January 1, 2012. The NMA and others are working to include a full repeal of the SGR in the next budget deal, yet such a proposal would require $300 billion in offsets elsewhere.
The Fight for Medicare, Medicaid, Health Reform is On!
With the battle lines drawn between conservatives—set on dismantling Medicare and other safety-net programs and outright killing health reform initiatives—and care providers, progressives who see the nation’s growth and prosperity rooted in the health and well-being of its people, observers expect a huge fight in Washington over the next few months, with millions being spent to sway Congress in one direction or another.
And if the conservatives win, seniors and the nation as a whole will lose, “[because] doctors simply wont be able to afford to treat them…and the adage of cutting off our nose to spite our face could become a reality,” says the NMA President Dr. Bright.