National Deficit Agreement Spawns New Challenges for Physicians and Patients
Congress and the President finally came to an agreement on raising the debt ceiling, but now the real work begins. The deal calls for an immediate increase in the debt ceiling of $900 billion with corresponding cuts to be developed through the normal budget-appropriations committee process this fall.
The cuts will not impact entitlement programs like Medicare and Medicaid (Medi-Cal in California), but will reduce student loan assistance for medical students.
House and Senate leaders will now appoint six members each to a Joint Select Committee on Deficit Reduction to develop recommendations for further reducing the nation's deficit by $1.2 to $1.5 trillion, which may include spending cuts and entitlement program reforms. There has been no mention of tax increases, but provisions in the President's tax reform package--such as closing tax loopholes for corporations, decreasing oil subsidies and allowing the Bush tax cuts to expire at the end of 2013--are on the table.
The joint committee must make its recommendations for reductions by November 23. The deadline for the Senate and the House to cast votes on the proposal is December 23. If the committee reaches an impasse, or Congress does not enact at least $1.2 trillion in deficit reductions by December 23, a "sequestration" budget process would be triggered and the debt ceiling would be raised by $1.2 trillion. The sequestration process would also make across-the-board cuts to all programs except Social Security, Medicaid, VA benefits, child nutrition, WIC, disability payments, federal retirement, and military and civil pay. Half of the cuts must come from defense spending. Medicare would be subject to cuts, but the reductions would be capped at 2 percent of total program spending. Medicare benefits and beneficiary premiums and copayments cannot be touched, which means providers could bear the brunt of additional reductions.
"Given the economic crisis we are facing in California and across the nation, California physicians and patients must be prepared for major changes in health care programs as everything is under scutiny," said Elizabeth McNeil, California Medical Association (CMA) vice president of federal government relations. "We must be vigilant in educating our elected officials about the impact their decisions will have on the future of health care. Physicians and patients must join together to protect access to care in both the Medicare and Medicaid programs."
In addition to the uncertainty of what proposals the joint committee will put forward in the coming months, CMA is also monitoring the Centers for Medicare & Medicaid Services' (CMS) deliberations on whether to approve the State of California's proposal to reduce Medi-Cal payments to providers by 10 percent. CMS has until September 30 to make a determination on the request.
Physicians also continue to face a 30 percent Medicare payment cut on January 1, 2012, as mandated by the flawed sustainable growth rate (SGR) formula. Given the timeline for the joint committee's work, it is likely that Congress will attempt to stop the SGR payment cut in this package.
CMA will remain vigilant with Congress and CMS over the next several months as deficit negotiations continue.
Contact: Elizabeth McNeil, (415) 882-3376 or emcneil@cmanet.org.
