Power Grid Blog
Medicaid Survives the Congressional Budget Process, but Will Be a Target for Cuts Later in the Year
May 21, 2012 | David Heymsfeld
By David Heymsfeld, AAPD Policy Advisor
The House and the Senate have now completed their actions in the regular Congressional budget process. At this time, it appears unlikely that the regular process will lead to reductions in funding for Medicaid. However, reductions in funding are still possible in the context of a deficit reduction package that may be considered by Congress towards the end of the year.
In the regular process, the House passed the Ryan budget on March 30. This budget provides for cuts of more than $800 Billion in Medicaid over the next ten years, and for repeal of the Affordable Care Act that extends Medicaid eligibility to about 17 million Americans. However, the budget resolution passed by the House does not actually make these cuts. That would require follow-up legislation passed by the House and Senate and signed by the President. No such legislation is currently being actively processed, and none is expected in the next few months.
Last week, the Senate took up several budget resolutions, including one with the Ryan plan. All of these resolutions were voted down, and no further Senate action is expected.
The apparent end of the regular budget process does not mean that Medicaid is home free. Towards the end of the year, Congress will be faced with the need to develop a revenue and spending package to replace a highly unacceptable series of changes which will take effect automatically if nothing is done. When Congress considers a replacement package, Medicaid and other entitlement programs will be in play.
The package that will take effect automatically if no replacement can be agreed upon includes
- The so-called Bush tax cuts of 2003 will end on January 1, and there will be higher tax rates for all. The current rate schedule of 10% to 35% will increase to 15% to 39.6%.
- The spending reductions (sequestration) agreed to in last summer’s agreement on raising the debt ceiling will take effect, resulting in cuts in 2013 of 7.5% in defense programs and 8.4% in most non-defense discretionary programs. There is a consensus that these reductions would force unacceptable cuts in our defense and security, and in all other government services.
- In February, the government may reach the ceiling on debt agreed to last summer, and if the ceiling is not increased, there would be serious threats of default on existing debt or unacceptable cutbacks in government payments and services.
- Medicare payments to Doctors would be reduced by more than 25%, leading some doctors to be unwilling to serve Medicare patients.
Congress will be strongly motivated to stop these automatic changes. It is unlikely that the automatic changes can be set aside unless there is a replacement package that improves our fiscal situation. Cuts in entitlement programs (Medicare, Medicaid and Social Security) will certainly be considered for a replacement package since these programs are now more than 40 % of the federal budget, and since most Republicans are unwilling to agree to any revenue increases unless they are accompanied by spending cuts.
The proposals that will be under consideration are by no means limited to the Ryan budget. As was the case last year in the Super Committee process, the Ryan cuts are probably too extreme to get majority support, and there are likely to be other proposals which would cut the program by $100 to $300 billion over ten years, compared to Ryan’s $800 billion.
It also seems unlikely that the issue will come to a vote before the election. Both sides are likely to want to wait until a lame duck session after the election, in the hopes that the election results will give their party increased leverage.
However, even though the issue is not likely to be resolved until after the election, there is likely to be considerable discussion about Medicaid before the election to develop and refine proposals. AAPD will work to learn of pending proposals, and to join with the entire disability community in insisting that there be no changes which would reduce the vital services which Medicaid supports.