The co-chairs of the Joint Select Committee on Deficit Reduction have announced that the committee has failed to come to an agreement on a deficit reduction strategy.  The bi-partisan, bicameral committee, formed by the Budget Control Act, was charged with reducing the national deficit by at least $1.2 trillion.

The committee’s failure to reach an agreement means automatic spending cuts totaling $1.2 trillion, to be split between defense spending and non-defense programs, will become effective in January 2013.  Under this across-the-board cut, hospitals face a 2 percent reduction to Medicare payments over nine years (2013 to 2021).  Medicaid cuts are, however, exempt from the cuts.

Congress will now take the time to determine the next steps for deficit reduction.  Some are calling for the cuts to be repealed or delayed further, though the president has already threatened to veto any attempts to do so as a means to encourage continued Congressional action on deficit reduction.

IHA strongly opposes the cuts to hospitals as not only are they incredibly arbitrary, but hospitals have already committed to more than $155 billion in Medicare cuts to help finance the health care reform law.  By simply piling on more and more cuts, hospitals are finding themselves unable to expand critical services and are unable to create jobs with so much financial uncertainty, adding additional pressure to the economy.  IHA will continue to work with Iowa’s Congressional Delegation on this issue.

Congress is now on recess for the month of August although party leaders remain focused on the selection of the 12 member “debt commission” charged with cutting $1.5 trillion from the deficit over the next 10 years by the end of the year.

The committee is nearly assembled with 9 of the 12 members having been announced.  From the Senate leaders selected Democrats Patty Murray (WA), Max Baucus (MT), John Kerry (MA) and Republicans Jon Kyl (AZ), Pat Toomey (PA) and Rob Portman (OH).  In the House: Republicans Jeb Hensarling (TX), Dave Camp (MI) and Fred Upton (MI) were nominated to serve.  House Democrats have not yet been selected, and must do so by August 16.

Once finalized, the committee will begin its work looking for spending reductions.  The commission must agree upon an adequate level of savings by November 23 when it will then seek support of the full Congress.  Congress must vote to approve the cuts by December 23 in order for the debt ceiling to be raised again.  However, should the committee fail to agree on cuts or successfully sell their proposal to Congress, then an automatic across-the-board cut will go into effect.  This would trigger an automatic $1.2 trillion cut to the federal budget.  Medicare cuts would be capped at 2 percent and Medicaid would be exempted from the cuts.

IHA continues to monitor the ongoing work in Washington, D.C. hospital advocates should stay tuned to the IHA Policy Blog for continuing coverage as more details unfold.

With less than two weeks to strike a deal or face a default on the nation’s $14 trillion debt, Congressional leaders are scrambling to piece together a package of program cuts and revenue options can be accepted by Senate Democrats, the White House and conservative House Republicans.

This week the so-called “Gang of Six” released a new proposal that is gaining traction.  Members include Senators Saxby Chambliss (R-GA), Tom Coburn (R-OK), Kent Conrad (D-ND), Mike Crapo (R-ID), Dick Durbin (D-IL) and Mark Warner (D-VA).

Their plan to seeks to reduce national deficit by nearly $4 trillion over 10 years and proposes billions in cuts from Medicare and Medicaid.  A few of members of the Gang of Six have yet to formally sign off on the framework but President Obama, after reviewing the proposal, added his support saying that proposal is on the right track concerning this issue.

The proposal seeks a two-part process with $500 billion in initial cuts followed by a process for congressional committees to pass a larger deficit reduction measure within 6 months.  Committees would be responsible for finding additional discretionary cuts and $800 – $900 billion in entitlement savings, as well as $1.1 trillion in new revenues.

The plan is unlikely to emerge in the short-term discussion of how to address the debt ceiling by August 2, though it could set up a series of short-term extensions giving Congress time to work on a larger measure.

The proposal comes on the heels of a party-line vote in the House this week on the bill referred to as the “cut, cap, and balance” legislation.  The 234-190 vote was backed by the freshmen “tea-party” caucus, even though it’s been widely reported that the legislation is dead on arrival in the Senate and faces a White House veto.

IHA has issued a series of Action Alerts urging Congress to protect hospital payments under Medicare and Medicaid as negotiations continue:

Prospective Payment System Hospitals – Take Action Here
Critical Access Hospitals – Take Action Here
Rural Prospective Payment or “Tweener” Hospitals – Take Action Here

A group of lawmakers along with Vice President Joe Biden plan to meet again this week to continue toward a compromise that would reduce the nation’s soaring deficit and reign in federal spending.

As the nation inches closer to the August 2nd deadline, when the debt limit is to be reached, pressure is mounting for Congress and the White House to reach a deal.   Though no specifics have yet been released, there continues to be wide speculation that health care spending will be targeted for cuts — although many lawmakers are finding the discussion a hard pill to swallow considering the backlash that ensued after House Budget Committee Chair Paul Ryan (R-WI) released a proposal that sought to make sweeping changes to the Medicare program.

Despite the lack of political will among lawmakers, Biden has publicly stated that he is interested in achieving consensus with lawmakers on cutting $1 trillion from the budget.  To do so, the vice president said that revenue generating options, like tax increases, and spending reduction options, like making cuts to entitlement programs, must all be on the table.

Reports indicate that the group is working on a two-pronged approach to deficit reduction.  First, to make immediate cuts to federal spending and secondly, to put in place so-called “triggers” that would force programs to be cut should they grow at a certain rate.

For example, if Medicare spending from one year to the next were to outpace inflation during that same time, the statutory trigger would be pulled forcing Medicare spending to be cut by an amount that would align it with the inflation rate.

This remains a very controversial approach, as there are so many factors that come into play when dealing with these major programs, that a one-size-fits-all, or across-the-board cut approach is not likely to be the best solution in the short or long-term.

IHA remains engaged with the ongoing budget debate in Washington D.C. and is concerned about the direction the conversation is heading with regard to Medicare and Medicaid.

Hospitals in Iowa and across the nation are already enduring significant Medicare cuts as a result of mandates contained in the health care reform legislation, and further cuts could certainly put access to health care nationwide at risk.

President Obama, in response to the House Republican budget plan, released his administration’s proposal that seeks to reduce the deficit by $4 trillion over the next decade.

Though the proposal is merely a framework, early analysis shows that of the $4 trillion in sought reductions, at least one quarter of the savings the president is requesting comes from reductions in government health care spending, in particular the Medicare and Medicaid programs.  These programs have come to the forefront of discussions when dealing with the national debt, which is currently more than $14 trillion.

The president’s plan seeks to achieve Medicare and Medicaid savings of $480 billion by 2023 and an additional $1 trillion over the following decade (2023-2033).

The plan would:

• Strengthen the power of the controversial Independent Payment Advisory Board
• Reform the Medicaid program’s Federal-State Partnership
• Make changes to Medicare’s prescription drug program
• Reduce costs by improving patient safety
• Reduce abuse in the Medicare and Medicaid programs

The White House has released more detail here.

The proposal comes in response to the House Republican proposal that would make more fundamental changes to the Medicare program — while the president’s proposal aims to make changes to the program as it exists today.  House Budget Committee Chair Paul Ryan (R-WI) stands by his committee’s proposal and came out yesterday critical of the Obama plan.

On the Ryan plan, the president said, “I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry with a shrinking benefit to pay for rising costs.”

It is unclear at this time which, if any, of the presidents’ or the House Republican proposal will gain enough traction to move forward, but even on first look of the side-by-side comparision of the proposals one can easily see stark differences that will add to the overall difficulty of compromise on these tough issues.

IHA will continue to evaluate the proposals and monitor their progress.