Debt Ceiling Update
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Congress and the White House reached a deal to raise the nation’s debt ceiling and avoid default. In addition to increasing the federal borrowing limit, the plan also included substantial deficit reduction measures. The agreement, which operates in two parts, would raise the debt ceiling by $900 billion immediately in August and September and require an equal $900 billion spending reduction. Medicare and Medicaid would not be impacted by these initial cuts, despite earlier information that Medicare payments to rural hospitals could be reduced by roughly $14 billion and Medicaid matching rates would be lowered. Thank you to all who called or wrote their Members of Congress to express concern about these cuts.
The second component of the debt ceiling legislation creates a 12-member “super congress” made up of equal numbers of members of both parties and both bodies of Congress. This committee would be responsible for making recommendations for $1.2-1.5 trillion in additional savings by Nov. 23. The committee may target Medicare and Medicaid for reductions to achieve these savings. The committee’s recommendations would be subject to a simple up-or-down vote before Dec. 23 and could not be filibustered. If the recommendations pass, the President could request an additional increase in the debt ceiling of $1.5 trillion. If Congress fails to either act on the committee’s proposal or send a balanced budget amendment to the states before the end of the year, then an automatic “trigger” of across-the-board spending cuts totaling $1.2 trillion would go into effect. The cuts would apply to both mandatory and discretionary spending programs beginning in 2013. Medicaid, Social Security, and veterans’ benefits would not be subject to the cuts, but Medicare provider payments would face a cut of up to 2 percent over nine years (2013-2021). The president would then be authorized to request an additional increase in the debt ceiling of $1.2 trillion.
The agreement passed both the House and Senate and the President is expected to sign it as soon as possible. Click here to read more about the agreement and its potential impact on health programs.
