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Tag Archive | "Deficit Reduction"

Politico Explains Impact of Sequestration

Today, Politico published an article by Jonathan Allen that sets out exactly how the cuts will impact nondefense and defense spending.

The Office of Management and Budget (OMB) will write a sequestration order that details the exact amount of the cuts to federal programs.  The report is expected in January.

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Membership of Joint Committee on Deficit Reduction

The House and Senate Republican and Democratic Leaders were each required to select three Members of Congress to sit on the Joint Committee.

Senate Majority Leader Harry Reid (D-NV) appointed Sen. Patty Murray (D-WA) as a Joint Committee co-chair, Senate Finance Committee Chairman Max Baucus (D-MT), and Sen. John Kerry (D-MA).

Senate Minority Leader Mitch McConnell (R-KY) selected Sen. Jon Kyl (R-AZ), Sen. Pat Toomey (R-PA), and Sen. Rob Portman (R-OH), a former Director of the Office of Management and Budget (OMB), to serve.

House Speaker John Boehner (R-OH) appointed House Ways and Means Committee Chairman Dave Camp (R-MI), Rep. Jeb Hensarling (R-TX) to be co-chair of the Committee, and House Energy and Commerce Committee Chairman Fred Upton (R-MI).

House Minority Leader Nancy Pelosi (D-CA) announced her selection of Rep. Jim Clyburn (D-SC), Rep. Chris Van Hollen (D-MD), and Rep. Xavier Becerra (D-CA) to the Committee.

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Key Dates for Joint Committee on Deficit Reduction

On August 2, President Obama signed into law the Budget Control Act of 2011, which authorizes an increase in the debt ceiling, caps spending, and provides a process by which an additional $1.2 trillion in cuts will be made.

The law authorizes a Joint Committee of Congress that is required to draft legislation to reduce the deficit by at least $1.2 trillion.  If Congress does not enact such legislation before December 23, 2011, across the board spending cuts would be triggered.  The timeframe by which Congress is required to pass this deficit reduction legislation is short:

  • August 16, 2011 – Members of the Joint Committee on Deficit Reduction Appointed
  • September 16, 2011 – The Joint Committee Meetings Begin
  • October 14, 2011 – House and Senate Committees may submit recommendations for deficit reduction to the Joint Committee
  • November 23, 2011 – The Joint Committee votes on recommendations
  • December 23, 2011 – The House and Senate must vote up or down without amendment on the deficit reduction legislation

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Sen. Coburn Proposes Deficit Reduction Plan

Yesterday, Sen. Tom Coburn (R-OK) proposed a deficit reduction plan, “Back in Black,” which would achieve $106.7 billion/10 years in savings from the Department of Health and Human Services (HHS).  His proposal:

  • Reduces Medicare and Medicaid fraud, waste, and abuse
  • Repeals the Affordable Care Act
  • Repeals the Independent Payment Advisory Board (IPAB)
  • Repeals the Community Living Assistance Services and Supports program (CLASS)
  • Repeals policies that increase the cost of health care insurance for individuals – the medical device and pharmaceutical drugs fees and the health insurance excise tax
  • Repeals Medicaid expansion
  • Repeals individual mandate
  • Eliminates Children’s Hospital GME
  • Reduces improper payments, modernizes HHS’ systems, controls unnecessary costs, and improves management of resources
  • Cuts administrative budget
  • Allows American to purchase health insurance across state lines
  • Adopts medical malpractice reform

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Gang of Six Presents Deficit Reduction Plan to Senate

This morning, the Gang of Six, which, again, includes Sen. Tom Coburn (R-OK) presented its deficit reduction plan to the Senate. According to Sen. Coburn, the deal gaining momentum in the Senate includes $116 billion in Medicare and Medicaid cuts, although the committees of jurisdiction would have to shape the specifics.  He also reported that the proposal fully pays for a SGR fix “with no gimmicks.”  Of note, the plan proposes to:

  •  Adopt statutory discretionary spending caps through 2015
  • Repeal the CLASS Act
  • Require the Senate Finance Committee to report legislation within 6 months that would permanently reform or replace the Medicare SGR formula and fully offset the cost with health savings; find an additional “$202 billion/$85 billion” /10 years in health savings; and maintain the essential health services that the poor and elderly rely upon
  • Require the Senate Health, Education, Labor and Pensions (HELP) Committee to report legislation within 6 months that would find an additional $70 billion/10 years in savings
  • Require the Senate Judiciary Committee to report legislation within 6 months that would advance medical malpractice reform
  • Require the Senate Finance Committee to report tax reform within 6 months that would include reforming – not eliminating tax expenditures for health
  • Require the Budget Committee to report legislation within 6 months that would: extend discretionary caps and enforcement mechanisms through 2021; ensure Congressional action to reduce the deficit if the debt-to-GDP ratio after 2015 has not stabilized; review total federal health care spending starting in 2020 with a goal of holding growth the GDP + 1% per beneficiary and require action by Congress and the President if exceeded; achieve program integrity savings of $26 billion in entitlement programs to curb fraud, abuse, and other wasteful spending government-wide; and create a working group to provide updated budget concepts for CBO and OMB
  • Provide that if any Committee fails to report entitlement program savings, the Senate would considered on an expedited basis across the board cuts to programs in the Committee’s jurisdiction

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Gang of Six Presents Deficit Reduction Plan to Senate

This morning, the Gang of Six, which, again, includes Sen. Tom Coburn (R-OK) presented its deficit reduction plan to the Senate. According to Sen. Coburn, the deal gaining momentum in the Senate includes $116 billion in Medicare and Medicaid cuts, although the committees of jurisdiction would have to shape the specifics.  He also reported that the proposal fully pays for a SGR fix “with no gimmicks.”  Of note, the plan proposes to:

  •  Adopt statutory discretionary spending caps through 2015
  • Repeal the CLASS Act
  • Require the Senate Finance Committee to report legislation within 6 months that would permanently reform or replace the Medicare SGR formula and fully offset the cost with health savings; find an additional “$202 billion/$85 billion” /10 years in health savings; and maintain the essential health services that the poor and elderly rely upon
  • Require the Senate Health, Education, Labor and Pensions (HELP) Committee to report legislation within 6 months that would find an additional $70 billion/10 years in savings
  • Require the Senate Judiciary Committee to report legislation within 6 months that would advance medical malpractice reform
  • Require the Senate Finance Committee to report tax reform within 6 months that would include reforming – not eliminating tax expenditures for health
  • Require the Budget Committee to report legislation within 6 months that would: extend discretionary caps and enforcement mechanisms through 2021; ensure Congressional action to reduce the deficit if the debt-to-GDP ratio after 2015 has not stabilized; review total federal health care spending starting in 2020 with a goal of holding growth the GDP + 1% per beneficiary and require action by Congress and the President if exceeded; achieve program integrity savings of $26 billion in entitlement programs to curb fraud, abuse, and other wasteful spending government-wide; and create a working group to provide updated budget concepts for CBO and OMB
  • Provide that if any Committee fails to report entitlement program savings, the Senate would considered on an expedited basis across the board cuts to programs in the Committee’s jurisdiction

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Shared Sacrifice in Resolving the Budget Deficit

This evening, the Senate voted 69-27 to proceed to a cloture vote on S.1323, a bill to express the sense of the Senate on shared sacrifice in resolving the budget deficit. Senate Majority Leader Reid indicated that he would fill the amendment tree and file for cloture on the bill.

 

UPDATE:  On July 13, the Senate voted on a procedural motion to the “Senate of the Senate on Shared Sacrifice,” which that states that taxpayers who earn $1 million or more annually should “make a more meaningful contribution to the deficit-reduction effort.”  The Senate did not have the 60 votes necessary to close debate and consider the legislation.

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Lieberman/Coburn Bipartisan Plan to Save Medicare and Reduce Debt

On June 28, 2011, Sen. Joe Lieberman (I-CT) and Sen. Tom Coburn (R-OK) presented a proposal– the Lieberman/Coburn Bipartisan Plan to Save Medicare and Reduce Debt – that would reform Medicare in order to save at least $500 billion over 10 years. The reforms include:

• Eliminating the variation in beneficiaries’ deductibles depending on the services provided and, instead, establishing an annual deductible of $550 for both Medicare Part A and Part B services;

• Establishing an “out-of-pocket maximum” of $7,500 for Medicare beneficiaries with higher income Americans having a higher out-of-pocket maximum;

• Increasing beneficiary cost-sharing in Medigap by requiring the enrollee to pay the first $550 in cost-sharing and limiting the coverage to half of the remaining coinsurance up to $7,500 of the new out-of-pocket maximum;

• Increasing the Medicare eligibility age to 67 by 2025;

• Accelerating the implementation of the productivity adjustments and rebasing for home health payments;

• Phasing out the Medicare payments for bad hospital debt;

• Requiring higher income Americans to pay more for Medicare Part B services;

• Increasing the Medicare Part B premium until enrollees premium level reaches a minimum of 35 percent of the program’s costs in 2019; and

• Requiring individuals 65 years of age and older who are making more than $150,000 annually ($300,000 for couples) to pay the full premium costs for their Medicare Part D coverage.

The plan would include provisions focused on preventing fraud, waste, and abuse from the “Medicare and Medicaid Fighting Fraud and Abuse to Save Taxpayer Dollars (FAST) Act” (S.1251), which was introduced by Sen. Tom Carper (D-DE) and Sen. Coburn. The Senators propose to use the cost savings generated from the above changes to pay for a three-year Medicare physician fee fix.

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Deficit Reduction Debate Quick Links

The Kaiser Family Foundation prepared a comparison chart of Medicare changes that have been recommended in various deficit reduction proposals.

As the bipartisan, bicameral negotiations lead by Vice President Biden continue, the Committee for a Responsible Federal Budget has identified areas of agreement among the deficit reduction plans, which amount to $1 trillion in savings.

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President Obama’s Deficit Reduction Commission Recommendations

As we await the release of a deficit reduction plan from the Senate – either the Gang of Six or Sen. Kent Conrad (D-ND), it is worth reviewing the recommendations made by the President’s National Commission on Fiscal Responsibility and Reform.

On November 10, the co-chairs of President Obama’s Commission on Fiscal Responsibility and Reform released draft recommendations for deficit reduction. The Commission’s report to Congress is due by December 1; however, any recommendations must be approved by 14 of the 18 Commissioners. The draft presentation includes significant changes to reduce Medicare and health care costs, as well as Social Security and tax policies. While it is unclear whether the Commission can muster the votes needed to approve recommendations, these proposals could be considered in the Congressional debate on spending offsets and deficit reduction.

Among the guiding principles outlined in the draft document, co-chairmen Erskine Bowles and Alan Simpson urged:  (1) instituting cuts gradually and beginning in Fiscal Year (FY) 2012 so as not to disrupt the economy; (2) considering all budget items for possible cuts; (3) protecting the disadvantaged by focusing benefits on those truly in need and ensuring an affordable and sustainable safety net; and (4) reducing the long-term growth of health care costs.  The co-chairmen made five overarching draft recommendations:

1.   Enact tough discretionary spending caps and provide $200 billion in illustrative domestic and defense savings in 2015.

2.   Pass tax reform that dramatically reduces rates, simplifies the code, broadens the base, and reduces the deficit.

3.   Address the “Doc Fix” not through deficit spending but through savings from payment reforms, cost-sharing, and malpractice reform, and long-term measures to control health care cost growth.

4.   Achieve mandatory savings from farm subsidies, military and civil service retirement.

5.   Ensure Social Security solvency for the next 75 years while reducing poverty among seniors.

The draft proposal acknowledges the need to address the Sustainable Growth Rate (SGR) problem and proposes that the physician fee fix be fully offset “by asking doctors and other health providers, lawyers, and individuals to take responsibility for slowing health care cost growth.” The proposal calls for SGR cuts through 2015 with modest reductions while directing the Centers for Medicare and Medicaid Services (CMS) to establish a new payment system, beginning in 2015, to reduce costs and improve quality.  The co-chairmen explain that potential offsets and savings could include the following: (1) paying doctors and other providers less, improving efficiency, and rewarding quality by speeding up payment reforms and increasing drug rebates; (2) paying lawyers less and reducing the cost of defensive medicine by adopting comprehensive tort reform; (3) expanding cost-sharing in Medicare to promote informed consumer health choices and spending; (4) expanding successful cost containment demonstrations; and (5) strengthening the Independent Payment Advisory Board (IPAB).

The proposal also makes reference to additional ways to reduce health spending, such as:(1) placing dual-eligible beneficiaries in Medicaid managed care; (2) cutting Medicare payments for bad debt; (3) expanding ACOs, payment bundling, and other payment reform; (4) cutting federal spending on graduate and indirect medical education; (5) reducing federal spending on Medicaid administrative costs; (6) increasing nominal Medicaid copayments; (7) accelerating the phase-in of DSH payment cuts, Medicare Advantage (MA) cuts, and home health cuts included in the Affordable Care Act (ACA); (8) reforming Tricare to increase cost sharing for military retirees; (9) reforming Federal Employees Health Benefits (FEHB) retiree plans to increase cost sharing for federal civilian retirees; (10) establishing national standards for regulating and administering health insurance; and (11) converting the federal share of Medicaid payments for long-term care into a capped allotment.

In the long-term, the co-chairmen call for containing the total health care spending to gross domestic product (GDP) + 1 percent after 2020 by establishing a process by which to regularly evaluate cost growth and institute a means by which additional savings could be derived if projected savings are not realized. The draft proposal suggests evaluating a “robust public option and/or all-payer system in the exchange,” overhauling the fee-for-service system, and expanding the authority of the IPAB if health care costs grow faster than targets.

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