In August of this year, congress passed The Budget Control Act of 2011 after being unable to negotiate a deal to manage deficit reductions while raising the debt ceiling. The Budget Control Act effectively raised the debt ceiling and established a Joint Select Committee on Deficit Reduction, commonly referred to as the “Super Committee.” The Committee has equal representations of Democrats and Republicans, with six Representatives and six Senators.
By November 23rd, the Committee has to recommend to Congress at least $1.2 trillion in deficit reductions over the next ten years. Congress was mandated to vote on the Committee’s recommendations by December 23rd. The legislation will not be subject to amendments or filibusters. If the Super Committee does not recommend $1.2 trillion in spending cuts, and if Congress does not vote on legislation to enact those cuts by these deadlines, then a “trigger” will be enacted. The trigger refers to automatic cuts to two major programs: Medicare and Defense spending.
Why This Matters to You Congress ended its recess and returned to Washington on September 6th, beginning its work to trim $1.2 trillion from the federal budget. The Committee was allowed to make cuts in a number of areas—including healthcare spending, medical research and drug development. If the Super Committee fails to deliver a legislative proposal before the November 23rd deadline, we will see severe budget cuts in Medicare and Defense. (This issue went to print at the end of October, before we could report on the outcome).
This means individual beneficiaries will have to pick up more of the cost for their healthcare via several mechanisms; this could include restructuring co-pays, paying more of the cost of prescription drugs and the possible elimination of first dollar coverage with Medigap policies.
First dollar coverage is an insurance policy feature that provides full coverage for the entire value of a loss without a deductible. It can be found on health insurance policies, homeowners’ insurance, car insurance, and others.
A Medigap policy is health insurance sold by private insurance companies to fill the gaps between what the original Medicare plan covers, and what the beneficiary will end up paying. It essentially helps to pay some of the healthcare costs that the original Medicare plan does not cover.
Members of the Super Committee
Here’s some background on each of the 12
committee members appointed by House and
Senate leadership:
Senators
Senator Patty Murray (D-WA)—Committee
Co-chair
Sen. Murray is the senior Senator from
Washington State and is serving her fourth
term. She is also a member of the Democratic
leadership. Sen. Murray is a member of the
Health, Education, Labor and Pensions (HELP),
Appropriations and Budget Committees, and
chairs the Veterans’ Affairs Committee.
Senator Max Baucus (D-MT)
Sen. Baucus, who is serving his sixth term in
office, is the senior Senator from Montana. Sen.
Baucus chairs the Senate Finance Committee,
which has authority over Medicare, Medicaid,
and all tax code changes. He participated in the
Simpson-Bowles Commission, established by
President Obama in 2010, charged with analyzing the nation’s spending and debt. The Simpson-Bowles Commission recommendations
failed to be adopted by Congress during the
debt ceiling negotiations.
It is almost certain that the Super Committee will not let the automatic trigger kick in. Medicare cuts will have to be negotiated and will most likely include shift in cost sharing.
The panel may rehash many of the proposals that were brought forward during the original discussions about raising the debt ceiling, which may include raising the age of entitlement for Medicare to 67.
The six Republicans and six Democrats represent states where the biggest defense contractors build military equipment and employ tens of thousands of workers. Thee potential for $500 billion in cuts via that automatic trigger would mean significant job loss in an economy that reported no job creation in the month of August 2011. Cuts of this size to defense contractors would mean a loss of tax revenue. The Super Committee does not want to see the automatic across-the-board cuts kick in, as up to $500 billion would hit the Pentagon starting in 2013.
If sufficient revenue raising strategies (taxes) are not put into place, additional cuts to entitlements are inevitable. We may see excessive cuts to Medicare, Medicaid and the implementation of the Affordable Care Act extend beyond the negotiations made by the Super Committee. How this problem is solved will be interesting to watch as each party has made commitments that the other belies. Thee COPD Foundation will continue to work to educate members of Congress about the needs of those living with COPD at a time when benefits reductions are inevitable.
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