Earlier this week, the Obama administration and Congressional leaders from both sides of the aisle came to an overall federal budget framework covering the next 2 years (known as the “Bipartisan Budget Act” or BBA.)  While in the end it still embodies an overall approach of austerity politics, it is MUCH less bad than many had feared, and also has some good provisions.

In sum, the on-again-off-again across-the-board budget sequester enacted as part of the Budget Control Act of 2011 (BCA) is temporarily suspended for the next 2 years, and new funding is provided to largely restore previous sequester cuts to slightly less than 2010 levels.  These cuts have seriously adversely affected a variety of “discretionary domestic” social programs such as meals-on-wheels, Head Start, etc.

Social insurance programs such as Social Security, Medicare, and Medicaid, are largely held harmless except for:

• Modest changes to eligibility rules for Soc. Sec. disability (physician sign-off now required in all states.)
• Closing of some loopholes around Soc. Sec. survivor and spousal benefits that are often exploited by the wealthy beneficiaries.
• Continues current 2% provider cut under Medicare enacted under BCA.

There is also good news on the social program front:

• The impending funding crisis for the Soc. Sec. Disability Trust Fund has been put off for 7 years until 2022.
• The impending large Medicare Part B premium increase for certain Medicare beneficiaries has been suspended for 1 year, along with an large increase in the Part B deductible (given the fact that there will be no Soc. Sec. COLA in 2016.)

Other good news in the deal:

• The debt ceiling is raised “cleanly” (without any “pay-fors” or other policy riders.)
• New funding for the IRS for audits of hedge funds and the like, to yield some new revenue.

Left untouched by the deal – these will all have to be dealt with separately in the future:

• Reauthorization of the transportation trust fund.
• Renewal or sunsetting of certain “tax extenders” and tax breaks for various industries and special interests.
• Renewal of increases in the Earned Income Tax Credit and Child Tax Credit that were created under the American Recovery and Reinvestment Act of 2009 (ARRA, aka stimulus package.)
• Comprehensive tax reform, including (but not limited to) the taxing of U.S.-based corporate profits booked off-shore.

What’s next for Congress:

• Negotiating out and finalizing the appropriation bills necessary to keep the government funded.  The current “continuing resolution” expires on Dec. 11.  (N.B.: A government shut-down is still theoretically possible.)
• Parceling out the sequester restorations among various domestic programs (see above.)
• Dealing with one or more of the matters left untouched (see above.)

In sum, we want to thank everyone for all your advocacy efforts on these matters that you directed toward the Obama administration, Senators Schumer and Gillibrand, and members of the NY congressional delegation.  Because of your work, the White House and Democrats stood strong, and even some Republicans joined in:

• against major entitlement changes and funding cuts
• against resumption of further sequester cuts (it has been suspended for FY 2014-15), and for restorations of previous sequester cuts (enacted in FY 2013-14.)
• for a clean increase in the debt ceiling
• for solving impending crises in Soc. Sec. disability and Medicare Part B

In the end, this deal is as much a political as a policy one, designed to get all parties past next year’s elections and over into 2017 when there will be a new President and Congress, who will then have to revisit these matters all over again, along with other important related issues.  Elections will matter!

Finally, our work is far from done as there are still important outstanding matters yet to be addressed by Congress concerning tax fairness, economic recovery and prosperity, and military spending, any of which may or may not rise to the fore sooner or later.  They, along with our core concerns over health care and social programs and austerity spending, are all of a whole.  We may have a bit of breathing room now to turn from a largely defensive posture to go on the offensive to promote proactive ideas we want to see happen in these various issues areas that make up the whole.  These ideas will help to frame the political debates for next year’s elections when we all hope that candidates who agree with and support our positions prevail.  The future of the kind of nation and society we want to see realized hangs in the balance.

For a fuller analysis of this budget deal:

http://www.cbpp.org/press/statements/greenstein-budget-deal-though-imperfect-represents-significant-accomplishment-and

http://docs.house.gov/meetings/RU/RU00/CPRT-114-RU00-D001.pdf

Addendum (Oct. 29):

While this new agreement settled many things related to health care funding, other matters to repeal portions of the Affordable Care Act and discontinue funding for Planned Parenthood via a “budget reconciliation” process continues to move forward.  The House passed such a bill last week, and the Senate is scheduled to take it up before Dec. 11, perhaps as soon as mid-November.

Last week, the Social Security Administration announced that there would be no annual cost-of-living adjustment (“COLA”) for Social Security beneficiaries next year because the overall general inflation rate, based on the consumer price increase (“CPI”), has been negligible this year.  However, the rate of medical inflation is higher (historically, about 3 times the general rate), and most people on Social Security (the elderly and disabled) need more health care than the average working-age consumer.  The pressure on their monthly checks to cover medical out-of-pocket costs will increase next year regardless.  Half of all people on Medicare live on less than $24,000/yr.  This problem is nothing new, sad to say, but there is a simple policy solution: use a different COLA base formula (known as the “CPI-E”) that better reflects health care costs for seniors and people with disabilities.

This coming year, there will also be an additional, very serious problem for a significant number of Medicare beneficiaries: a skyrocketing Part B premium, from the current ~$105/mo.in 2015, to nearly $160/mo in 2016, a whopping 52% increase.

Here’s the underlying dynamic:

About 70% of Medicare beneficiaries will experience no Part B premium increase next year because of a “hold harmless” provision of the Social Security Act that prevents such an increase when there is no annual increase in monthly Social Security benefit checks.  This is a good protection for them.  Had an increase been assessed on all beneficiaries across the board, the premium would have increased to $121 (an amount that is significant for those living on low and fixed incomes.)

However, because by law 25% of the total cost of the Medicare Part B program must be borne by beneficiaries in total, the remaining 30% of beneficiaries not protected by the hold-harmless provision must make up the entire difference, consequently having to pay for the entire cost of the increase for the program, which will go up because of the higher medical inflation rate.  This 30% will be comprised of new beneficiaries (who become eligible and enroll in 2016), people on Medicare who don’t receive Social Security benefits, Medicare beneficiaries who already pay higher, non-standard, income-related premiums because they have above-average incomes, and people who are on both Medicare and Medicaid.  (Fortunately, this latter category will not experience the increase directly because state Medicaid programs will cover it for them.)

Two bills have been introduced in Congress to mitigate this tremendous increase next year for the unlucky 30% who aren’t “held harmless” under current law when annual Social Security COLAs are not granted.  The “Protecting Medicare Beneficiaries Act” (S.2148) has been introduced by Sen. Ron Wyden (D-OR), the ranking member on the Senate Finance Committee, which has jurisdiction over Medicare.  In the House of Representatives, Rep. Dina Titus (D-CA) has introduced the “Medicare Premium Fairness Act” (H.R. 3696.)  Both would cancel the Part B premium increase for those beneficiaries not protected by the “hold harmless” provision, and cancel the increase on state Medicaid programs. Neither bill indicates how the additional cost would be paid for.  New York co-sponsors include Sen. Schumer on S.2148, and Reps. Carolyn Maloney, Sean-Patrick Maloney, Jerrold Nadler, and Charles Rangel on H.R. 3626.  Senior citizen, disability rights, and health care advocates are reaching out to Sen. Gillibrand and the remaining Congressmembers to talk about the importance of addressing this situation quickly, since there are only 2 months to go.

Autumn has arrived, and in Washington that means two things: budget deals, and election campaigns.  This year, there are no federal elections, so tax and spending measures claim the spotlight alone.

Congress passed a Joint Budget Resolution last spring which serves as an overall blueprint to guide specific committees of jurisdiction as they craft specific appropriations bills which (theoretically) adhere to it.  Their Resolution called for large cuts in spending on Medicare, Medicaid, and the Child Health Insurance Program (CHIP) over the next decade (along with implicit suggestions of block granting or imposition of “per capita caps” for the latter two programs), and outright repeal of the Affordable Care Act (ACA) per special “budget reconciliation” instructions (see below.)

While only a simple majority was needed for adopting their Resolution and the President played no role concerning it, this time around with appropriations bills in play, both the Senate Minority Democrats and the White House will need to be included in whatever is finally enacted.  In addition, the issue of funding for family planning services, particularly those provided through Planned Parenthood and/or state Medicaid programs, has since been added to the mix.  Technically, all appropriations bills were to have been enacted by October 1^st when the federal government’s new fiscal year began.  However, as has often been the case in the past decade or more, this deadline was not met, and instead Congress enacted a “continuing resolution” (CR) to keep the government open and operating per the current budget for a limited period of time, this year until Dec. 11.

Outside of this regular budget matter, several other major actions that relate in various ways and in varying degrees will also need to be addressed and may likely end up as part of some “grand deal” by the end of this year.  They include whether or not to reinstitute and/or refashion an across-the-board sequester of funds (50% defense, 50% discretionary domestic), raising the debt ceiling, renewing and refunding the transportation trust fund, continuing certain temporary tax provisions that benefit large corporations and/or low-income families, creating incentives for multi-national corporations to “repatriate” their profits booked off-shore, and whether or not to actually invoke the budget reconciliation process per se or forego it.  In the end, the final decisions on all of these matters will be a function of both policy and political concerns, with an eye toward each party setting themselves up for next year’s elections when a new President and Congress will be chosen.

Overall, the Obama administration and Congressional Democrats are striving to cancel the budget sequester and minimize any general cuts to health care and social programs, except where rational savings can be achieved (e.g., lowering drug costs for public programs.)   While the Budget Control Act of 2011 (enacted as a result of that summer’s fight over raising the debt ceiling) created the sequester process, it has only been invoked occasionally since then, and has been suspended for the past 2 years.  Health care programs were largely exempted from it except for a 2% decrease in Medicare reimbursement rates to providers.

Congressional Republicans are seeking to reinstitute the sequester process in order to lower the overall deficit, and to rejigger its target areas to lessen the impact on defense spending and make up the difference via further cuts to domestic and social programs whose funding is discretionary (as opposed to mandatory.)  (Mandatory programs, termed “entitlements” in federal budget-speak, are programs like Social Security, Medicare, Medicaid, CHIP, SNAP, SSI, veterans’ benefits, etc.)  Should the sequester be reinstated, it is possible that Congress could revisit whether to institute new spending cuts in various health care programs in order to achieve overall deficit reduction target dollar amounts.

As for (yet another) repeal attempt of the ACA, using the budget reconciliation process would allow the Senate to bypass its normal rules for procedural votes where 60 votes are needed for cloture to move forward, thereby allowing simply 51-vote majorities to rule.  However, this special process can only be used when the item under consideration is directly germane to spending, revenue raising, or deficit reduction, and related policy goals are of secondary concern.  It cannot be used in the opposite circumstance where major policy change is attempted via relatively minor financial concerns, and when any measure actually raises the budget deficit.

Given these parameters, the ACA provisions considered at risk would be:

• the so-called individual and employer mandates (“responsibility’ provisions in ACA-speak)
• the medical device tax
• taxes on insurers’ windfall profits
• funding for the (yet to be created) Medicare Independent Payment Advisory Board
• the so-called “Cadillac” (excise) tax on employer-sponsored health plans with high actuarial values.

Left unaffected would be funding for:

• new health benefit exchange marketplaces;
• premium tax credits and cost-sharing reductions for low- and moderate-people who purchase private “qualified health plans”;
• expansions of Medicaid in states that have done so.

(N.B.: Source for information here about the ACA and budget reconciliation is from http://healthaffairs.org/blog/2015/10/21/instructions-for-reconciling-tax-credits-basic-health-plan-funding-methodology-released/)

Should these actions be taken in total, the Congressional Budget Office has estimated that the number of uninsured would rise by 14-15 million (20% of whom would be children), premium costs would rise by 20%, and up to 25% of current family planning patients could lose access to services.  Should any or all of these changes and up in a budget bill that goes to the President, he is expected to veto them, so beyond policy considerations, Congressional leaders will also have to decide if they want to expend the time, energy, and political capital to pursue them since a successful veto override vote would likely be impossible.

Health care and social service advocates across New York State are mobilizing through the Restore the America Promise (RAP) campaign to:

• engage members of the House Majority (in the 2^nd, 11^th, 19^th, 21^st, 22^nd, 23^rd, 24^th, and 27^th congressional districts) about the importance of health care and social safety net programs to their constituents;
• engage members of the Congressional Progressive, Black, and Hispanic Caucuses, who have historically championed health care and social programs;
• engage Senators Schumer and Gillibrand to defend these programs as important to our state overall.

The RAP campaign is a statewide effort jointly spearheaded by Citizen Action of New York, Hunger Action Network of New York State, New York State AFL-CIO, the New York State Alliance for Retired Americans, New Yorkers for Fiscal Fairness, and New York Statewide Senior Action Council.  Here in New York City, No Bad Grand Bargain, a network of labor and community activists, operates as the local affiliate for RAP, and we here at Metro New York Health Care for All coordinate its communications and convene its meetings.

Unexpectedly part of all this political stew is the unanticipated changes in House leadership now underway – how that all falls out and its impact on any final budget deal remains to be seen.  At its most extreme would be a federal government shutdown over family planning funding for Planned Parenthood.  However, speculation is that when all is said and done, a 2-year budget deal that’s not too far afield from the current status quo is likely to be negotiated, simply to get all parties past next year’s elections and into a new presidential administration and Congress when all these (and other) “major issues” will move back to the fore.  In sum, elections do matter.

(P.S.:  One other possible health care budget issue that’s suddenly emerged out of left field is fallout from a recently announced lack of any cost-of-living-adjustment (COLA) next year for Social Security beneficiaries.  As a consequence, Medicare Part B premiums will skyrocket for a limited number of Medicare beneficiaries.  A subsequent post to this blog will discuss that in more detail.)