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Debt Limit Legislation Next Steps - Joint Committee Now the Focus

Tuesday, August 09, 2011

The legislation to increase the debt limit by $2.1-$2.4 trillion is now the law of the land and attention has shifted to the Joint Committee on Deficit Reduction (often referred to as the “super committee”).  This 12-member committee is comprised of three Democrats and Republicans from the House and three Democrats and Republicans from the Senate.  The super committee is tasked by Thanksgiving with developing a plan supported by at least seven members of the committee that includes between $1.2 trillion to $1.5 trillion in deficit reduction (over a ten year period).  Congress is then required to take an up or down vote without amendments on the legislation proposed by the joint committee.   If the super committee fails to present a plan, or if the super committee’s plan does not reduce the deficit by at least $1.2 trillion, or if Congress fails to pass the super committee recommendations; a process of automatic cuts known as sequestration is triggered.  These cuts would start in 2013.  This sequestration mechanism would cause across-the-board cuts in federal government spending, with half of the cuts coming from defense spending and the other half from other government programs including Medicare. Sequestration is intended to force action by members of the super committee to avoid significant reductions to spending interests considered important to the respective parties. Time will tell if this strategy prevails.

The deal also requires the House and Senate to vote on a Balanced Budget Amendment.  If the Balanced Budget Amendment passes the House and Senate by the two-thirds majority constitutionally required, the entire joint committee process and sequestration are unnecessary. It is highly unlikely the House and Senate can agree on language for the Balanced Budget Amendment, and it is unlikely enough votes are present for the Balanced Budget Amendment to pass both the House and Senate

-- Congressional leaders appoint joint committee (JC) members by August 16.
-- Joint committee must begin meeting by September 16.
-- Between October 1 and December 31, both the House and Senate must vote on a Balanced Budget Amendment. 
-- Regular House and Senate committees can make recommendations to the JC by Oct. 14.
-- JC must submit a report to Congress and the President that is supported by at least 7 of the 12 members by Nov. 23.
-- The House and Senate must vote up or down without amendment on the JC report by Dec. 23.
-- Current SGR patch expires Dec. 31, 2011.

Sequestration or “Triggered Cuts”
If this super committee fails to produce the required savings, falls below the savings targets, or Congress fails to adopt the committee’s recommendations then spending is automatically reduced by up to $1.2 trillion in a process referred to as sequestration.  This sequestration mechanism would cause across-the-board cuts in federal government spending, with half of the cuts coming from defense spending and the other half from other government programs including Medicare.  In particular, Medicare could be cut by up to two percent in this process.  The legislation requires that the Medicare cuts not impact beneficiaries, which means physicians and other providers will be on the hook for most of the cuts. The agreement specifically exempts Medicaid, Social Security, veterans’ benefits and other “essential” benefits from the cuts. Sequestration would also be triggered if the committee recommends and Congress passes cuts that are less than $1.2 trillion to make up the difference, All cuts associated with sequestration would go into effect January 1, 2013.  

Sequestration could lead to significant spending cuts to the Patient Protection and Affordable Care Act (PPACA).  The across the board mandatory spending cuts may extend to preventative and community health centers, the temporary high-risk pools for people with pre-existing conditions, funds to establish the insurance exchanges, funds for state review of insurance policies, grants for children’s mental health and other health care law-related spending provisions. The Congressional Budget Office (CBO) is still determining what portions of the health care law are subject to reductions under the legislation, although no sections appear exempt. 

Medicare Sustainable Growth Rate (SGR)
The timing of the joint committee work is important because it closely correlates to the expiration of the current SGR fix on December 31, 2011.  Unless Congress acts, the SGR will result in physician Medicare pays being cut by over 29 percent.  The final vote on any compromise agreed to by the super committee must occur by December 23, and a little over one week later the 29% SGR payment cut will go into effect absent Congressional action to the contrary.  

The “Byrd Rule”
Often overlooked, but not without consequence is the fact that the super committee is not subject to the “Byrd Rule,” which is a long-running rule that forbids deals from including unrelated policy matters in budget language.  Lacking this rule, members of the committee could theoretically include any policy or regulatory issue the committee sees fit.  

ASA’s Advocacy
In addition to ASA’s ongoing outreach to key lawmakers and staff regarding Medicare payments for anesthesiologists, ASA will also work to bring our issues to the new special joint committee.   Additional advocacy activities will be required to determine how possible changes to Medicare payments to physicians under this package would interact with projected Sustainable Growth Rate (SGR) related payment reductions in the future.

Click here to stay up to date on the latest happenings with the joint committee.

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